By TIOL News Service

MUMBAI, AUG 19, 2016: DEMANDS seeking recover of CE duty on Ready Mix Concrete (RMC) manufactured by appellant was confirmed by the Commissioner but the Tribunal allowed the appeals following the decision of Larger bench in Chief Engg. Ranjit Sagar Dam - 2006-TIOL-321-CESTAT-DEL-LB.

Revenue took the matter to the Supreme Court and by order dated 19.11.2015, it was ordered thus:

"The Tribunal by way of impugned judgment has allowed the appeals of the respondent/assessee holding that ‘Ready Mix Concrete' (RMC) does not amount to ‘manufacture' and, therefore, is not liable to excise duty. This Court in M/s. Larsen & Toubro Ltd. & Anr., ECC Constructions Group v. Commissioner of Central Excise, Hyderabad, 2015 (10) SCALE 476 = 2015 (324) E.L.T. 646 (S.C.) = 2015-TIOL-236-SC-CX, otherwise holding that RMC would amount to ‘manufacture' and, therefore, liable for payment of excise duty. The Judgment of the Tribunal has to be, therefore, set aside on this ground alone.

2. We, however, find that the respondent had taken a specific plea before the Adjudicating Authority that the produce in question is not RMC but only ‘Mix Concrete' (MC). This contention was rejected by the Adjudicating Authority in Order-in-Original passed by it. The assessee had challenged those findings before the Tribunal. However, the Tribunal did not go into this aspect as it proceeded on the basis that even if it was RMC produced at site, the same shall be entitled to exemption under the requisite Notification. In view thereof, the matter needs to be remanded back to the Tribunal to decide the aforesaid factual aspect viz. whether the produce in question is RMC manufactured at site or is it MC as contended by the assessee.

3. We may record the submission of Mr. K. Radhakrishnan, learned senior counsel appearing for the appellant that the finding of the Adjudicating Authority that the produce in question was RMC has been arrived at on the basis of statements of the officials of assessee itself which were never retracted by them. That may be so, still we are of the opinion that the assessee is to be given a chance to contest the finding of the Adjudicating Authority, once such a stand is taken before the Tribunal and there is no finding thereon recorded by the Tribunal. However, we make it clear that it will always be open to the appellant/Department to justify the order passed by the Adjudicating Authority on the basis of material which is relied upon by the Adjudicating Authority including the statements of the officials of the assessee and effect thereof.

4. We, thus, allow these appeals, set aside the impugned order and remit the case back to the Tribunal to look into the matter afresh keeping in view our observations."

Consequently, the matter was heard by the CESTAT along with the appeals filed by Cyrus P. Mistry and S.Y. Karkhanis against imposition of penalty.

The appellants argued that they had not manufactured RMC and relied on the CBEC Circular No. 368/1/98-CX dated 06.01.1998.

Inasmuch as it is submitted that -

(a) The RMC should be manufactured in a plant and plant should consist of stone crushers, conveyors, vibrator screens, sand mill, central batching plant.

(b) The chemicals are added to RMC to increase the shelf life.

(c) The RMC is required to be loaded on a transit mixer for the purpose of transportation to the site of the customer.

(d) By its very nature, RMC cannot be manufactured at the site of construction and is brought from the factory of manufacturer for use in construction.

The appellant also added that since the plant installed by them was not RMC plant as described in the CBEC Circular; that there is no evidence of addition of any retarders (to increase shelf-life); there is no addition of any chemicals to the concrete; that RMC cannot be manufactured at site, the product manufactured by them could not be treated as RMC; that concrete mix manufactured at the site of construction is eligible for exemption under Notification No. 4/97-C.E. dated 01.03.1997; that while the Project Manager S.Y. Karkhanis had admitted in his statement that the product manufactured by them is ready mix concrete but he has backed out during cross-examination; that the entire demand is beyond normal period of limitation; no intention to evade duty as there was doubt regarding the taxability on RMC and its eligibility to exemption; Continental Foundation Jt. Venture - 2007-TIOL-152-SC-CX relied upon.

The AR relied on the CBEC Circular No. 315/31/97-CX dated 23.05.1997 to assert that ready mix concrete even if manufactured at the site of construction is liable to duty. Reliance is placed on the decision in the case of Larsen & Toubro Ltd. - 2015-TIOL-236-SC-CX where it is held that the benefit of Notification No. 4/97-C.E. dated 01.03.1997 is not applicable for ready mix concrete but only to concrete mix.

After considering the submissions made by both sides, the Bench observed -

++ In the instant case, the mix manufactured by the appellant is specially made for Mahindra & Mahindra and is manufactured with precision of a high standard and is delivered to the customer at his site. Thus prima facie it fulfills the criteria identified by the Hon'ble Supreme Court in its decision. In the instant case the appellants are also adding plasticizers to improve the quality of the concrete. In view of above it is held that the product manufactured by the appellants is RMC and the appellants are not entitled under Notification No. 4/97 dated 01.03.1997.

++ Insofar as the issue of limitation is concerned the decision of the Hon'ble Supreme Court in the case of Continental Foundation Jt. Venture (supra) is squarely on this issue. …In fact, the period as well as the issue involved is roughly the same. Relying upon the above said decision of the Hon'ble Supreme Court we hold that extended period of limitation cannot be invoked in this case.

In fine, the appeal was allowed and the demand and penalty against the assessee was set aside. Consequently, the penalty against Cyrus P. Mistry and S.Y. Karkhanis was also set aside.

(See 2016-TIOL-2126-CESTAT-MUM)