A.K.Mookherjee, J. - (1.) Petitioners carry on the business of manufacturing various kinds of confectionery in their factory at Marhowrah in Bihar and sells its products under the trade name "Morton". In course of manufacture of confectionery, various small bits and dusts of assorted sorts fallen out into the trays and on the floor, the accumulate of which are known as "scraps". The said scrap is, therefore, collected and sold at a nominal price of about 1.10 per Kg. (as against the average price of about 7.50 per Kg. for the actual confectionery) to the various small buyers, who usually melt the same to extract sugar for the purpose of preparing cheap syrups used in preparation of lowgrade sweetmeats. The said scrap is not known or sold in the market as confectionery" nor is the same covered by any of the items in the Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the "Act").
(2.) The said scrap is not edible or sold for consumption as such. Between the periods of 19th April, 1968 and 30th June, 1971 the petitioners cleared a total quantity of about 91,40,000 Kgs. of the said scraps which were accumulated in the course of manufacture. According to petitioners, the said scrap is non-excisable under the Act. Without paying the duty and with the full knowledge and approval of the respondents, the Scraps were removed from the petitioners' factory. In the relevant returns for the relevant period, the petitioners duly showed the removal of the said scrap along with the said returns, copies of the Gate passes relating to the "scraps" were sent. After considering the said returns, the said Gate passes and other documents accompanying them, assessments were finalised. The returns submitted by the petitioners were accepted and no objection was raised about the payment of any excise duty on the said scraps as the same were not liable to any duty. Three notices of demand for duty all dated 30-11-71 for a total of Rs. 41,312.24 were issued by the Superintendent, Central Excise, S R.P. Range to the petitioners under Rule 9(2) of the Central Excise Rules in respect of the confectionery "scraps" removed by the petitioners during the period from 19-4-68 to 30-6-71. On or about the 7th February, 1971, the petitioner No. 1 made a representation to the respondent No. 2 against the said demands. By an order dated 3rd July, 1971, the respondent No. 2 informed the petitioner that he had no reasons to withdraw the said three demands. The said respondent No. 2 also held that the impugned demands had been issued under Rule 10A of the Central Excise Rules, 1944 and not under Rule 9(2) thereof. On or about 14th September, 1972, the petitioners preferred an appeal to the respondent No. 3 against the said order of the respondent No. 2 dated 3rd July, 1972. The hearing of the said appeal was concluded on the 25th November, 1972. On or about 21st December, 1972, the petitioners were served with an order passed by respondent No. 3 dated 8th December, 1972 wherein the Collector held that the confectionery in question was liable to excises under Tariff Item 1A of the First Schedule to the Central Excises and Salt Act.
(3.) Mr Bajoria, appearing on behalf of the petitioners, contended that the scrap obtained in course of manufacture of confectionery is not "confec tionery" within the meaning of item 1A of the First Schedule to the Act or any other items thereof. The findings of the Appellate Collector that the scraps were nothing but parts of boiled sweets in various forms, irregular shapes and sized and those were made for marketing purpose for the sole object of consumption by human being are perverse and without any evidence : The tariff Item 1A reads as follows :- "Confectionery Cocoa powder and chocolates in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, namely (1) Boiled sweets, toffees, caramels candies, nuts (including almonds) and fruit kernels coated with sweetening agent, and chewing gums".;