Customs, Excise and Gold Tribunal - Bangalore
Orion Precast Private Limited, Saturn ... vs The Commissioner Of Central Excise on 4 April, 2006
Equivalent citations: 2006(109)ECC251, 2006ECR251(TRI.-BANGALORE), 2006(202)ELT305(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. All these appeals raises some common issue in law, hence they are taken up together for disposal as per law including the Revenue appeals.
2. Appeals No. E/287-288/04 filed by the assessee arises from Order-in-Original No. 13/03 dated 9.12.2003. Appeals No. E/1272/04 and E/1250/04 arising from Order-in-original No. 13 & 14/03 dated 9.12.2003 and 19.12.2003, respectively are filed by Revenue. Appeal No. E/424-425/05 arises from Order-in-Appeal No. 11 & 8/05 CE both dated 8.2.2005 denying the benefit of modvat credit filed by the assessee. Appeal No. E/624/05 arising out of OIA No. 42/2005 dated 17.5.2005 and Appeal No. E/625/05 arising from Order-in-Appeal No. 39/05 CE dated 2.5.2005 filed by the assessee. The party is aggrieved with these impugned orders against Commissioner (A)'s order setting aside the Order-in-original and allowing the Revenue appeal pertaining to classification of the item Solid Concrete Blocks and the grant of relevant benefit of the notification which are the issues involved.
3. In party's appeals No. E/287-288/04, the issues are common. The appeals are taken up together and decided by this common order. The Tribunal by their Final Order No. 1476-77/2002 dated 14.11.2002 set aside the Order-in-Original No. 9/02 dated 28.3.2002 confirming demands in respect of solid concrete blocks manufactured by the assessee and directed the Commissioner to reexamine the issue only with regard to the aspect pertaining to classification and grant the benefit of Notification No. 6/02. In Orders-in-Original No. 2/02 dated 31.1.2002 and 9/02 dated 28.3.2002 which were subject matter of appeals before the Tribunal which remanded it by Final Order No. 1476-77/2002 dated 14.11.2002 while hold that the demands cannot be confirmed for larger period and penalties were set aside. The Orders-in-Original No. 2/02 and 9/02 granting the benefit on time bars and on penalties was not appealed by the Revenue. The remand order of the Tribunal was restricted to classification issue and grant of benefit of the Notification. On denovo, the Commissioner by impugned order No. 13/03 dated 9.12.2003 while holding the classification of solid concrete blocks under sub heading No. 6807.20 of CET Act, however proceeded to confirm demands with regard to clearances made during the period 1996-97 to 1998-99 by invoking larger period under Section 11A of the Act and also proceeded to confirm penalties also. The assessee had accepted the classification of the said item under sub heading No. 6807.20 of CET Act. However, they have filed the appeals No. 287-288/04 challenging the order of the Commissioner confirming the demands for larger period and imposing penalties on the ground that the earlier orders-in-original No. 2/02 and 9/02 had clearly held that larger period was not invokable and demands had been dropped for larger period and no penalties had been imposed. The appellants contend that the Revenue did not challenge this order and the remand order of the Tribunal by Final order No. 1476-1477/02 dated 14.11.2002, which was only on the issue of classification and hence, the Commissioner proceeding beyond the terms of reference in the Tribunal's Final Order is not legal and proper. The Commissioner ought not to have re-determine the issue on time and imposed penalty.
4. We have heard both sides in these appeals and find that the order passed by the Commissioner with regard to extending larger period and imposing penalties is beyond the terms of remand order of the Tribunal. The Commissioner in the initial Order-in-Original No. 2/02 and 9/02 had dropped the proceedings on large period and had also not imposed penalties. Revenue had not challenged this order. The assessee had challenged these orders and had claimed classification under sub heading 6807.20 as against the classification held under sub heading No. 6807.90 as claimed by Revenue. This issue alone was remanded for denovo by the Tribunal by Final Order No. 1476-1477/02 dated 14.11.2002, hence, the Commissioner's proceeding beyond the terms of remand and also the remand order was only restrictive to classification. Therefore, the Commissioner having proceeded to re-decide the issue on time bar and imposing penalty is not sustainable in law. The earlier order passed by the Commissioner in No. 9/02 dated 28.3.2002 dropping the demands for larger period and not imposing penalty has not been set aside by the Tribunal and hence, this order not having been challenged by Revenue, therefore, it cannot be readjudicated by the Commissioner while passing the impugned order No. 9/02. Hence, the confirmation of demands for larger period and imposing penalty in Order-in-Original No. 13/02 dated 9.12.2003 is set aside by allowing the party's appeal No. 287-288/04.
5. The Revenue is aggrieved with Order-in-Original No. 13 and 14/2003 classifying the solid concrete blocks under sub-heading No. 6807.20 of CET and rejecting the Revenue's classification under Sub Heading 6807.90 in Appeals No. 1250/04 and 1272/04.
6. The findings recorded by the Commissioner in impugned order No. 13/02 dated 9.12.2003 on the issue of classification in Para 12-20 is noted herein below. The Revenue is aggrieved with these findings on the following grounds.
12. I have perused the technical opinion dated 22.7.2003 given by Dr. B. Venkatarama Reddy of the Indian Institute of Science, Bangalore. In order to appreciate the contents of the report in its proper perspective, I would like to discuss the relevant extracts of the opinion.
13. Building construction practices are basically grouped into three categories viz.,
(a) Cast in-situ constructions.
(b) Prefabricated constructions and
(c) Partially prefabricated constructions.
It is opined that form the structural design point of view the concrete blocks used for any type of construction should possess adequate strength and the strength of the wall element. In reply to a specific question as to whether solid concrete blocks satisfy the description of 'Blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings', it is opined as follows:
Solid Concrete Blocks belong to the category of masonry units like burnt clay bricks, hollow clay blocks, hollow concrete blocks, size stones, laterite blocks calcium silicate bricks etc. The above masonry units along with mortar can be used to construct masonry walls of a building. Masonry walls could be either load bearing or non load bearing type. Masonry units can be used for various types of constructions as mentioned below.
(a) Masonry walls of a cast in situ construction.
(b) Masonry walls of a prefabricated or partially prefabricated building. Here, the masonry unit can be used to build the wall in situ or to prefabricate wall panels, which can be later transported and assembled into a building.
It is therefore very clear from what has been stated above that solid concrete blocks which are nothing but masonry units are used in prefabricated constructions, and therefore of a kind used in prefabricated buildings.
14. The concluding para of the opinion proceeds to clarify that since the solid concrete block or the masonry unit which is a basic building block is sued both in cast in situ and prefabricated buildings, the same cannot be classified under the category of 'blocks, slabs, concrete beams and stairs of a prefabricated construction' by excluding cast in-situ construction. In other words, the opinion conclusively indicates that the solid concrete blocks can be classified under the category of "blocks, slabs, concrete beams and stairs of a prefabricated as well as cast in-situ construction.
15. The Bureau of Indian Standards in its specification for concrete masonry units (Hollow and Solid Concrete Blocks) viz., IS :2185 (Part-I) - 1979 has defined Block as follows:
A concrete masonry unit, either hollow (open or closed cavity), or solid or cellular (other than units used for bonding, such as a half block), any one of the external dimensions of which is greater than the corresponding dimension of a brick as specified in IS: 3952 - 1978, and of such size and mass as to permit it to be handled by one man. Furthermore, to avoid confusion with slabs and panels, the height of the block shall not exceed either its length or six times its width.
16. I find that the show cause notice also has relied upon the standards as laid down in the above standards to determine the definition of a Block and has acknowledged that the same standard is being followed by the manufacturer. The expert opinion also suggests that from the structural design point of view the concrete blocks used for any type of construction should possess adequate strength andt eh strength requirements can vary depending upon the magnitude of loads realized on the component of the wall element. Hence the solid concrete blocks manufactured by the assesses are of such specifications, which can be conveniently used in prefabricated constructions.
17. The assessee has also furnished clarification issued by the Torsteel Research Foundation in India, a Premier Institution wherein Dr. C.S. Viswanatha, Chief Consulting Engineer has stated that Concrete Block is a construction material of a kind that can be effectively used like any other prefabricated materials such as slabs, beams, etc., in prefabricated buildings. They have also furnished technical opinion given by the Malnad College of Engineering Consultancy Centre, which is run under the auspices of the Malnad Technical Education Society, Hassan and affiliated to the Vishweswaraiah Technological University, wherein a committee of technical experts have opined that the concrete blocks referred to by the assesses satisfy the clause "Blocks, slabs, concrete beams and stairs of the kind used in prefabricated buildings".
18. The Chapter Note No. 4 to Chapter 94 defines prefabricated buildings which means "buildings which are finished in the factory or put up as elements, cleared together, to be assembled on site, such as housing or work site accommodation, offices, schools, shops, sheds, garages or similar buildings". I am inclined to accept the expert opinion given by Dr. B.V. Venkataram Reddy, Principal Research Scientist, Indian Institute of Science in as much as the Department has obtained the same from the Indian Institute of Science and this opinion is given with reference to the samples seized from the assessee. I would also like to accept the expert opinions given by the Torsteel Research Foundation of India and the Malnad College of Engineering Consultancy Centre since they are organizations of repute and therefore hold that the solid concrete blocks manufactured by the assessee are of a kind used in the prefabricated buildings of heading No. 9406 as defined above.
19. In view of the above discussions, I am inclined to hold that the solid concrete blocks manufactured and cleared by the assessee are classifiable under Chapter sub heading 6807.20 of the Central Excise Tariff Act 1985 as "Blocks of a kind used in the prefabricated buildings of leading No. 94.06.
20. The assessee has pleaded that he is eligible for SSI exemption. I find from the records that the assessee is manufacturing the solid concrete bricks using the brand name "APCO" belong to M/s. Apco Concrete blocks and allied products, Bangalors. This has also been admitted by Shri Alfred Mathew, Managing Director of M/s. Orion Precast in his reply dated 31.12.2001 to the show cause notice issued to him. The assessee's plea that they may be allowed exemption available to SSI units under Notification No. 8/2000 dated 1.3.2000 or 9/2000 dated 1.3.2000, as they are not affixing brand name for their products is found to be contrary to facts. The records as well as the samples drawn clearly show that the assessee has affixed the said brand name on the goods. As per the aforementioned notification, exemption is not available if one affixes or uses a brand name of another person. I therefore deny the SSI benefits available in terms of the solid notification to the assessee. The case laws cited by the assessee in this regard are irrelevant as they are applicable only if the assessee does not affix any brand name on the finished goods.
7. We have heard both sides in the matter.
8. The learned DR contended that the HSN Explanatory Notes clearly brings the item under Chapter Sub Heading No. 6810.91 and therefore, the item does not have any facility or device for assembling and hence, it is to be classified only in residuary entry of 6807.90 of CET. He also referred to the advertisement materials/leaf lets/brochures and prayed for classifying the item under the resindry entry. He referred to the Apex Court judgment rendered in Excon Building Material Manufacturing Co. Pvt Ltd. v. CCE, Mumbai reported in 2005 (186) ELT 263 (SC) which has dealt with the benefit of Notification No. 64/88 CE which grants benefit to blocks, slabs, lintels, concrete beams and stairs constitute an intermediary or component of pre-fabricated buildings falling under Head No. 94.06. The Apex Court held that the benefit of Notification is available to blocks, slabs, liters concrete blocks and stairs, constitute an intermediary or component of pre-fabricated buildings. The learned DR submitted that the blocks in the present case are intermediary or components of pre-fabricated buildings and hence they cannot be classified under No. 6807.20. The learned DR relied on Aeon's Construction Product Limited v. CCE reported 2005 (184) ELT 120 (SC) wherein Apex Court noted that the assessee had not produced any evidence to show that blocks manufactured by them were of a kind used in pre-fabricated buildings. He contended that the assessee has not produced any evidence to support their case. The certificate produced by the Revenue clearly held that the assessee manufactured sold concrete blocks belong to the category of masonry units like bricks, hollow clay bricks, etc., and that it was clarified that masonry units could be used in various types of construction which includes masonry walls of casts-in-situ construction. Therefore, the classification adopted by the Commissioner is required to be set aside.
9. The learned Counsel arguing for the assessee pointed out that the judgment relied on by the learned DR in the case of Excon Building Material v. CCE (Supra) dealt with notification No. 64/88 which had the wordings blocks, slabs, lintels, concrete beams and stairs which constituted intermediary or component of pre-fabricated buildings falling under Head 94.06. He submits that the issue did not pertain to classification of the item under the two heading in dispute and the finding was in the context of the Notification then existing which had also undergone a change and Notification has a different wordings and hence, this judgment is not applicable. He also pointed out that in the case of Aeon's Construction Products Ltd., (supra) wherein the Supreme Court had noted that the assessee did not produce any evidence to show that blocks manufactured by them are of the kind used in the pre-fabricated buildings. He referred to enormous evidences produced by the assessee and which has been accepted by the Commissioner. He points out that these evidence have not been challenged by the Revenue in the ground of appeal and therefore, the finding of Commission is required to be confirmed.
10. The learned Counsel referred to the opinion given by Torsteel Research Foundation in India to the assessee who had clearly opined that concrete blocks is a construction material of a kind that can be effectively used like any other prefabricated materials such as slabs, beams, etc., in prefabricated buildings. The Malnad College of Engineering Consultancy Centre by their opinion dated 18.10.2003 also opined that building blocks made of plain cement having various modular sizes may be either solid or hollow or cellular and their components/elements used in prefabricated building. They have also stated that the items satisfy the clause "blocks, slabs, cement beams and stairs of kind used in prefabricated building". The Civil-Aid Technoclinic Pvt. Ltd. by their opinion dated 15.10.2003 have also given an opinion that the item is of a kind used in the prefabricated buildings. Struct Geotech Research Laboratories Private Limited by their opinion dated 6.10.2003 also confirmed that the blocks is of a kind used in prefabricated buildings. Reference was made to the opinion given by Mr. Balasubramanya Dattatri; Cosmic Industrial Laboratories Limited; B.G. Shirke Construction Technology Pvt. Ltd.; Nagarjuna Construction Company Ltd.; Gopalan Enterprises; and Puravankara Projects Limited. The learned Counsel pointed out that the HSN Explanatory Notes is not para materia with the CET Tariff. He contended that in the HSN Notes, building blocks and bricks were classified under 6810.11 and other articles had two headings viz., Prefabricated structural components for building or civil engineering under 6810.91 and residual under 6810.99. He pointed out that under Note 6810.91 covered prefabricated structural components for building or civil engineer such as facing panels, interior walls, floor or ceiling section etc., and not to building blocks and bricks. Therefore, the reliance of HSN Explantory Note by the Revenue is not justified. He also submitted that the ground made out by the Revenue relying on the advertising material cannot be sustained as held by the Bombay High Court in the case of Blue Star Ltd. v. UOI and Anr. Reported in 1980 ELT 280 (Bom.). He further submitted that the Revenue has relied on the opinion given by Indian Institute of Science. The Commissioner had not given right of cross examination of the Ex-party, therefore the opinion cannot be relied. He also pointed out that there was contradiction in the opinion. He pointed out that the opinion itself clearly expressed that solid concrete blocks belonging to the category of masonry units could be used for prefabricated buildings. He also pointed out that the expressed view on classification is contra to the opinion expressed. He also pointed out that an expert cannot give opinion on classification which has been deprecated in large number of judgments. He cited the following rulings.
(i) Stadfast Paper Mills v. Dr. Kohli, Former Collector of C. Ex., Baroda and Ors.
(ii) N.P. Venkataraman Iyer v. CC, Madras
(iii) CCE, Pune v. General Pharmaceutical Pvt. Ltd. Pune
(iv) Shalimar Paints Ltd. v. CCE, Calicutta
(v) Pushpanjali Floriculture Ltd. v. CC, Mumbai
11. He also submitted that the Commissioner's order denying the benefit of SSI Notification is incorrect, as the appellants had been assigned with the brand name and they were owners. He relied on Bull Works reported in 2002 (142) ELT 588 ZARA Shan Chemicals Pvt. Ltd. reported in 2000 (124) ELT 103). The learned Counsel also pointed out that they were eligible for modvat credit as claimed in Appeal No. E/424-425/04 and the denial of modvat credit is not justified. On this plea, the learned DR submitted that they had not produced documents to extend the benefit of modvat credit and hence, they are not eligible to the same in the light of the Tribunal ruling rendered in the case of Balmer Lawrie and Co. Ltd. reported in 2000 (116) ELT 364, and that of CCE v. AB Electronics Pvt. Ltd.
12. On a careful consideration of the submissions pertaining to the classification of the item, we note that the order passed by the Commissioner on this ground is legal and proper for the following reasons.
(a) The first ground taken by the Revenue is that the Explanatory Notes of HSN is required to be considered. We notice from the HSN notes that the headings are not para materia with the tariff heading in CET. The CET has got only two heading 6807.20 - Blocks, slabs, concrete beams and stairs of kind used in prefabricated buildings of Heading No. 94.06 and 6807.90, on the other hand while in HSN Explanatory Notes, it has two separate headings for building, blocks and bricks - 6810.11 and 6810.91 for prefabricated structural components for building or civil engineering. In the examples given in Heading No. 6810.91 are facing panels, interior walls, floor or ceiling sections, foundation components, pilings, tunnel sections, components for lock gates or dams, gangways, cornices. The Revenue wants to classify the solid concrete blocks under this description as HSN Explanatory note, which is not para materia. Hence, this prayer is required to be rejected.
(b) The second ground taken by the Revenue is pertaining to the claim of the assessee in the advertising material/leaflet/brochure. In the case of Blue Star (S) , it has been clearly held that for the purpose of deciding a classification, advertisements made for attracting customers can be no criteria for deciding whether duty payable under a particular tariff item or not, hence this ground is also not legal and proper.
(c) The Revenue has relied on technical opinion of Indian Institute of Science. This opinion has been opposed by the party, as the Commissioner has not granted cross examination to the appellants and furthermore the expert opinion of Indian Institute of Science has been vitiated as the certificate gives opinion on the classification and in view of large number of judgments been cited and noted supra, an expert opining on the classification of a product is to be rejected [See also Puma Ayurvedic Herbal (P) Ltd. v. CCE, Nagpur reported in 2006 (73) RLT 111 (SC)]. It is from the note of IISc. that the opinion is also in favour of the assessee. Both the grounds taken by the assessee is required to be accepted. This certificate of IISc., cannot be relied on for the reasons that the expert has not submitted himself for cross examination and also that the certificate is contradictory in nature. Inasmuch as the expert having given an opinion that the item is a prefabricated or a panel prefabricated material concludes that it cannot be of a category of blocks/slabs, concrete beams and stairs of prefabricated construction. In terms of the judgment cited by the Counsel noted supra, the technical expert cannot express opinion to guide or bind an officer as rendered in the case of Pushpa and Ors. citations (Supra). The Revenue has not made out any grounds with regard to the enormous technical literature produced by the assessee to establish that the item is of a kind used in the prefabricated buildings. Rebuttal evidence has also been produced. Therefore, the reliance on their evidence produced by the assessee is required to be upheld.
13. The learned DR relied on the judgment of Excon Construction (supra) . In this case the assessee had not produced any evidence to show that blocks manufactured by them were of a kind used in prefabricated buildings, hence on that ground the classification under Sub Heading 6807.20 was rejected. In the present case, the assessee has produced enormous evidence to show that the solid concrete blocks manufactured by them were of a kind used in the prefabricated buildings of Heading 94.06. In view of the enormous evidence produced, which is also not challenged by the Revenue by producing any rebuttal evidence and no ground being raised in the memo of appeal by Revenue, therefore, the findings given by the Commissioner to classify the item under chapter heading 6807.20 is required to be accepted. There is no merit in Revenue appeal and the same is rejected.
14. The appellants have claimed the SSI Notification and their prayer for rejecting the same has been challenged. The Commissioner has denied the benefit of SSI Notification on the ground that the assessee has affixed the brand name on the goods. The assessees have clearly produced evidence to show that the brand name has been assigned to them and therefore, the benefit cannot be denied. In this context, the assessee has relied on the judgment rendered in the case of Bull Works Enterprises (Supra); Zaharshan Chemicals (supra); CCE v. West Coast Diesel Limited. In view of these judgments, the assessee is entitled for the benefit of the SSI Notification. Therefore, the order of the Commissioner denying the benefit of SSI Notification is set aside. In so far the claim for modvat credit is concerned, it is seen that the assessee was not required to have paid the duty, as they were exempted from paying the duty, as we have held the classification of the product in assessee's favour. Therefore, the appeals E/424-425/05 is allowed and the order of Commissioner denying the benefit of SSI exemption is set aside.
15. In the result, we hold that the
(a) Solid Concrete Blocks are classifiable under Heading No. 6807.20 of the CET.
(b) Assessees are entitled for the benefit of SSI Notification.
(c) The order of the Commissioner confirming demands for larger period and imposing penalty is set aside.
(d) Assessees are entitled for the modvat credit
16. The party's appeals are E/287-288/04; E/424-425/05; E/624-625/05 are allowed and Revenue Appeals No. E/1250/04 and E/1272/04 are rejected.
(Pronounced in open Court on 4 Apr 2004)