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TMI Blog1995 (11) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 same goods weighing 199.67 MTs manufactured and said to have been cleared clandestinely during the period 14-12-1984 to 29-4-1987 under the said Rule and Section of the said Act. (iv) Confirmed a demand of Rs. 7,00,814.40 against M/s. Shri Kahan Traders in respect of the same goods weighing 212.368 MTs manufactured and removed clandestinely during 4-4-1985 to 24-8-1987 under the said Rules and Section of the Act. (v) Confirmed a demand of Rs. 1,08,916.50 against M/s. Mehta Brothers in respect of the same good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recorded. Shri Kishorbhai Motilal Mehta, Maheshbhai Dolatrai Mehta, Pushpaben Dolatrai Mehta and Jayeshbhai Dolatrai mehta partners of M/s. Mehta Industries inter alia stated that their company was established in 1967 and they were engaged in manufacture and sale of brass parts in addition to sale and purchase of Pittal Bhangar (Brass scrap); that, since last six to seven years, they were importing foreign brass-scrap/brass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 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 reference to their books of accounts, sales and purchases, and foundry accounts; that the explanation of Shri Jayeschandra Dolatrai Mehta, according to department, is binding on them. 2.7 In terms of these statements, the department has alleged that the importers subjected such material i.e. brass dross/ash to "processing, viz. pulverising, washing, cleaning, etc. and obtained/separated/seggregated (brass) metal g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 scrap, which consisted of worn-out or broken metal articles. Therefore, it was submitted by them that washing and seiving of imported dross are not processes involving either mechanical working of metal or those which result in the generation of scrap within the meaning of the aforesaid explanatory note. Mechanical working of metal would refer to processes, such as, cutting of metal under other processes of machining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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 importers. he relied very strongly on the judgment rendered by the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. v. Union of India as reported in 1995 (78) E.L.T. 641, pertaining to asbestos fibre separated from the rock in which it is embedded by manual and mechanical means, has been held as not amounting to manufacture. He also relied on the judgment rendered in the case of M/s. N.J. International v. Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions 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 invoice, description as refined dross B.D. Scrap. The appellants have contended that such processing of cleaning, the imported Brass dross/ash does not result in a process of manufacture as no new commodity as known in the market arises as the said Brass dross/ash continues to remain as the same article, although they might have referred to the said imported item as brass/scrap/laddi etc. in their invoices. They have also relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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 appellants, therefore, we have to hold that the appellants have succeeded on this point itself and the impugned demands are required to be set aside on this ground alone. However, we would like to examine the other points also in order to answer, all points raised before us. 11(a). The department is relying on the Note 6(a) of Section XV, to classify the items under Chapter 72. The said Note 6(a) reads as follows :- "Metal waste a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 [our] notice in support of this plea. It is also brought to our notice that on the date of filing of his declaration, two High Courts had taken the view that the goods exempted from duty are not includible within the definition of `excisable goods' as defined in clause (d) of Section 2, No doubt, two other High Courts had taken a contrary view. The appellant's factory is in the state of Maharashtra and the Bombay High Court had not taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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