TMI Blog1988 (7) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants were more anxious to get MODVAT under Rule 57A of Central Excise Rules. In the opening arguments, he drew our attention to the Write Up on ANFO submitted by the appellants. The said Write Up is annexed to this order as Annexure I. 2A. He reiterated the plea which was taken note of in the case of Kesoram Cement referred to supra that the ANFO was obtained by mixing ammonium nitrate to the fuel oil and this being preparation obtained by simple mixture of two items, could not be considered as a manufacturing process as according to him, merely mixing of two items is not a process of manufacture. In this connection, he cited the case of State of Maharashtra v. The Central Provinces Manganese Ore Co. Ltd. (AIR 1977 S.C. 879). He pleaded that by mixing of the two items, no other product came into existence. He pleaded that even if mixing was held to be process of manufacture, the product emerging by the process of mixing could not be considered as goods as the same was not in a marketable form. He pleaded that before the duty could be levied the test of marketability must be satisfied. He cited the case of The Union Carbide India Ltd. v. Union of India and Ors. 1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras (1988 14 ECR 129) in this regard. He also pleaded that the appellants had been issued with a special license by the Chief Controller of Explosives. The License is for the manufacture of non-captype sensitive blasting explosive and this license was valid only for production of 100 kg. at a time. He drew our attention to the wording of the licence which is reproduced below for convenience of reference - License is hereby granted to the General Manager, Singareni Collieries Co. Ltd., P.O. Godaveri Khani-505 209 Ramagundam Railway Station, Karimnagar, valid only for the manufacture of 100 kgs. at any one time, of non-capsensitive explosive consisting of ammonium nitrate or non-explosive mixture containing ammonium nitrate mixed or impregnated with mineral oil subject to the provisions of the Explosives Act, 1884 and the rules framed thereunder and the conditions on the back of this licence. The licence shall remain in force till the 31st day of March, 1981. His plea is that the licence is for the non-explosive mixture. He stated that inasmuch as, licence was issued for a non-explosive material by the Chief Controller of Explosives, there is no reason why the mixture sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne. It is, however, seen from the order of the lower authority who has cited from the Condensed Chemical Dictionary, 9th Edition published by Van Nostrand Reinhold Company revised by Gessner G. Hawley - the prills are described as under - Prill - small round or acular aggregates of a material usually a fertilizer, that are artificially prepared. In the explosives field prills - and - oil consists of 94% coarse porous ammonium nitrate prills and 6% fuel oil.... It is seen prills are porous. The oil obviously is absorbed in the porous prills to some extent thus changing that character of the ammonium nitrate as an explosive. It appears that the use of the ammonium nitrate is a mixture with fuel is a standard procedure used for blasting purposes. As mentioned by the learned Departmental Representative, ANFO though being a simple mixture is recognised as a product apart from ammonium nitrate and is considered as a prepared explosive as evidenced by the Explanatory notes to the Harmonised Coding System of Customs Cooperation Council. Since prepared explosives are specifically covered under the Tariff, irrespective of the fact that the ANFO is prepared by a simple mixture of prills an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo products has to be held to be a process of manufacture resulting in the emergence of a new commodity. The Hon'ble Supreme Court in the case of Union of India and Ors. v. Delhi Cloth and General Mills Co. Ltd. and Ors. 1977 ELT (J 199) has held as under - Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. Following the ratio of the judgment of the Hon'ble Supreme Court, we hold that ANFO is the result of a process of manufacture. 10. The next point for consideration is whether ANFO can be considered as goods for the purpose of Central Excise levy. The contention of the appellants in this regard is that ANFO is produced by the appellants for their own use and is not marketed by them and no evidence has been produced by the Department that the same is actually marketed. We observe that it is not the case of the appellants that the ANFO is produced in the hole or the cavity in which the mixture is exploded. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler of Explosives. We observe that the license Issued to the appellants is for non cap sensitive explosive consisting of ammonium nitrate of a non-explosive mixture containing ammonium nitrate with mineral oil subject to the provisions of Indian Explosives Act, 1884. We observe that for the purpose of carrying out the purpose of the Explosives Act, various definitions have been given under the Explosives Act. So far as the term explosive is concerned, it covers certain items by a specific mention and also it carries a general definition of the term explosive and this covers products which are manufactured with a view to produce a practical effect by explosion and even the fire works are covered under the term explosives. The very fact that the appellants had to obtain a license to produce ANFO from the Chief Controller of Explosives shows that they were producing ANFO which was covered under the scope of the Explosives Act. 13. We observe that the appellants have been given the license to produce ANFO which is an explosive, as seen from the technical literature cited by the Revenue. The teamed Advocate plea that we should not go by the dictionary meaning is mis-conceived in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of excisable goods. We observe that the demand has been raised in respect of the clearances made from 1 -3-1986 to 31 -10-1986. The show cause notice was issued on 30th December, 1986. It does not appear that any demand was raised before 1-3-1986. The second show cause notice as seen from the record, is dated 17-3-1987 for the period from 1-3-1986 to 31-1-1987, It appears that item prepared explosive came to be introduced for the first time in the tariff with the introduction of new tariff and duty demand was raised in view of the inclusion of this item in the tariff. 16. The question in this context is whether the appellants manufactured the goods and used them for captive consumption without payment of duty on a bona fide belief regarding its excisability or there was any suppression of fact with the intention to evade payment of duty on their part. The Intention to evade payment of duty would be there if the appellants had a mala fide intention. It is observed that the appellants were carrying out their operations regularly in the open and it is quite possible that they were under the bona fide belief that their goods were not chargeable to duty. 17. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the failure on the pat of the appellants to furnish information to the Central Excise authorities about the manufacture of ANFO and their failure to comply with the Central Excise formalities in regard to the goods can be taken to be an act done with the intent to evade payment of duty. The intent to evade payment of duty implies that the person had mala fide intention and thus suppressed the facts to evade payment of duty. There is nothing on record nor there is any finding by the Collector in his order that there was clandestine manufacture or removal of the ANFO or they were carrying out operations in a manner with a view to evade the detection of the same by the Central Excise officers. The appellants were functioning under Central Excise control and there is no allegation from the Revenue that they had not brought the production and use of ANFO on record in their own private records. We observe that the legislation in its wisdom has set out the parameters for the purpose of invoking the longer time limit of five years. These parameters are set out in the proviso to Section 11 A(1). The same is reproduced below for convenience of reference - Provided that where any duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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