TMI Blog1994 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated June 7, 1985 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (`Tribunal' for short) in appeal No. ED (SB) A 104/84.C. Facts leading to and relevant for disposal of the appeal are as under. 2.On January 30, 1983 a team of Central Excise (Preventive) Officers of Bulsar Division paid a surprise visit to the factory premises of M/s. Grovel Chromates, a division of M/s. Grauer and Weil (India) Ltd., Bombay, the appellants herein, situated in Plot No. 407, G.I.D.C., Vapi. They found that the appellants, who are engaged in the manufacture of Sodium Bichromate (falling under Item No. 14AA of the First Schedule to the Act) under a valid license, had removed their product, on payment of central excise duty and under gate passes, for captive consumption to their Chromic Acid Section situated adjoining to their manufacturing premises, for the manufacture of Chromic Acid flakes. The officers further found that those flakes (falling under T.I. 68) were manufactured with the aid of power and were removed under delivery challans of the appellants without payment of duty. The Officers detained 98 drums containing 4,900 kg. of Chromic Acid flakes lying in the Chr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feviable thereon, during the period from September, 1981 to January, 1983 or thereabout, as shown in Annexure `A' to the show cause notice, under the proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944, read with Rule 9(2) of the Central Excises Rules, 1944." 5.Aggrieved by the above order the appellants filed an appeal before the Tribunal. The Tribunal while upholding the order of the Collector directing payment of excise duty, set aside the order of confiscation and imposition of fine in lieu thereof. The Tribunal also upheld the order of imposition of penalty but reduced it to Rs. 1,00,000/-. Hence this appeal. 6.To appreciate the contentions of the appellants, it will be profitable at this stage to refer to Notifiaction No. 46/81, dated March 1, 1981, which reads thus : "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 85/79-Central Excises, dated the 1st March, 1979, the Central Government hereby exempts all goods, falling under Item No. 68 of the First Schedule to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard, reference to 24th Annual Report for the year 1981 of M/s. Grauer and Weil (India) Ltd. (the appellant) is also relevant. In the said annual report, in the director's report on the item "Additional to fixed assets" it has been stated that "the company has also acquired the complete assets and liabilities of Growel Chromates Pvt. Ltd., located at Vapi, in the district of Valsad, Gujarat. The plan so acquired is designed for annual capacity to manufacture the following products:- Chromic Acid 730 Tons(1) Sodium Bichromate 2190 Tons(2) Yellow Sodium Sulphate 1314 tons(3) From the director's report it is quite clear that the entire plan of M/s. Growel Chromates Pvt. Ltd., including Chromic Acid Section formed the division of Grauer Weil (India) Ltd., Bombay, in the name of M/s. Growel Chromates, on merger. On the other hand, while applying for L 4 licenses for manufacture of "Sodium Potassium Dichromate" falling under T.I. 14 AA on 2-12-1981 and for "Yellow Sodium Sulphate" falling under T.I. 68 on 18-1-1982, in the ground plans produced therewith, the assessee has safely avoided to show their premises demarcated as "Chromic Acid" Section, though the same premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. How the two activities can be said to be independent of each other passes our comprehension, especially considering the other features of the case, i.e. common water and power connections, common payments for these facilities, common payments to workers, common delivery challans, etc. This is not, therefore, a case in which it can be said that the activities in the chromic acid section were not connected with but were totally independent of the activities in the rest of the premises." 11.From a bare perusal of the definition of factory under Section 2(m) of the Factories Act, it is patent that if on any premises including the precincts thereof ten or more workers are working or were working on any day of the preceding twelve months, and in any part thereof a manufacturing process is being carried on with the aid of power it would be a factory. Ordinary, meaning of the word `premises' is a piece of land including its buildings or a building together with its grounds or appurtenances and precincts mean the areas surrounding a place. The words "any premises including the precincts thereof" under Section 2(m) are therefore wide enough to include all buildings with its surroundings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proviso to sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacture knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful mis-statement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case." (emphasis supplied) 14.As has been observed in the above-quoted passage the question as to whether in a given case the requirements for invoking the proviso are fulfilled or not is one of fact. It has therefore to be ascertained whether in the set of facts and circumstances of the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken together, a reasonable conclusion can certainly and legitimately be drawn that the appellants wilfully and deliberately made mis-statements and suppressed material facts to avoid payment of excise duty. In other words it is not a case of simple inaction or failure on the part of the appellants to furnish material information. 16.It has lastly been contended that in any view of the matter the appellants could not be asked to pay penalty as the breach in question flowed from the bona fide belief that they were not liable to pay excise duty. In support of this contention the appellants have relied upon the following passage from the judgment of this Court in Hindustan Steel Ltd. v. State of Orissa, 1978 (2) E.L.T. (J 159). "An Order imposing penalty for failure to carry out a statutory obligation is the result of a 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." 17.Since we have already found that the appellants have acted in conscious disregard of their statutory obligations and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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