TMI Blog1994 (6) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... under Heading 2505 of the Central Excise Tariff the Department was of the view that the appellants had been engaged in the activity of manufacturing crushed limestone without obtaining Central Excise Licence and without payment of Central Excise duty. The appellants were, therefore, served with a Show Cause Notice dated 22/25-5-1992 alleging that during the period November, 1988 to 6-12-1991, they had manufactured 1,34,117.11 MT crushed limestone and cleared it without discharging duty liability to the tune of Rs. 17,20,467.32. The appellants denied the allegations in the Show Cause Notice on the grounds that in several decisions of the Tribunal and the High Courts the activity of crushing of limestone had been held as not amounting to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor that crushing of limestone amounts to manufacture. He added that the High Court while arriving at the finding that the crushing of limestone into chips amounted to manufacture, had also held that there was no case for levying penalty on the petitioner since they had acted under the bona fide belief that the activity of crushing of limestone did not amount to manufacture in view of the divergent rulings of the Courts on this subject. He contended that the reasons which weighed with the High Court in the case of M/s. Sunderson (Minerals) Ltd. in holding that the petitioner was not liable to penalty on account of bona fide belief that their activity did not amount to manufacture would be equally applicable in the applicants case. He stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of Misc. Petition No. 2522/1990 in the case of M/s. S.N. Sunderson (Minerals) Ltd. v. The Superintendent (Preventive), Central Excise, Indore wherein the activity of crushing of limestone lumps into chips has been held as manufacture attracting Central Excise duty under Chapter 25 of Central Excise Tariff Act, 1985 the only question to be decided in this case is whether the Collector s order invoking the extended period under proviso to Section 11A for confirming the demand is sustainable. It has been submitted on behalf of the appellant that in the case of M/s. S.N. Sunderson (Minerals) Ltd. v. Superintendent (Prev.) Central Excise, Indore, the Hon ble High Court has arrived at the finding that the petitioners were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Sales Tax, decided on 10th April, 1987, a Division Bench of this Court has ruled, while considering Section 2(j) and 2(r)(ii) of the M.P. General Sales Tax Act, 1959 that dolomite lumps broken into chips and powder for convenience in use retain the same characteristics and qualities of dolomite lumps, therefore, there is no manufacture by crushing dolomite lumps into chips or powder. In S.A.I.L. v. Collector of Central Excise, CEGAT has held that crushing of limestone into lime powder does not amount to manufacture as lime powder not known and recognised as a distinct commodity in the market. In Ajanta Marble and Chemical Industries v. Collector of Central Excise, CEGAT, it was held that crushing, grinding and sieving of limestone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passing orders (Annexures M N) imposing penalty has not at all taken into consideration this aspect of the case. Therefore, we are of the opinion, that as the petitioners were under a bona fide belief about their liability to pay excise duty, the Collector, Central Excise has acted rather harshly in imposing penalty of Rs. 5,00,000/- and Rs. 50,000/- under Annexures M N." 6. On a plain reading of the extracts from the judgment of Madhya Pradesh High Court reproduced above, it followed that on account of divergent views expressed by the Tribunal and the Courts on the question whether the crushing of limestone into powder amounted to manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 and whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take out a licence or to pay duty on that belief, when there was no contrary evidence that the producer or the manufacturer knew that these were excisable or required to be licenced, would not attract the penal provisions of Section 11A of the Act. 7. It has been observed by the Hon ble Madhya Pradesh High Court in the case of M/s. S.N. Sunderson (Minerals) Ltd. that on account of the divergent views expressed by the Courts on the question whether the activity of crushing of limestone into powder amounted to manufacture and whether crushed limestone attracted Central Excise duty, there was a bona fide belief in the minds of manufacturers that the process of crushing of limestone did not amount to manufacture. For this reason, and on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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