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1994 Supreme(SC) 1074
SUPREME COURT OF INDIA
R.M. SAHAI AND M.K. MUKHERJEE, JJ.
M/s. Grauer and Weil (India) Ltd., Appellant
Versus
Collector of Central Excise, Baroda, Respondent.
Civil Appeal No. 785 of 1986
Decided on 26-10-1994.
ANAND PRASAD, DUSHYANT A.DAVE, JOSEPH VELLAPALLY, RAJIV TYAGI, U.A.RAMA, V.K.VARMA
Headnote:
Central Excises and Salt Act, 1944 - Section 2 - Factories Act, 1948 - Section 2(m) - Central Excise Rules, 1944 - Payments of salaries - Chromic Acid is manufacturing is not factory - Officers of Division paid a surprise visit to factory premises Chromates a division and Weil (India) Ltd - Bombay appellant herein situated in found that appellants who are engaged in manufacture of Sodium falling Item of First Schedule to Act) under a valid licence had removed product on payment of Central excise duty and under gate passes for captive consumption to Chromic Acid Section situated adjoining to manufacturing premises for manufacture Chromic Acid flakes further found that those flakes falling under were manufactured with aid of power and were removed under delivery of appellants without payment duty - Officers detained drums containing Chromic Acid flakes lying in Chromic Acid section for making further enquiry into matter - On a subsequent visit Officers seized drums of Chromic Acid flakes which included drums detained earlier in fully manufactured condition weighing and valued on reasonable belief that goods were liable to confiscation as appellants were not entitled to exemption from duty under Notification goods were provisionally released to appellants on executing requisite bonds –Held, Chromic Acid Section in ground plan submitted Factories Act authorities and claimed non-factory status for it ground plan submitted to Excise authorities for approval of license for manufacture of Sodium y did not even indicate its existence circumstances when taken together a reasonable conclusion can certainly and legitimately be drawn that appellants and deliberately made -statements and suppressed material facts to avoid payment of excise duty - In or words it is not a case of simple inaction or failure on part of appellants to furnish material information lastly been contended that in any view of matter appellants could not be asked to pay penalty as breach in question flowed from bona fide belief that y were not liable to pay excise duty. In support of this contention appellants have relied upon following passage from judgment of this Court in Hindustan Steel penalty for failure to carry out a statutory obligation is result of quasi-criminal proceeding and penalty will not ordinarily be imposed unless party obliged either acted deliberately in defiance of law or was guilty conduct contumacious or dishonest or acted in conscious disregard of its obligation already found that appellants have acted in conscious disregard of statutory obligations and deliberately suppressed material facts above contention can neither be accepted nor above quoted passage pressed into service - Appeal dismissed
JUDGMENT
M. K. MUKHERJEE J. :- This appeal under Section 35L of the Central Excise and Salt Act, 1944 (Act for short) is directed against the 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 appellant 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 licence, 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 TI 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 Chromic Acid section for making further enquiry into the matter. On a subsequent visit on February 2, 1983, the Officers seized 126 drums of Chromic Acid flakes (which included the 98 drums detained earlier) in fully manufactured condition weighing 63,000 Kgs. and valued at Rs. 1,89,000/- on the reasonable belief that the goods were liable to confiscation as the appellants were not entitled to exemption from duty under Notification No. 46/81 dated March 1, 1981. The goods were provisionally released to the appellants on their executing requisite bonds.
3. In due course a notice was issued to the appellants on July 14, 1983 charging them with contravention of Rule 173F read with Rule 9(i), Rule 173B, Rule 173C, Rule 173G(2) read with Rule 52A. Rule 173F(4) read with Rule 53 of the Central Excise Rules, 1944 and they were asked to show cause why penalty should not be imposed on them, why the goods seized and subsequently released provisionally should not be confiscated and why they should not be called upon to pay duty on 1,52,950 Kgs. of Chromic Acid flakes valued at Rs. 44,95,475.00 illicitly manufactured and cleared by them during the period of September, 1981 to January, 1983.
4. On consideration of the cause shown by the appellants and the oral submissions made on their behalf the Collector made and recorded the following order on November 30, 1983:
"i) I impose a penalty of Rupees 5,00,000/- on M/s. Growel Chromates of Vapi under Rule 173Q(i) of Central Excise Rules, 1944;
ii) The goods namely "Chromic Acid flakes" weighing 6300 Kgs. contained in 126 drums valued at Rs. 1,89,000.00p, seized from their possession from Chromic Acid Section and subsequently released provisionally on execution of B 11 bond are liable to confiscation. Accordingly under Rule 173Q(1) of the C.Ex. Rules, 1944, I confiscate the same and order that the assessee shall pay a fine of Rupees 1,89,000/- in lieu of confiscation within one month of receipt of this order by them.
On redemption the confiscation goods shall be properly accounted for by them and cleared in accordance with law, if not already done.
iii) I order that M/s. Growel Chromates of Vapi shall pay the duty of excise at the appropriate leviable rate on 1,52,950 Kgs. of Chromic Acid flakes falling under Tariff Item 68, valued at Rs. 44,95,475.00 p. illicitly manufactured and removed by them without paying the duty leviable thereon, during the period from September, 1981 to January, 1983 or thereabouts, as shown in Annexure A to the show cause notice, under proviso to sub-section(1) of Section 11A of the Central Excises and Salt Act, 1944, read with Rule 9(2) of the Central Excise Rules, 1944.
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