TMI Blog1994 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the manufacture of lime. The petitioner-companies are also holding mining leases in the State of Madhya Pradesh. The lime stone extracted from the mines are utilised for the manufacture of lime and is also supplied to the Government Undertakings, including the Durgapur Steel Plant belonging to the Steel Authority of India Ltd., a Government of India Enterprise. 3.The Superintendent (Preventive) Central Excises, Indore issued summons to the petitioners on 17-11-1989, exercising powers under Section 14 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), calling upon the petitioners to produce before him the documents referred in the summons issued pertaining to the contract and supply of lime stone to Durgapur Steel Plant. 4.According to the petitioners, before issuance of the summons, inquiries were made by the Superintendent himself regarding supply of lime stone made to Durgapur Steel Plant and statement was recorded under Section 14 of the Act from the authorised representative of the petitioners. The petitioners made their written submissions before the Superintendent, Central Excise, raising the question that they are not involved in the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; the lime stone after extraction, is crushed to the required size and the crushed lime stone is supplied to the buyer; the lime stones extracted from the mines are crushed and grinded to the desired size in a crushing machine to get lime stone chips; the process of crushing and grinding is ancillary to the completion of manufactured products, viz., lime stone chips or crushed/grinded lime stone, which is excisable goods; the crushing of lime stone is a process of manufacture; and the crushed lime stone chips are a different commercial commodity than the lime stone lumps. 7.It is contended by the counsel for the petitioners that the crushing of the lumps of lime stone into pieces is not a manufacturing process within the meaning of Section 2(f) of the Act; it is merely a process of making the lime stone into commercial product without losing its quality and characteristic. On the other hand, it is the case of the respondents that the lime stone, lime stone chips, lime stone lumps and crushed and grinded lime stone are different commercial commodities and, therefore, conversion of lime stone lumps into crushed and grounded lime stone involves a transformation from non-excisable go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Tariff Act, 1985. Chapter Note 2 of Chapter 25 does not equate the process of crushing as amounting to manufacture but merely enumerated the forms of products falling under the Headings Nos. 25.01, 25.03 and 25.05 in which they can be taxed. The intention of the Legislature is clearly not to equate the process of crushing as amounting to manufacture. 10.The intention of the Legislature can be further seen on a comparison of Chapter Note 2 of Chapter 25, Chapter Note 2 of Chapter 9, Chapter Note 3 of Chapter 2, Chapter Note 2 of Chapter 26, Chapter Note 6 of Chapter 2 Chapter Note 4 of Chapter 33, Chapter Note 6 of Chapter 2 and Chapter Note 2 of Chapter 83. Chapter Note 2 of Chapter 25 does not provide that the process of crushing referred to therein shall amount to manufacture, whereas in the aforesaid Chapter Notes it has been expressly provided that the process referred therein shall amount to manufacture in respect of the specified goods. The Legislature has expressly made provision where the process undergone shall amount to manufacture wherever it is intended to extend the artificial definition. On the aforesaid view, we are of the opinion that Note 2 of Chapter 25 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y used to get the lime stone crushed into particular size by supplying lime to Subash Stone Crusher, Maihar; Rakesh Stone Crusher, Katni, Vijay Stone Crusher, Maihar and Maa Sharda Stone Crusher, Baraiya and thereafter by their own crusher at Reusa. Apart from their own crusher, they are getting the lime stone crushed from M/s. Subash Stone Crusher. They were selling crushed lime stone of particular size to Durgapur Steel Plant only. It is further stated that he did not know that the crushing of lime stone falls under Heading 25.05 and attracts excise duty at 12 per cent. 13.The statement of the Law Officer of the petitioner No. 1 company clearly establishes that lime stone crushed by processing through crusher to a particular size, as per the order placed by the buyer and the buyer is supplied lime stone after it is crushed; the lime stone as it is extracted or purchased from other persons is not supplied to the buyer; it is only after it is converted to a particular size by application of mechanical process, it is supplied to the buyer. The crushing operation is meant for the purpose of supply of particular size of lime stone chips, as per the order placed by the buyer. 14.Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at : "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. 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 is 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." This decision was followed and approved in later decisions of the Supreme Court in Cement Marketing Co. of India v. Asstt. S.T. Commissioner [1980 (6) E.L.T. 295 (SC) = AIR 1980 SC 346], Union of India v. Bombay Tyre International [1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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