Brief Facts :

Transferor  and transferee companies having different  objects clause -Companies Act, 1956- Section 394- Whether  amalgamation  permissible- Held Yes. Change in effective date of the  scheme-Whether permitted-Held Yes.

Issue: The Regional Director  took objection to the scheme of amalgamation that the objects of transferor- and transferee-companies are not  same  but different and pressed for the  rejection of the scheme. Further, there was a request for the change of effective date  of the scheme from the petitioners.

Decision: Petition allowed.

Reasons: Amalgamation under  Section 394 of the Act is  primarily on internal matter of the two companies and requires  approval of the shareholders, secured and unsecured creditors of the companies seeking amalgamation. It is essentially on arrangement for mutual benefit in creating a larger resource base and streamlining administration. The scope of interference by the court is confined to considerations of legality and public interest only. Diversify  of  objects of the two companies cannot, in any case, be a  guard for declining sanction to the proposed scheme of amalgamation.

Learned counsel for the petitioner next argued that it had  earlier been prayed  for sanction  of the scheme  on or before Ist  January, 2004 and since it could not  give  the sanction in time, it is now  prayed, by way  of  CA 537/2004, to make the scheme effective from 30th June,2004 instead of Ist April,2004  He  relied on the  judgement of Apex Court in Marshall Sons & Co.(India) Ltd.  V. ITO AIR 1997 SC 1763, to submit that  while sanctioning the scheme of amalgamation, it is open to the court to  modify the  effective date  and prescribe such  date of amalgamation as it thinks  appropriate in the facts and circumstances of the case. In view of the fact that the  extended dates have been approved by the respective Boards of the two companies and also in extraordinary  general meetings of the two companies , the reasons stated in the application are accepted and the application is  allowed in terms of the prayer clause.

(2) I.T.C. LTD . V. COMMISSIONER OF CENTRAL EXCISE , (2004)63 CLA SC;)- 10.9.2004

Manufacturers clearing goods by paying duty on the printed MRP-Retailers selling the goods at a  price MRP plus local taxes- Section 4- Valuation of goods Central Excise Act,1944 - Duty notifications-MRP exclusive of  local taxes- Whether  local taxes collected by retailers could be  added to the MRP for the purpose  of “Sale price” to calculate  excise duty – Held No.

Brief Facts:

The  issue settled in the case was  what would be the sale price  for the purposes of excise  duty when Maximum Retail Price(MRP), which is exclusive of local taxes, printed on the pack of cigarette in accordance with the relevant excise notification. The appellant- manufacturer cleared the goods from the factory by paying excise  duty on the MRP  printed  on the pack and sold them   at the price, which was MRP plus  the local  taxes. The Revenue sought  to treat the local taxes thus collected from the consumers to be part of the price and accordingly imposed duty on the  sales tax content also. The Tribunal also upheld the  imposition of  duty  against which the appellant-company approached the  Supreme Court of India. Before the Court it  was contended on behalf of the Revenue  that the sale price for the purpose of levying excise  duty would be MRP printed on the pack plus the local sales tax collected on it while the appellants contended that  local sales tax element should not be counter for the purposes  of levying duty.

Decision: Appeal allowed.

Reasons:

In the present case, the two notifications are statutory fiscal provisions. They require  that excise duty on cigarettes must be levied on “ adjusted sale price “. “Sale price” has in turn been  defined in relation to  a packate of  cigarettes as meaning the  maximum price (exclusive of local taxes only) at which such package  may be sold in accordance  with the declaration  made on such package.

According to the notification it is the declaration made,  or the MRP as printed, on the package which  alone is the sale price   and which furnishes the foundation  for the calculation of the adjusted sale price. There is  no other basis provided. The construction put by the tribunal is contrary to the words used, an exercise in  interpretation which is clearly impermissible and  and against the well-established  canon of  construction that  in constuing any statutory provision, words may  not be added or amended  but must , if reasonably possible , be construed as they stand.

The notification speaks of a permitted  sale according  to the MRP . The notification does not itself provide  for any sanction or prohibition against the retail sale of cigarettes at any rate other than the printed MRP. All that it does  is to accept that printed MRP according to which the cigarettes are permitted to be sold  by the retailer, as the sale price for the purposes of grant of concessions under the notification. The certainty of specific rates which was  sought  to be achieved  by the notification  has been undone  by the  adjudicating authority and the Tribunal. The notification had introduced a system for levy of excise  duty on an experimental basis. If the  experiment was a failure for whatever reason, it was open to the respondents to do  away  with  it and  replace the system by some other as it  did  in 1987 . But as  long as the notification stood, it had to be given effect to. In the view we have taken, there is no need to go into other  question  questions debated before us. The impugned  demands  raised against the appellant are set –aside  without any  order as to costs.

(3) COMMISSIONER OF CENTRAL EXCISE V. ACER INDIA LTD(8 SC 53)      24.9.2004

Valuation- Software exempt  from excise duty- Computer  subject to excise  duty- Software loaded into computer-whether the value of software includible for the purpose of excise duty payable on the  computer-Central Excise Act,1944 –Held No.

Brief Facts:

The respondent- company  is a manufacturer of computers, peripherals ,servers, notebooks and accessories . Upon orders received from the customers it loaded  operative  software (under License with WIPRO) in the computers manufactured  by it. While valuing the computer for the purpose of calculating excise duty, the respondent –company deducted the value of software from the total value of the computer supplied to the customers. The appellant Revenue sought to levy excise  duty on the value  thus  excluded on the ground that  without operative software a computer is  a dead box. The respondent was unsuccessful  before the first appellate authority  but succeeded in the  second appeal before the CEGAT which held that no excise  duty was payable on software loaded in a  computer. The Revenue come in appeal, against the order of the CEGAT ,before the Supreme Court.

Decision: Appeal dismissed.

Reasons: Computer  and operative software are different  marketable commodities. They are available in the market separately. They are classified differently. The rate of excise  duty for computer is 16%  whereas that of software is “Nil”. Accessories  of a machine promote the  convenience and better utilization of the machine  but nevertheless they are not machine in itself. The  computer and software are distinct and separate both as a matter of commercial parlance as  also under the  statute. Although a computer may not be capable of effective functioning unless loaded with software, the same would not tantamount to brining them within the purview of the part of  computer   so as to hold that if they are sld  along with the computer their value must form part of the assessable value thereof for the purpose of  excise duty. Both computer and software must be classified  having fallen under 84.71 and 85.24 and must be subject to corresponding rates of  duties separately. The information contained  in software although  are loaded in the hard disc., the operational software dos not lose its value and is still marketable  as a separate commodity. It does not lose  its character as a tangible goods  being of the nature of  CD-ROM. A licence to use the information  contained  in a  software can  be given irrespective of the fact  as to  whether they  are loaded in the computer or not. The fact that the manufacturers  put different prices for the computer loaded  with different types of operational software whether separately or not would not make any difference as  regard nature and character of the “computer”. Even if the appellants in terms of the provisions of a licence were obliged to preload a software on the computer  before  clearing the same from the factory, the characteristic of the software cannot be said to have  transformed into a hardware so as to  make it  subject to levy of excise duty along with computer  while it is not under the Tariff Act. In other words, computers and software are different and distinct  goods under the said Act having been classified differently and in that view of the matter , no central excise duty would be leviable upon determination  of the value thereof  by taking the total value of the computer and software.

We , however, place  on record that we have not  applied  our mind  as regard the larger question as to whether the information contained in a software would  be tangible personal property or not or whether preparation of such software would  amount to manufacture  under different statutes . For the  reasons aforementioned, we do not find any merit in the appeals of the Revenue which are  dismissed accordingly

(4) K.H. PANDHI V. PRESIDING  OFFICER, ADDITIONAL  LABOUR COURT  & ANR. 106 FJR 943 (DEL)

Issues:

Section 2(s)- Workman-Industrial Disputes Act,1947-Employee performing mostly accounting duties-some times performs incidental duties  also in addition to his primary duties- Whether the employee is a workman –Held Yes.

Brief Facts:

The petitioner was an accountant with the respondent  management and was  dismissed from the services after  one and half year. He raised an industrial dispute. The Labour  Court  held that he was not a workman and  dismissed the dispute. The petitioner –workman approached  the High Court under  a writ  challenging the award of the  Labour Court.

Decision: Petition allowed.

Reasons:

To  determine whether an emloyee is a  workman or not,what is of consequence is  his main or primary duty. If the employee performs some duties  which are incidental or  even in addition to his main or primary  duties, that   by itself, will not take away his  status as a  “workman” provided , as a result of his  main or primary  duties, he falls within the  meaning of the definition of “workman” under the Act.The designation of an employee is of no consequence.

A perusal of the duties performed  by the peitioner suggested that his duties were only, if not primarily clerical in nature . He was required  to write accounts and prepare related statement of accounts on the basis of and according to the  guidelines issued by the chief accountant and the chartered accountant. The  activities  that the petitioner performed  in relation to cash, that was, to deposit cash in the bank or  to withdraw it, were under the supervision  of  the technical director. Quite clearly, the work done  by the petitioner feel in the category of clerical work and  nothing more. It is not necessary to have  any further  inquiry  because  the facts  are sufficient for coming to the conclusion that the petitioner was a workman within the meaning of section 2(s)