LexM/S GRAVER AND WEIL (INDIA) LTD. versus COLLECTOR OF CENTRAL EXCISE, BARODA
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A B MIS GRAVER AND WEIL (INDIA) LTD. v. COLLECTOR OF CENTRAL EXCISE, BARODA OCTOBER 26, 1994 [R.M. SAHAI AND M.K. MUKHERJEE, JJ.] Factories Act, 1948-Section 2 (m)-Factory-Definition-Word 'premises,-Meaning-Words 'any premises including the precincts thereof -Scope of C Central Excise and Salt Act, 1944-Section 11A(J), proviso and 35 L- D E F Central Excise Rules, 1944-Rule 173 F rlw Rules 9 (I), 173 B, 173 C, 173 B(2) rlw 52A-1ssue of notice for contravention of-Case of conscious disregard of statutory obligations-Deliberate suppression of material facts to avoid payment of excise duty-Order of imposition of penalty upheld Words and Phrases: 'Factory' 'Premises' 'any premises including the precincts thereof,-Meaning of in one context of Factories Act, 1948. Appellants who were engaged in the manufacture of Sodium Bichromate 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. It was found that those flakes were manufactured with the aid of power and we.re removed under delivery challans of the appellants without payment of excise duty. The goods were confiscated by a team of Central Excise Officers holding that the appellants were not entitled to exemption from duty under Notification No. 46/81 dated March 1, 1981. A notice was issued to the appellants charging them with contravention of Rule 173 F read with Rule 9 (1), rule 173 B, Rule 173 C, Rule 173 G (2) r/w Rule 52 A, G Rule 173 F (4) r/w Rule 53 of the Central Excise .Rules, 1944 and they were asked to show cause why penalty sh.oqld not be imposed on them, i(. . why the goods seized and subsequently released provisionally should ~.. not be confiscated and why they should not be called upon to pay duty i~'·.·: · 1 •. • • ... on 1,52,950 Kgs. of Chromic Acid .flakes valued at Rs. 44.,95,475.00 · . " · . illicitly manufactured and clearcd-.~Y them during the period from . H September, 1981 to January, 1983 . . ;;f\,j,, ·. ' . ) 168 / GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE 169 The Collector, on consideration of the cause shown by the A appellants, passed on order of imposition of penalty of Rs. 5,00,000 under Rule 173 Q (1) of the Rules with order of confiscation of the goods namely 'Chromic Acid flakes'. On appeal, 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 B reduced it to Rs. 1,00,000. This appeal u/s 35 L of the Central Excise and Salt Act, 1944 was directed against the order of the Appellate Tribunal. The appellants submitted that Chromic Acid section of their premises constituted a unit different from the unit where Sodium C Bichromate was manufactured and the workers employed in that section were not more than 4, so it could not be said to be a 'factory' within the meaning of Section 2 (m) of the Factories Act. Therefore, the appellants contended that they were exempted from payment of excise duty under the Notification No. 46/81 dated March 1, 1981. The appellant further contended that even if it was accepted that the appellants' Chromic Acid Section was a factory even then, the excise authorities could raise demand of duty for only a period of six months prior to the date of issue of notice to show cause u/s 11 A (1) of D the Act but could not have recourse to the proviso thereof to claim duty beyond that period as the appellants could not be said to be guilty of E fraud, collusion, wilful mis-statement or suppression of facts. Therefore, in any view of the matter appellants could not be asked to pay penalty as the breach in question flowed from the bonafide belief that they were not liable to pay excise duty. In dealing with the above contentions, the Excise authorities F conceded that if the Chromic Acid section was not a 'factory' within the meaning of Section 2 (m) of the Factories Act the Chromic Acid manufactured by the appellant therein would not attract duty under the Notification but they asserted that the said section did constitute a factory and, therefore, the appellants were liable to pay duty under the Notification. ' G Dismissing the appeal, this Court ~ HELD : 1
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