TMI Blog1995 (11) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... osal as per law. By common order-in-original dated 28-8-1990, the Collector of Central Excise, Rajkot passed a common order in respect of M/s. Super Engg. Co., Shri Kahan Traders, M/s. Mehta Engineering Works, M/s. Mehta Brothers and M/s. Mehta Industries (i) confirming the duty demand of Rs. 16,85,247.30 against M/s. Super Engineering Co. for heavy manufacture of brass scrap/laddi etc. weighing 510.681 MTs said to have been manufactured and removed clandestinely during the period 3-12-1980 to 16-8-1987 in terms of Rule 9(2) read with proviso to sub-section (1) of Section 11A of the Central Excises Salt Act, 1944. (ii) Confirmed a demand of Rs. 8,28,468.30 against M/s. Mehta Industries in respect of brass scrap/laddi etc. weighing 251.051 Mts. manufactured and said to have been removed clandestinely during 1-1-1985 to 21-1-1987 by M/s. Mehta Industries/Mehta Moulding Works, the latter having clearly admitted to be only a division of M/s. Mehta Industries, in terms of Rule 9(2) read with proviso to sub-section (1) of Section 11A of the Central Excises Salt Act, 1944. (iii) Confirmed a demand of Rs. 6,58,637.40 against M/s. Mehta Engineering Works in respect of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter under Chapter 74 of the Central Excise Tariff Act, 1985, as the case may be. 2.1 The importers/traders of `brass dross/ash' either sold the said material as such, or after subjecting the said material to certain "processing", to traders/actual users/buyers by describing/invoicing as `Brass dross, refined dross, B.D. Scrap, Pittal Bhangar' etc. 2.2 Such "processed" material viz. refined dross B.D. Scrap, Dross, Pittal Bhangar etc. appear to be of non-duty paid character. 2.3 The Supdt., Central Excise (Preventive) (hereinafter referred to as `the Central Excise Officers) during enquiry relating to such material, conducted search of premises of the importer/trader, of `Brass dross/ash' on 31-10-1987 and took possession of records of traders. 2.4 They also conducted search of premises (godown), of the appellant and visited the premises of M/s. Mehta Moulding Works, Jamnagar. It was stated that there is a foundry capable of melting brass and brass scrap as well as other metals, etc. and work of casting (thereof) was in progress. The department officials likewise visited the office premises of traders and statement of various persons were recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed; that in addition to those on 24-1-1985, as per Bill No. 21/41 of Rs. 4,000/- a grinder machine was also purchased from M/s. Panchasara Engineering, Jamnagar; that the pulverising machine was installed in a room (rented to Super Engineering Co., Jamnagar) and remaining two machines i.e. Mill and Grinder were installed in the factory of M/s. Mehta Industries and for which the additional electric connection of 25 to 30 H.P. was taken by them; that M/s. Mehta Industries has neither obtained any licence from Central Excise Department; nor filed any declaration till that date; the brass dross which was imported was brought in Plot No. B-44, and cleaned to separate brass which was sold as `Pittal Bhangar' (Brass scrap) in the market; that such brass scrap was sold by them after casting; that the process of separating brass. 2.6 The statement of Shri Kiritbhai Navalchand Bavisi, partner of M/s. Mehta Brothers, M/s. Mehta Engineering Works, and M/s. Super Engineering Co., all of Jamnagar, was recorded on 22-4-1988 wherein it is stated that other things, that Shri Jayeshchandra Dolatrai Mehta was handling the administration of all the factories and had full knowledge with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with zinc, lead, copper, etc. in foundry of M/s. Mehta Moulding Works, Jamnagar for casting rods, etc. on job work basis as well as for further use in the production of their inter-connected firms/companies. 3. The activities undertaken by them of removal of impurities from the brass dross by a manual or mechanical process does not amount to manufacture since the nature of the goods, chemical composition and physical appearance remains the same and all the happens is that extraneous impurities are cleaned by a process of washing and seiving, they also relied on the rulings rendered by the Tribunal, Hon'ble High Court and Hon'ble Supreme Court. 3.1 They also pleaded that there was a distinction between dross included in Chapter 26 and metal waste and scrap covered by Section Note 6(a) of Section XV. They have also referred to the Explanatory Note on page 210 under Heading 26.20 of the HSN. They submitted that there has been no mechanical working of metal, or scrap which consists of worn-out or broken metal articles to be excluded (Section XIV or XV). They also submitted that waste and scrap referred to only waste, which is derived from the mechanical working or metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement. He referred to the latest judgment of the Hon'ble Supreme Court rendered in the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay as reported in 1995 (75) E.L.T. 721 wherein Hon'ble Supreme Court has laid down that the department should allege the facts of mis-statement or suppression and intention to evade duty. He also referred to another judgment of Hon'ble Supreme Court on this point, as rendered in the case of Pushpam Pharmaceuticals Co. v. Collector of Central Excise, Bombay as reported in 1995 (78) E.L.T. 401. He also referred to an earlier judgment of the Hon'ble Supreme Court in the case of Cement Marketing Co. v. Assistant Sales Tax Commissioner as reported in 1980 (6) E.L.T. 295 (SC) = AIR 1980 (SC) 346 to 348 at para 5, wherein Hon'ble Supreme Court has held that there has to be an act of deliberateness to hold the appellants to be guilty of suppression. Sr. Advocate submitted that the appellants had not done any Act wilfully, with intention to evade duty. It is his contention that such process of pulverising and cleaning does not amount to manufacture, as it is a process of cleaning and it remains the same item which has been imported by the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ld. Sr. Advocate replying to the arguments submitted that the department had not levied CVD in the present case and the department had also not proceeded to claim CVD in the present case as there was no charge of mis-declaration at the time of importation of the goods. 10. We have carefully considered the submissions made by both the sides and have perused the findings given by the respective Collectors. The questions that arise for consideration in these appeals are (i) as to whether the process of pulverising, seiving and cleaning resulted in the production of new goods which is classifiable under Tariff Item 26A and erstwhile under sub-heading 7402.00 in respect of imported brass dross/ash to be refined as dross B.D. Scrap/ Dross, Pittal Bhangar etc. (ii) whether the demands are barred by limitation and (iii) as to whether penalty is leviable in the present case. As regards the first and main charge regarding excisability and levy of duty on the imported `Brass dross/ash which has been subjected to certain processing like pulverising, cleaning and washing without the aid of power to bring into existence items said to have been sold on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture." Again Hon'ble Supreme Court has observed that "Dross and skimmings may contain some small percentage of metal. But dross and skimmings are not metal in the same class as waste or scrap. It may be possible to recover some metal from such dross and skimmings. They can, therefore, be sold. But this does not make them a marketable commodity. As ld. Single judge of the Bombay High Court has pointed out, even rubbish can be sold. Everything, however, which is sold is not necessarily a marketable commodity as known to commerce and which, it may be worthwhile to trade in. Ld. Single Judge of the Bombay High Court, therefore, rightly came to the conclusion that the proviso to Rule 56A was not applicable as aluminium dross and skimmings are not excisable goods". 11. Taking into consideration the ratio of the judgments rendered by the Hon'ble Supreme Court, we have to hold that the process of pulverising, washing and cleaning of brass/ash does not result into emergence of a new marketable commodity with a separate, distinct name having separate physical, chemical composition or characteristic. As the first question answered by us has gone in the favour of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this act or of the rules with intent to evade payment of duty..... " 6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e. intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or mis-statement of fact which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful. 7. Now coming to the facts of this case, the appellant's case is that he thought bona fide that he need not include the value of the Rapidogens in his declaration, for the reason that the said product was fully exempt from duty under Notification No. 180/61, dated November 23, 1961. Certain facts are brought to [o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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