TMI Blog1980 (9) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... re found to be clearing the above said goods viz. dross/ash without payment of duty, while the Department s case is that these goods attracted Central Excise duty under Tariff Item 68. 4. In view of this 3 separate show cause notices were issued to the appellants on 22-5-1979 wherein the appellants were alleged to have manufactured and removed 40,969.500 kg. of the subject goods valued at ₹ 99.023.05 during the period from 1-3-1978 to 31-10-1978, 48,395 kg. of such goods valued at ₹ 3,05,236.17 during the period from 1-3-1975 to 16-6-1977 and 34,14,200 kg. of such goods valued at ₹ 1,19,740 80 during the period from 18-6-1977 to 28-2-1978. 5. The Additional Collector by the above said three orders apart from demand of duty on the goods cleared during the above said periods also imposed a penalty of ₹ 5,000/- in each case under Rule 173Q on the appellants. 6. In the orders under appeal, the Additional Collector has observed that the appellants did not disclose that they were manufacturing the above said goods and that they were clearing the same without the knowledge of Central Excise Officers till the cases were booked against them. He has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be attracted. 12. As regards the question of classification the appellants have cited the judgment of the Bombay High Court delivered by Hon ble Mr. Justice B. Lentin in the case of Indian Aluminium Company Limited and another v. A.K. Bandyopadhyay and others, dated 5/6-12-1969 [1980 E.L.T. 146 (Bom.)] wherein an identical issue of the classification of aluminium dross (and skimmings) was involved. The court observed :- It is difficult to come to the conclusion that dross and skimmings are goods and the contention to the contrary urged on behalf of the petitioner is not entirely devoid of substance. As stated earlier, dross is nothing but scum thrown off from metals in something; refuse, rubbish or worthless impure metal and skimming is that which is removed or obtained from the surface by skimming. These are nothing but ashes resulting in the process of the manufacture of aluminium sheet from aluminium ingots. In Union of India v. Delhi Cloth and General Mills Co. Ltd., A.I.R. 1963 Supreme Court 791 = 1977 E.L.T. (J 199), it was held that goods must be something which can ordinarily come to the market and be bought and sold and that the manufacture which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion resulting in a new and different article with a distinctive name, character or use or that they ordinarily come to the market to be bought and sold and are known to the market. Refuse or scum thrown off during the process of manufacture cannot by any stretch of imagination be considered as a by-product and merely because such refuse are scum may fetch some price in the market does not justify it being clothed with dignity of being called by-product, must less an end-product or a finished product. 13. The Board finds itself in agreement with the view taken by the High Court and accordingly would hold that the dross/ash in question is not liable to be charged to duty under item 68 of the Central Excise Tariff. 14. As regards the infringement of Rule 9(1) the appellants have submitted that for item 68 the Excise authorities had dispensed with the making of an application for permission to remove the goods from the premises only under payment of duty. The appellants have also submitted that the Excise authorities had full opportunity to levy and collect Central Excise duty on the aluminium dross/ash at the time of manufacture and at the time of removal from the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation as a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the company as a dealer acted in the honest and genuine belief that the company was not a dealer. Granting that they erred, no case for imposing penalty was made out. 18. In the circumstances the Board holds the personal penalties were not warranted in these cases a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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