KALINGA CEMENT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE order of the Additional Collector, Central Excise and Customs dated 31 3 1992 annexed as Annexure 1 levying duty on 16,143.138 MX of Limestone on a finding that the said limestones was crushed and made to small pieces and was thereafter used in the manufacture of cement and as such dutiable under Heading 25.05 of the Central Excise Tariff Act, 1985, is being impugned in this writ application essentially on the ground that the order in question has been passed on an obvious error of record which has vitiated the ultimate conclusion and as such is not sustainable in law.

(2.) DURING the period 20 3 1990 to 16 9 1990 admittedly duty is leviable on manufacture of limestone in terms of Section 2(f) of the Central Excises and Salt Act, 1944 read with Note 2 of Chapter 25 of the Central Excise Tariff Act. The competent authority issued notice to petitioner No. 1 company alleging that the petitioner has manufactured limestone during the aforesaid period without obtaining Central Excise Licence and utilised the same in contravention of the provisions of the Central Excise Rules, 1944, and evaded payment of Central Excise Duty and therefore, Central Excise Duty is recoverable under Rule 9(2) of the Central Excise Rules read with proviso to Section 11A(1) of the Central Excises and Salt Act. The petitioner filed its show cause stating therein that it has received Limestone from Mines after being crushed into small shapeless masses inside the mines which small pieces have been mixed with other inputs like Silica, Alumina and Iron Oxide for converting the same into Cement Clinker. It was also categorically averred in the show cause that limestone is neither crushed or manufactured by the petitioner inside the factory premises and consequently no manufacturing process is involved within the meaning of Section 2(f) of the Act and there has been no violation of the provisions of the Act as alleged. The Learned Additional Collector by the impugned order came to the conclusion that there has been crushing of limestone in the factory premises which amounts to manufacture in terms of Section 2(f) of the Act and this conclusion is based on the ground that M/s. Kalinga Cement Limited did not deny the allegation that limestone has been crushed in their factory. The petitioner therefore assails the conclusion of the learned Additional Collector on the ground that he has never applied his mind to the positive case of the petitioner which has been narrated by himself while narrating the facts and such non application of mind vitiates the ultimate conclusion.

(3.) IN view of the rival stands of the parties two questions really arise for our consideration :