Holding

The Chromic Acid section is a factory under Section 2(m) of the Factories Act, and the appellant’s wilful mis‑statement and suppression of facts justify invoking the proviso to Section 11A, so the penalty stands and the appeal is dismissed.

Summary

Mis. Graver and Weil (India) Ltd. manufactured sodium bichromate and transferred it to an adjoining Chromic Acid section where chromic‑acid flakes were produced using power. The flakes were removed without payment of excise duty and were seized. The Collector imposed a penalty and ordered confiscation; the Tribunal upheld duty, reduced the penalty and set aside confiscation. The appellant argued that the Chromic Acid section was not a "factory" under Section 2(m) of the Factories Act, claiming exemption under Notification 46/81, and contended that the excise authorities could not invoke the proviso to Section 11A beyond six months absent fraud. The Supreme Court held that the definition of "factory" includes any premises with its precincts, and since ten or more workers were employed and power‑driven manufacturing occurred on the combined premises, the Chromic Acid section was a factory. The Court also found that the appellant wilfully mis‑stated and suppressed material facts, satisfying the criteria for invoking the proviso to Section 11A, and therefore upheld the penalty. The appeal was dismissed.

Issues considered

The Chromic Acid section whether qualifies as a ‘factory’ within the meaning of Section 2(m) of the Factories Act, 1948 for the purpose of Notification 46/81.
Whether the excise authorities could invoke the proviso to Section 11A of the Central Excise and Salt Act, 1944 to demand duty beyond six months in the absence of fraud, collusion, wilful mis‑statement or suppression of facts.
Whether a penalty can be imposed when the appellant claims a bonafide belief of exemption.

Legislation cited

Central Excise and Salt Act, 1944s. 11A(1), s. 35L
Central Excise Rules, 1944s. 173B, s. 173C, s. 173F, s. 173F(4), s. 173G(2), s. 173Q(1), s. 52A, s. 53, s. 9(1)
Factories Act, 1948s. 2(m)

Subjects

Excise dutyFactory definitionFactories ActNotification exemptionPenaltyWilful mis‑statementSuppression of factsCentral ExciseConfiscationCaptive consumption

Judgment

A MIS GRAVER AND WEIL (INDIA) LTD.
v.
COLLECTOR OF CENTRAL EXCISE, BARODA

OCTOBER 26, 1994

B [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-
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 ofstatutory obligations-Deliberate suppression of material facts
to avoid payment ofexcise duty-Order of imposition ofpenalty upheld

D Words and Phrases: 'Factory' 'Premises' 'any premises including the
precincts thereof,-Meaning of in one context ofFactories 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
E 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.
F 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
~.. 1 not be confiscated and why they should not be called upon to pay duty
i~'·.·:
· •. • • ... 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.
D
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
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 : 1.1. 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 H
170 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R.

A 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
surrounding place. The words "any premises including the precincts
thereor' under Section 2 (m) of the Factories Act are therefore wide
B enough to include all buildings with its surroundings which form part
of one unit. If, therefore, in such an area ten or more workers are
working and in any part thereof manufacturing process is being carried
on with the aid of power it would be a factory within the meaning of
Section 2 (m). (I 76-A-C)

c 1.2. The question as to whether in a given case the requirements for
invoking the proviso to Section 11 A(l) of the Central Excises and Salt
Act, are fulfilled or not is one of fact. In the facts and circumstances of
the instant case, a reasonable conclusion could certainly and
legitimately be drawn that the appellants wilfully and deliberately
made mistatements and suppressed material facts to avoid payment of
D excise duty. It was not a case of simple inaction or failure on the part of
the appellants to furnish material information. (177-F, 178-F)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 785 of I 986.

From the Order dated 7.6.85 of the Customs Excise and Gold (Control)
E Appellate Tribunal, New Delhi in Order No. C-44 I of I 985.

Dushyant Dave, U.A. Rana, Rajiv Tyagi and Anant Prasad for Gagrat
and Co., for the Appellant.

Joseph Vellapally and V.K. Verma forthe Respondent.
F
The Judgment of the Court was delivered by.

M.K; MUKHERJEE, J. This appeal under Section 35 L of the Central
Excise and Salt Act, I 944 ('Act' for short) is directed against the order
•.
dated June 7, 1985 passed by the Customs, Excise and Gold (Control)
G 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.

On January 30, 1983 a team of Central Excise (Preventive Otlicers of
Bulsar Division paid a surprise yisit to the factory premises (}f Mis. Grovel
H Chromates, a division of Mis. Grauer and Weil (India) Ltd., Bombay, the
GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE [MUKHERJEE, J.) 171

appellants herein, situated in Plot No. 407, G.I.D.C., Vapi. They found that A
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 B
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 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 C
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.
D
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 (1), Rule
173 B, Rule 173 C, Rule 173 G (2) read with Rule 52 A, Rule 173 F (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 E
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 from September, 1981 to January, 1983.

On consideration of the cause shown by the appellants and the oral F
submissions made on their behalf the Collector made and recorded the
following order on November 30, 1983 :

"(i) I impose a penalty of Rs. 5,00,000 on Mis. Growel
Chromates of Vapi under Rule 173 Q( 1) of Central Excise
Rules, 1944; G
(ii) The goods namely "Chromic Acid flakes" weighing
6300 kgs. contained in 126 drums valued at Rs. 1,89,000.00
P. 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 H
172 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R.

A 173 Q(l) of the Central Excise Rules, 1944, I confiscate the
same and order that the assessee shall pay a fine of Rs.
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
B accounted for by them and cleared in accordance with law,
if not already done.

(iii) I order that Mis. 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
c Item 68, valued at Rs. 44,95,475.00P. illicitly manufactured
and removed by them without paying the duty Ieviable
thereon, during the period from September, 1981 to
January, 1983 or thereabouts, as shown in Annexure 'A' to
the show cause notice, under the proviso to sub-section (i)
of Section 11 A of the Central Excises and Salt Act, 1944,
D read with Rule 9 (2) of the Central Excise Rules, 1944."

Aggrieved by the above order the appellants filed an appeal before· the
Tribunal. The Tribunal while upholding the order of the Collector directing
payment or excise duty, set aside the order of confiscation and imposition
of fine in lieu thereof. The Tribunal also upheld the order of imposition of
E penalty but reduced it to Rs. 1,00,000. Hence this appeal.

To appreciate the contentions of the appellants, it will be profitable l}-t
this stage to refer to Notification No. 46/81 dated March 1, 1981, which
reads thus:

F "In exercise of the powers conferred by sub-rule (i) 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 l st March, 1979, the Central Government
hereby exempts all goods, falling under Item No. 68 of the
G
first Schedule to the Central Excises and Salt Act, 1944 (I
of 1944), other than goods manufactured in a factory, from
the whole of the duty of excise leviable thereon,
Explanation: in this notification, the expression "factory"
has the meaning assigned to it in clause (m) of section 2 of
H the Factories Act, 1948 (63of1948).
GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE [MUKHERJEE, J.] 173

This notification shall come into force with effect from the A
1st day of April, 1981."

and Section 2 (m) of the Factories Act, 1948 which, so far as it is
relevant for our present purposes, reads as under :

"(m) "factory" means any premises including the precincts B
thereof -

(i) whereon ten or more workers are working, or were
working on any day of the preceding twelve months, and in
any part of which a manufacturing process is being carried
on with the aid of power, or is ordinarily so carried on, or C
(ii) whereon twenty or more workers are working, or were
working on any day of the preceding twelve months, and in
any part of which a manufacturing process is being carried
on without the aid of power, or is ordinarily so carried on -
D

The first ground that was unsuccessfully canvassed by the appellants
before the Collector and ·the Tribunal, and which has been re-agitated E
before us, is that Chromic Acid section of their premises constitute a unit
different from the unit where Sodium Bichromate is manufactured and as,
admittedly, the workers employed in that section are not more than 4 it
cannot be said to be a 'factory within the meaning of Section 2 (m) of the
Factories Act. That necessarily means, the appellants have contended, that
they were exempted from payment of excise duty under the above quoted F
Notification.

In dealing with the above contention the Excise authorities 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 above Notification but G
they asserted that the said section did constitute a factory and, therefore, the
appellants were liable to pay duty under the Notification.

On perusal and appraisal of the materials placed before him, the
Collector rejected the above submission of the appellants with the following
&~: H
174 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R.

A "In this regard, reference to 24th Annual Report for the year
1981 ofM/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
B at Vapi, in the district of Valsad, Gujarat. The plan so
acquired is designed for annual cap~city to manufacture the
following products :-

(I) Chromic Acid 730 Tons

c (2) Sodium Bichromate 2190 Tons

(3) Yellow Sodium Sulphate 1314 Tons.

From the director's report it is quite clear that the entire
plan of Mis. Growel Chromates Pvt. Ltd., including
D Chromic Acid Section formed the division of Grauer and
Weil (India) Ltd., Bombay, in the name of Mis. Growel
Chromates, or merger. Oil the other hand, while applying
for L4 licenses for manufacture of "Sodium and Potassium
Dichromate" falling under T.I. 14 AA on 2.12.81 and for
"Yellow Sodium Sulphate" falling under T.1.68 on 18.1.82,
E in the ground plans produced therewith, the assessee has
safely avoided to show their premises demarcated as
"Chromic Acid" Section, though the same premises is
situated in the same plot bearing No. 407.

The facts. discussed as above clearly bring out: that the
F assessee has made a wrongful attempt to get considered
"Chromic Acid" section as a separate premises/entity
entitled for exemption under Notification No. 46 dated
1.3.81 as amended, as not governed by Section 2 (m) of the
Factories Act, 1948.

G It has also not been disputed by the assessee, that their
"Chromic Acid" Section is situated in the same plot No.
407, where their another section for manufacture of
"Sodium Bichromate" is situated. It is also an admitted fact
that there is common connection for supply of water and
electricity to both the sections are borne by the assessee
H themselves. It is further found that the assessee is also silent
GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE [MUKHERJEE, J.] 175

on the allegations that the payments of salaries to the staff A
working in "Chromic Acid" Section is made by themselves,
i.e. the assessee, accounts for chromic acid flakes
manufactured and cleared are maintained on the stock-
register by the store keeper alongwith accounts of other
items at the assessee-firm, the main raw-material viz.,
"Sodium Bichormate" manufactured by the assessee in their B
"Sodium Bichromate" Section is also supplied/issued to
Chromic Acid Section by showing removals as for "captive
consumption" or as "issued to Chromic Acid Section" in the
gate passes issued for "Sodium Bichromate" by the
assessee-firm, finished product that is "Chromic Acid
flakes" is also removed under the delivery challans of the C
assessee and bills/invoices are also issued for such flakes
under the name of the assessee i.e. Mis. Growel Chromates,
a division of Mis. Grauer and Weil (India) Ltd., Vapi.

It is further found that the material requisition book is
maintained in the name of the assessee-firm, under which D
the raw-material (Sodium Bichromate) is showm as
supplied to Chromic Acid section as one of the department
of the assessee-firm. Besides, confirmation of buyers orders
in respect of "Chromic Acid flakes" is also given in the
name of the assessee-firm i.e. Mis. Growel Chromates (a E
division of Mis Grauer and Weil (India) Ltd.,

The Tribunal also in its tum, re-appraised the relevant materials and
concurred with the finding of the Collector with the following observations:

"Here, the appellants were engaged in the manufacture of F
sodium bichromate, a vital input for manufacture of
chromic acid and using it as such. 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 G
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."
H
176 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R.

A 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
B 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 which form part of one unit. If therefore
in such an area ten or more workers are working and in any part thereof
manufacturing process is being carried on with the aid of power it would be
c a factory' within the meaning of Section 2 (m).

Since both the Collector and the Tribunal have recorded their
respective findings as quoted above, taking into consideration all relevant
facts and relevant factors in the light of the above definition of factory, no
exception can be taken to the same. The first contention of the appellants
D therefore fails.

The next contention that was raised on their behalf - and did not find
favour with the authorities below - is· that even it is accepted that the
appellants Chromic Acid Section is a factory still then, the excise
authorities could raise demand of duty for only a period of six months prior
/ E
to the date of issue of notice to show cause under Section 11 A(l) of the
Act but could not take recourse to the proviso thereof to claim duty beyond
that period as the appellants cannot be said to be guilty of fraud, collusion,
wilful mis-statement or suppression of facts. The appellants have urged,
relying upon the following contents of their letter dated September I 9, 1981
F addressed to the Excise authorities :

"Further to our Declaration dated 15.4.8 I we have to inform
you that the premises where Chromic Acid is manufacturing
is not a factory within the meaning of Section 2 (m) of
Factories Act, I 948. This premises is completely
G seggragated and the goods manufactured therein are wholly
exempted from the payment of duty, by virtue of
Notification No. 46/81 dated l.3.81, as amended by
Notification No. 92/81dated1.4.81."

that they honestly believed that their Chromic Acid Section is not a
H factory and on such belief did not pay excise duty on the flakes
GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE [MUKHERJEE, J.] 177

manufactured therein till the Excise authorities held otherwise. According A
to the appellants, the above contents of the letter not only prove their
bonafides but negate the allegations of fraud, collusion, wilful mis-
statement or suppression of facts also. To oring home their above
contention the appellants have relied upon the following passage from the
judgment of this Court in Collector of Central Excise v. Chemphar Drugs
and Liniments, (1989) 40 ELT 276. B
"In order to make the demand for duty sustainable beyond a
period of six months and up to a period of 5 years in view
of the proviso to sub-section. l lA 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 C
by reasons of either fraud or collusion or wilful
misstatement or suppression of facts or contravantion 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 D
information when the manufacturer knew otherwise, is
required before it is saddled with any liability, before the
period ofsix months. Whether in a particular set of facts and
circumstances there was any fraud or collusion or wilful
misstatement or suppression or contravention of any
provision of any Act, is a question of fact depending upon E
the facts and ciFcumstances of a particular case."
(emphasis supplied)

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 F
fulfilled or not is one of fact. It has therefore to be ascertained whether in
the set of facts and circumstances of the instant case, the Collector and
Tribunal were justified in concluding that the appellant was guilty of wilful
mis-statement and suppression of facts. On perusal of the record we find
that in arriving at the above conclusion the Collector and the Tribunal relied
upon the following facts and ci_rcumstances :- G

(i) the reference to the declaration dated April 15, 1981 by the
appellants in their letter dated September 19, 1981 was incorrect and
misleading inasmuch as the said declaration related to Mis. Growel
Chromates ·Pvt. Ltd. and was filed for availing exemption under
Notification No. 105/80 dated June 19, 1980, which pertained to factories H
178 SUPREME COURT REPORTS [1994] SUPP. 5 S.C.R.

A wherein the total investment on plant and machinery was not over 10 lakhs,
and had no reference or relevance to Notification No. 46/81 dated March 1,
1981;

(ii) the copy of the prescribed form of the above declaration dated
April 15, 1981, which was filed in the impugned proceeding indicates that,
B against the column "reference to the notification under which exemption
from duty is claimed" is the remark "105/80 dated 19.6.80; Not as 92/81
(not falling under .Factories Act having less than 10 workers)" but in the
original of the declaration form the words "Not No. 92/81 (not falling under
Factories Act having less than 10 workers)" are significantly missing;

C (iii) the claim of the appellants that the Factories Act authorities had on
February 9, 1982 approved their lay out plan wherein the Chromic Acid
Section has been described as "premises which do not come under Section
2 (m) of the "Factories Act", was unfounded for it had not been signed by a
duly empowered officer administering the Factories Act;

D (iv) the statement of non-factory status of the Chromic Acid Section in
the letter dated September 19, 1981 was a conclusion drawn without any
factual basis for the same, for, on the own showing of the appellants, the
endorsement regarding the "non-factory" status of the said section was
made for the first time on or around February 9, 1982; and

E (v) thou_gh the appellants showed the Chromic Acid Section in the
ground plan submitted to the Factories Act authorities and claimed 'non-
factory' status for it, in the ground plan submitted to the Excise authorities
for approval of license for manufacture of 'Sodium Bichromate' they did
not even indicate its existence.

F In our opinion from the above facts and circumstances when taken
together, a reasonable conclusion can certainly and legitimately be drawn
that the appellants wilfully and deliberately made misstatements 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
fumfsh material inform.ation.
G
rt 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 bonafide 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 Hind~stan Steel Ltd v. State of
H Orissa, (1978) EL T J 159.
GRAVER AND WEIL (I) LTD. v. COLLECTOR C. EXCISE [MUKHERJEE, J.] 179

"An Order imposing penalty for failure to carry out a 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."
B
Since we have already found that the appellants have acted in
conscious disregard of their statutory obligations and deliberately
suppressed material facts the above contention can neither be accepted nor
the above quoted passage pressed into service.

In the result the appeal fails and the same is hereby dismissed. C
However, there will be1no order as to costs.

A.G. Appeal dismissed.