Marked Differences Exist between Conditions and Considerations in a Contract: CESTAT Allows Appeal [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Hyderabad Bench, noted the difference between conditions and considerations in a contract and allowed the appeal.

The facts of the case are that the appellant, M/s Rashtriya Ispat Nigam Ltd, entered into charter party agreement with vessel operators and entered into separate agreements for unloading of goods at the port of import with stevedores on a vessel to vessel basis. It was held, after adjudication, that the appellants were the main contractor who engaged sub-contractors i.e., stevedores for carrying out stevedoring operators and in respect of which had received a certain amount of money from the vessel owner/operator.

The counsel for the appellants submitted that the contract cannot be split and that the attempt to sever the agreement, especially when the consideration of contract and demurrage/despatch money are inseparably connected in the agreement, and that such conclusions derived are impermissible under law.

The tribunal observed that the vessel owners are paying them despatch money which has been treated as consideration for such port service. CESTAT relied on South Eastern Coalfields Ltd v. CCE & ST, Raipur to emphasize that there is marked difference between conditions to contract and consideration for contract.

The two members, A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member), held that the amount cannot be considered as consideration paid to the appellant for especially providing port services for quicker turnaround. They found no merit in the contention that a contract had been executed from the charter party agreement, and ultimately allowed the appeal.

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