TaxTMI 
TaxTMI 
2007 (10) TMI 9
X X X X Extracts X X X X
X X X X Extracts X X X X
....porting its entire requirement of gummed stamp paper from foreign countries. From 1967 onwards the security press commenced purchasing of Ashoka Pillar water mark stamp base paper from Paper manufacturing mills. The base paper was thereafter gummed and super-calendared by the contractor on a job work. In 1967 the claimant established a pilot plant for purpose of manufacturing gummed stamp paper at the instance of appellant- security press. The claimant set up the factory at Umbergaon in Thane district and the plant was commissioned in 1969. The claimant received orders for gumming and super-calendaring of stamp based papers. In the year 1976 the appellant for the first time floated tender for gumming and super-calendaring work. Again in 1989 the Security press floated tender and the claimant questioned the action of the security press by filing writ petition before the High Court but did not succeed. The tender was again floated in 1996 and the grievance of the claimant was that though the offer made by it was the lowest and the claimant further reduced the rates in view of the agreement reached between the parties, which agreement has been descr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to enable the claimant availing modvat credit. The security press while placing the orders on 31.5.1994 added a term that the modvat credit if any, availed by the claimant will have to be passed on to the security press. The claimant by its letter dated 5.6.1995 agreed to accept the order subject to withdrawal of the term relating to passing of modvat credit to the security press. The claimant stated that only on confirmation/ modification of this condition that it would proceed with the execution of the contract. The security press did not respond but forwarded base paper to the claimant to carry out the work of gumming and super-calendaring of base paper. The finished goods were delivered by the claimant along with necessary documents including the gate passes for endorsement by the security press. The claimant used to remind them from time to time that the modvat credit is only available to the manufacturer i.e. the claimant. It appears that no positive response was given to the claimant. On 16.10.1995 the appellant- security press for the first time informed that the matter would be examined and the decision would be commun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es will be issued, as per requirement." This was one of the terms and conditions of the purchase order. It is true that when the advertisement was issued there was no such condition but when the purchase order was issued it clearly stipulated this condition and it was accepted by the claimant, though it protested which is evident from the communication dated 5.6.1995 which reads as under : GANDHI INDUSTRIAL CORPORATION SPEED POST GIC/ISP/S.O.291/95/079/95-96 5.06.1995 The General Manager, India Security Press, Nashik Road, C.Rly. Dear Sir, Reg: Your S.O. No.PR-30(Adh)/291/95 dt.31.5.95 For Gumming & Supercalendaring of all over Ashoka Pillar Watermarked Stamp Base Paper Reels and Cutting into Reels & Sheets. We ackno....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dvat credit was not legally available to the Security Press. As such it requested that this condition be deleted. On 16.10.1995 a communication was sent by the Security Press to the claimant that the issue of modvat credit was being examined and further communication in this regard would follow in due course of time. Thereafter, on 30.12.1995 a clear reply was sent to the claimant informing that it was not possible to accede to the request of the claimant for waiving the condition of modvat credit. It was clearly informed to the claimant that since the Modvat credit was directly linked with the payment of Excise duty indicated in the terms and conditions of the tender as well as the referred order, the benefits, if any, will have to be invariably passed on to the India Security Press and this cannot be waived under any circumstances. The aforesaid communication dated 30.12.1995 is reproduced as under : "GOVERNMENT OF INDIA From The General Manager, India Security Press, NASIK ROAD-422101 Reference No.15858/PR-30(ADH) &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itions when the tenders were floated inviting tenderers to file their response to the offer. Whatever may be the terms and conditions of the advertisement which were floated, that is not binding and what is binding is the terms and conditions of the contract. Therefore, as per the terms and conditions of clause (i) of the supply order, the claimant has to refund the modvat credit to the security press. Learned counsel also submitted that modvat credit is available on the excise duty paid by the party and in this case the papers on which the excise duty was paid by the appellant- security press. Thus the gate passes were given to the claimant to claim the benefit of modvat credit and on the basis of excise duty paid on the paper by the security press, the benefit was drawn by the claimant by producing the gate passes and the benefit of modvat credit was claimed by the claimant on that basis. Therefore, it was submitted that the security press is entitled to the benefit of modvat credit. As against this, learned counsel for the respondent submits that since the modvat credit is only available to the manufacturer and it was clearly understood that this will go to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch of the High Court is correct. 8. After hearing learned counsel for the parties and perusing the record we are of opinion that the view taken by the Arbitrator and affirmed by the learned Single Judge and the Division Bench of the High Court cannot be sustained. Firstly, when the terms and conditions have been reduced in the supply order dated 31.5.1995, therein the condition of modvat credit was incorporated and it was accepted by the claimant. The contract had come into existence and the supply had been started on the basis of that supply order. Though the claimant had protested with regard to this clause but the appellant did not accede to the request of the respondent for deleting that clause and the appellant had informed the claimant on 31.12.1995 that there was no change in the conditions of the supply order still claimant continued to supply the goods as per the order. Therefore, on the face of this condition there is no going back from that. In case the claimant was not inclined to accept this clause he could have very well withdrawn from the contract. But it did not do so and continued with the contract. Therefore, on the basis of the clear terms of the contract, the....