Custom, Excise & Service Tax Tribunal
Rajkot vs Reliance Industries Limited on 7 March, 2022
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
EXCISE Appeal No.10155 of 2020
Excise Cross-Objection (CO) No.10453 of 2020
(Arising out of OIO-RAJ-EXCUS-000-COM-04-19-20dated 23/10/2019 passed by
Commissioner of Central Excise, Customs and Service Tax-RAJKOT)
C.C.E. & S.T.-RAJKOT ......Appellant
Central Excise Bhavan,
Race Course Ring Road...Income Tax Office,
Rajkot,Gujarat-360001
VERSUS
RELIANCE INDUSTRIES LIMITED .........Respondent
Reliance Greens Village: Meghpar/ Padana, Taluka: Lalpur Jamnagar, Gujarat WITH EXCISE Appeal No.10173 of 2020 (Arising out of OIO-RAJ-EXCUS-000-COM-04-19-20 dated 23/10/2019 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT) RELIANCE INDUSTRIES LIMITED ......Appellant Cabin No.18, 5c, 1st Floor, Reliance Corporate Park, Ghansoli Mumbai, Maharashtra VERSUS C.C.E. & S.T.-RAJKOT .........Respondent Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot,Gujarat-360001 APPEARANCE:
Shri T. G. Rathod, Additional Commissioner (AR) for the Appellant Shri. Vishal Agrawal & Shri. Akshit Malhotra, Advocates for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/ 10221-10222 /2022 DATE OF HEARING: 14.09.2021 DATE OF DECISION: 07.03.2022 RAMESH NAIR The brief facts of the case are that M/s. Reliance Industries Ltd.(hereinafter referred to as „assessee‟) are engaged in the manufacture of excisable goods such as High Speed Diesel, Motor Spirit,
2|Page E/10155,10173/2020 Naphtha, Pet-coke, Gas Oil, Ready Mix Concrete (RMC), etc. falling under CETSH 27101930, 27101219, 27101290, 27131100, 27101990 and 38245010 of the First Schedule to the Central Excise Tariff Act, 1985. During the course of audit of the records maintained by the assessee, the audit officers of the Department found that the appellant had manufactured „Ready Mix Concrete‟ (RMC) during the period from 2014- 15 to 2017-18 (upto June, 2017), used some of the quantity captively without payment of Central Excise Duty and also cleared some quantity for home consumption on payment of Central Excise Duty. On further verification, it was found that the appellant had installed RMC plant for manufacture of Ready Mix Concrete (RMC) within the construction site for manufacture of „Ready Mix Concrete‟. They were asked to produce the details of Ready Mix Concrete (RMC) manufactured and its clearance during the period April, 2014 to 2017. They submitted statements of captive consumption/dispatch details of RMC for the year 2015-16 and 2016-17 which showed clearance of Ready Mix Concrete manufactured and consumed captively as well as sold to other customers. On detail data provided by the assessee, it was found that they did not pay Central Excise Duty on RMC cleared for captive consumption during the period April, 2014 to September, 2015 and April, 2016 to June, 2017 accordingly, a Show Cause Notice dated 15.4.2019 was issued wherein, it was contended that the appellant have wrongly availed the benefit of Notification No.12/2012-CE dated 17.03.2012 and Notification No.12/2016-CE dated 01.03.2016 on the quantity of RMC manufactured and cleared by them for captive consumption. The Show Cause Notice also relied upon the CBEC Circular No.315/37/97-CX dated 23.05.1997 wherein, it was clarified that Concrete Mix and Ready Mix Concrete are two separate and distinguishable manufactured goods, the exemption was specifically given to the goods namely concrete mix only. It was contended that the ready mix concrete manufactured and cleared captively is different from concrete mix hence, the exemption is not available accordingly, it was proposed to demand the excise duty on Ready Mix Concrete along with interest and also proposed to impose penalty. The show cause notice invoked extended period of limitation as per the proviso to Section 11A.
1.1 The adjudicating authority passed the adjudication order dated 23.10.2019 which is impugned herein. By the said Order, the demand of Rs.41,74,42,183/- was confirmed under Section 11A of the Central Excise
3|Page E/10155,10173/2020 Act, 1944 however, demand of Rs.8,31,68,920/- was dropped by extending the benefit of exemption notification No.12/2016-CE. The impugned order also demanded interest under Section 11AA and also imposed penalty of Rs.41,74,42,183/- under Section 11AC of the Central Excise Act, 1944.
1.2 Being aggrieved by the said Order-In-Original, the assessee filed Appeal No. E/10173/2020-DB against the confirmation of demand, interest and corresponding penalty. The revenue also filed an Appeal No. E/10155/2020 against the dropping of demand of Rs.8,31,68,920/-. The assessee M/s. Reliance Industries Ltd. also filed Cross Objection No. E/CO/10453/2020 in department‟s appeal.
02. Shri Vishal Agrawal, learned counsel along with Shri Akshit Malhotra, Advocate appeared on behalf of the assessee. He submits that the entire demand is beyond normal period and the adjudicating authority has invoked the extended period of limitation. He submits that there is no suppression of fact on the part of the assessee therefore, the entire demand is not sustainable on limitation itself. He submits that the assessee declared the description of the RMC manufactured in its invoice and in ER1 returns as „Concrete Mix/Ready Mix Concrete‟ and also declared the claim ofexemption provided under Notification No.12/2012-
CE dated 17.3.2012. He submits that during the relevant period viz. April, 2014 to September, 2015 the settled legal position was that RMC manufactured at Site and consumed for construction at such site was eligible for exemption from payment of Excise Duty as held by Larger Bench of this Tribunal in the case of CHIEF ENGG. RANJIT SAGAR DAM Vs. CCE- 2006 (198) ELT 503 (Tri.-LB), the said order was thereafter confirmed by the Hon‟ble Punjab & Haryana High Court vide their judgment reported in 2007 (217) ELT 345. Even the Hon‟ble Supreme Court in the case of CCE Vs. SIMPLEX INFRASTRUCTURES LTD. reported in 2008 (225) 338 (SC). Shri Vishal Agrawal, learned counsel taking support of the above judgments submits that when Circular dated 23.05.1997, 06.01.1998 and 20.11.2001 had been eclipsed from their operation, assessee could not have been denied exemption on the basis of the circulars.
2.1 Without prejudice to his above submission, he further submits that it was only vide judgment dated 16.10.2015 of the Hon‟ble Supreme Court in the case of LARSEN & TOUBRO LTD. Vs. CCE- 2015 (324) ELT
4|Page E/10155,10173/2020 646 (SC) that the exemption under Notification No.4/97-CE, which is identically worded to Sr. No.144 of Notification No.12/2012-CE was held to be inapplicable to RMC. It is settled law that any judgment passed by the court holds the field till the time it is overruled or set aside or stayed. In other words, the overruling of a judgment will only have a prospective effect. In view thereof, in the instant case as well, the judgment of the Apex Court in the case of SIMPLEX (Supra) as also the judgment of the Hon‟ble Punjab & Haryana High Court in the case of RANJIT SAGAR DAM (supra) will hold the field and would be applicable till the judgment of LARSEN AND TOUBRO (supra) was passed by the Hon‟ble Supreme Court being dated 16.10.2015. Thus, no demand of excise duty could have been confirmed against the assessee for the period April, 2014 to September, 2015, being the period prior to the passing of the judgment in the case of LARSEN AND TOUBRO (supra). Reliance in this regard was placed on the order of this tribunal in the case of HINDUSTAN PETROLEUM CORPORATION LTD. Vs. CCE, 2013 (289) ELT 59 (Tri.-Bang).
2.2 Without prejudice to his above submission, he further submits that the adjudicating authority has erred in confirming the demand by invoking the extended period of limitation in the instant case. The adjudicating authority ought to have appreciated that the demand is completely barred by limitation as there was no willful suppression and misstatement of facts on assessee‟s part. The entire demand raised in the show cause notice has been computed with reference to the figures stated in the ER-1 Returns filed by the assessee. This itself shows all the disclosures in its ER-1 Returns accordingly, there can, by no stretch of imagination, be a case for invoking the extended period of limitation. He submits that ER-1 returns categorically discloses that it was manufacturing and clearing of product nomenclated as „Concrete Mix/Ready Mix Concrete‟. In addition, it was also disclosed that the said product was being cleared under exemption available at Sl.No.144 of the Notification No.12/2012-CE dated 17.03.2012 (as amended). The ER-1 also contained the 8 digit Tariff classification namely 38245010 which applies to Concrete ready to use known as RMC. The said classification specifically covers only RMC. Even the invoices issued by the assessee contain the same description and Tariff Entry. It is thus clear that the department was made fully aware of the fact (i) the product being manufactured and cleared was RMC (ii) the exemption being claimed. In view of such explicit disclosure, the adjudicating authority confirmed
5|Page E/10155,10173/2020 demand by invoking the extended period of limitation is untenable. He submits that the finding of the adjudicating authority that assessee had willfully mis-declared the goods as „Concrete Mix/Ready Mix Concrete‟ in the returns to invoke the extended period of limitation is concerned. He submits that the same is bereft of any merits. There has been no willful mis-declaration/misstatement on assessee‟s part. It is his submission that the description was based on the existing settled position in law (prior to the judgment of LARSEN AND TOUBRO) that RMC is nothing but a type of Concrete Mix. Further the usage of „/‟ also explains that assessee considered RMC as a type of Concrete Mix. Had the department any doubts, it was open to them while perusing the ER-1 Returns to seek clarification qua the same, while they didn‟t. Therefore, now it is impermissible on their part to invoke the extended period of limitation. He further submits that in the light of the order of Hon‟ble Tribunal in the case of RANJIT SAGAR DAM (supra), it was held that RMC is eligible for exemption. This view also fortified by the Hon‟ble Punjab and Haryana High Court thereafter. Further, the fact that this view was reversed by the Hon‟ble Supreme Court in the case of LARSEN AND TOUBRO (supra) shows that there was no scope for entertaining a doubt about the view to be taken in the instant matter. Accordingly, the assessee cannot be said to be guilty of any willful suppression or willful misstatement of facts with any intention to evade any duty. In support, he placed reliance on the following judgments:-
CONTINENTAL FOUNDATION JOINT VENTURE Vs. CCE- 2007 (216) ELT 177 (SC) MENTHA AND ALLIED PRODUCTS- 2004 (167) ELT 494 (SC) JAIPRAKASH INDUSTRIES- 2002 (146) ELT 481 (SC) NAGARJUN CONSTRUCTION CO. LTD. Vs. CGST, BHOPAL-
2019-TIOL-667-CESTAT-Del.
SHAPRROJI PALLONJI & CO. LTD. Vs. CCE- 2016 (344) ELT 1132 (Tri.-Mum) 2.3 He further submits that the assessee was subject to regular departmental audit, the audit at the previous occasion after scrutinizing the assessee‟s records including the ER-1 Returns, had not raised any issue on its admissibility to exemption under Sl.No. 144 of Notification No.12/2012-CE, for this reason also the invocation of extended period of limitation is completely untenable. The assessee‟s record for the period
6|Page E/10155,10173/2020 2011-12 to 2014-15 had been audited by Department in July, 2015 wherein, no objection was raised about the assessee‟s claim to exemption which is under dispute. Even, in the meeting held on 07.01.2016 (post the judgment of LARSEN AND TOUBRO) by the Monthly Monitoring Committee, no objection was raised about the exemption on RMC (captively consumed) therefore, the invocation of extended period of limitation is untenable.
2.4 Without prejudice to his above submission, he further submits that the appellant also claimed the exemption Notification No.67/95-CE before the adjudicating authority which was denied. He submits that the Notification No.67/95-CE is only qua the RMC as input, which was manufactured in the factory of production and used in turn for manufacture of final products. The adjudicating authority has completely overlooked this fact. He submits that the said notification extends the benefit to inputs which have been defined to mean goods specified in the column appended to Table annexed in the said Notification which have been manufactured in the factory and used within the factory of production in or in relation to the manufacture of final products specified in column (2) of the said Table. There being no dispute that the structures/foundation erected using the RMC was used in relation to manufacture of final product as accordingly benefit of exemption was admissible.
2.5 Without prejudice to his above submissions, he submits that the adjudicating authority rejected the assessee‟s contention that the demand of duty if any, could have been confirmed only at the rate of 2% in terms of the Sl. No. 46 of Notification No. 1/2011-CE is concerned which is devoid of any merits. He submits that the adjudicating authority has failed to appreciate that there is no estoppel in law if an assessee has not claimed benefit of the concessional rate of duty for a particular clearance, it does not estops or debars it from claiming the benefit of such concessional rate in respect of other clearance.
2.6 He submits that the finding of the adjudicating authority that the assessee has not shown any documentary evidence of reversal of proportionate credit is factually misconceived as ER-1 returns themselves, clearly evidence that the assessee had reversed the proportional credit under Rule 6(3) of Cenvat Credit Rules, 2004 on which there is no dispute. In view thereof, it is clear that the condition stipulated under the
7|Page E/10155,10173/2020 Notification No. 01/2011-CE for Serial No. 46 stands fulfilled and accordingly, the demand if any, ought to have been restricted to 2% only.
2.7 As regard, the department‟s appeal for the disputed period of April, 2016 to June 2017, he submits that the department is in appeal only on the ground that the benefit of exemption notification was available in a situation where the entire quantity of „Ready Mix Concrete‟ (RMC) manufactured at site being used for construction work at site and that no „Ready Mix Concrete‟ (RMC) had been cleared from the said site even on the payment of appropriate duty of Excise. In other words, the department reading of the exemption is that the exemption is available to the site subject to all the RMC manufactured at site being used for constriction work at such site. He submits that the applicability of exemption has to be seen qua the goods on which it has been claimed and not qua the site. Further the exemption was claimed only in respect of goods used in the construction at the site and not for those which were cleared from the site. Secondly, it was the assesse‟s contention that the department is adding/reading a condition in the exemption which does not exist and accordingly such an interpretation ought to be discarded at the threshold. The adjudicating authority has accepted the assessee‟s submissions in this regard and has correctly held that it is only qua the quantity of „Ready Mix Concrete‟ (RMC) on which the exemption has been claimed that the said assessee was required to demonstrate that the said quantity for use of construction at site. The adjudicating authority also correctly held that it was impermissible on the part of the department to add a condition to artificially provide that the entire quantity of RMC should be used in the construction work at site and that no quantity thereof could have been cleared on payment of Central Excise Duty. He submits that in view thereof, there is no perversity in the impugned order to the extent the adjudicating authority has extended the benefit of Sl.No. 144 of Notification No.12/2012-CE as amended by Notification No.12/2016-CE qua the RMC for the period April, 2016 to June, 2017. In this regard, he placed reliance on the following judgments:
UNION OF INDIA Vs. INTERCONTINENTAL (INDIA)- 2008 (226) ELT 16 (SC) CCC VS FAVORITE INDUSTRIES- 2012 (278) ELT 145 (SC)
8|Page E/10155,10173/2020 From the above submissions, he submits that the assessee craves leave to refer to and relying upon the submissions urged in the preceding paragraphs. Assessee also craves leave to refer to and rely upon the present synopsis along with the submissions urged in appeal memorandum of appeal and cross-objections, he prays for allowing the appeal of the assessee and dismissing the revenue‟s appeal.
03. Per contra, Shri T.G.Rathod, Learned Additional Commissioner (AR) appearing on behalf of the revenue in respect of Revenue‟s appeal submits that the adjudicating authority has erred in holding that by virtue of Entry No.144 of Notification No.12/2016-CE dated 01.3.2016, the assessee is not liable to pay Central Excise Duty on the „Ready Mix Concrete‟ cleared for use in construction work in the site during the period from April, 2016 to June, 2017. He referred to the exemption Entry No.144 and explanation given in the said entry to submit that the exemption under this entry is available subject to the condition that the „Ready Mix Concrete‟ manufactured at such site is solely used in the said construction work only. The assessee during the period April, 2016 to June, 2017 manufactured and cleared „Ready Mix Concrete‟ for captive consumption without payment of duty as well as cleared to other customers on payment of Central Excise Duty.
3.1 In view of the explanation to the exemption notification No.12/2016-CE „Ready Mix Concrete‟ manufactured at site shall be solely used in the construction work in the same site. Unless the entire production of „Ready Mix Concrete‟ manufactured at site is used solely at the site for construction work, the exemption will be denied even for „Ready Mix Concrete‟ used at the site. He submits that the adjudicating authority has ignored that this provision contained in the said explanation to Notification No.12/2016-CE dated 01.03.2016 is not fulfilled by the assessee as apart from using of „Ready Mix Concrete‟ manufactured at site for construction purpose they had cleared some quantity of „Ready Mix Concrete‟ manufactured at the said site to another site/customer on payment of duty and made a mistake in granting the benefit of duty exemption to the „Ready Mix Concrete‟ used in the construction work at such site under the provision of amended Notification No.12/2016-CE dated 01.03.2016.
3.2 He submits that the case laws relied upon by the applicant including in the Early Hearing and Cross-Objections dated 06.08.2021 are
9|Page E/10155,10173/2020 distinguishable clearly on facts. To counter the said case laws, he placed reliance on the following judgement:-
COMMISSIONER OF CUSTOMS (Import), MUMBAI Vs. DILIP KUMAR & COMPANY- 2018 (361) ELT 577 (S.C.) Whereby, it is concluded for exemption notification it should be interpreted strictly, the burden of proving applicability would be on the assessee to show that his case comes within the parameter of exemption or exemption notification.
3.3 As regard assessee‟s appeal, he reiterates the finding of the impugned order to the extent that the adjudicating authority has confirmed the demand by denying the exemption Notification No.12/2012-CE dated 17.3.2012 (Sr. No.144 as amended). He referred to Board Circular No.325/31/97-CX dated 23.05.1997, Circular No. 368/1/98 dated 06.01.1998 and further submits that the adjudicating authority has found that prior to 01.03.2016, there was no exemption available to RMC even if, it is manufactured at site and used in the construction at site. He submits that for the period April, 2014 to September, 2015, the assessee cleared and used RMC in construction at their premises and wrongly availed the benefit of exemption under Notification No.12/2012-
CE dated 17.3.2012. For availing this benefit they misdeclared goods in documents as "Concrete Mix/Ready Mix Concrete" whereas, only „Ready Mix Concrete‟ were manufactured by them and used in construction in their premises, which was not eligible for exemption under the aforesaid notification. He submits that for the period from October, 2015 to February, 2016 the assessee has made payment of Central Excise Duty on entire quantity of RMC manufactured and cleared by them whether for home consumption or used for construction work in their premises. He submits that the case laws relied upon by the assessee are in respect of earlier period i.e. Period prior to the period involved in the present matter and in respect of another notification which had been rescinded and was not applicable in the present case. He submits that in the present matter, the applicable notification is 12/2012-CE dated 17.03.2012 in which vide entry No.144 exemption has been granted only to Concrete Mix which is manufactured at the site of construction. There is no mention of „Ready Mix Concrete‟ in the said notification till 01.03.2016 when the entry No.144 has been amended vide Notification No.12/2016- C.E dated 1.3.2016 with prospective effect only therefore, the facts mentioned in 10 | P a g e E/10155,10173/2020 the relied upon decision are different from the facts involved in the present matter hence, the ratio of the decision cannot be applied in the present matter.
3.4 As regard the extended period, it is his submission that both the case laws of M/s SHAPOORJI PALLONJI & CO (supra) and CONTINENTAL FOUNDATION JOINT VENTURE (SUPRA) for invocation of extended period. He placed reliance on the judgment in the case of M/S. GENEX ENTERTAINED LTD VS COMMISSIONER OF CUSTOMS - 2018 (363) ELT 1021 he submits that the assessee has referred to the Circular No. 9793/2014-CX dated 15.01.2014 in support that extended period will not be applicable in respect of demand raised in the wake of M/s FIAT INDIA judgment of the Hon‟ble Supreme Court. He submits that judgment was delivered in respect of valuation of the products for assessment on payment of Central Excise Duty therefore, the same is not applicable in the present case.
3.5 As regard the contention of the assessee in respect of reversal of Cenvat Credit, it is contended that RMC has been manufactured and used by them for setting up various manufacturing facility within the factory premises and thus the said quantity of captively consumed RMC is clearly in or in relation to manufacture of their products and they are eligible for benefit of exemption of Notification No.67/95-CE dated 16.03.1995; that they had reversed credit on the quantity of inputs and inputs services used in manufacture of RMC in terms of Sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2004, by virtue of Rule 6(3)(D) the said reversal will not tantamount to credit not taken accordingly such case fall within four corners of the concession provided at Sl.No.46 of the Notification No.1/2011-CE dated 01.03.2011 (as amended). In this regard, the adjudicating authority found that from the definition of „Capital Goods‟ as defined under Rule 2(a) of the Cenvat Credit Rules, 2004 neither Ready Mix Concrete nor civil construction work namely walls, ceiling and other civil work can be considered as „Capital Goods‟. The Notification No.67/95-CE dated 16.03.1995 (as amended) which has been referred by the assessee for claiming exemption from payment of Central Excise Duty on the quantity of RMC manufactured by them and used in construction work in their factory premises for civil construction work has prescribed that capital goods as defined under Cenvat Credit Rules, 2002/2004 will be eligible for benefit of this notification.
11 | P a g e E/10155,10173/2020 3.6 However, as discussed hereinabove, the goods manufactured by the Noticee namely RMC and civil construction work which has been constructed by using RMC manufactured by them, are not capital goods and hence the benefit of Notification No.67/95-CE dated 16.03.1995 is not available to them. As regard the benefit of concessional rate of duty prescribed under Notification No.1/2011-CE dated 01.03.2011 (as amended) he submits that the assessee had cleared RMC on payment of Central Excise Duty for home consumption during the entire period covered in this show cause notice. They have paid the Central Excise Duty for such clearance at prescribed tariff rate and not at the concessional rate of duty at the rate of 2% hence, the benefit of concessional rate of duty for the quantity of RMC used in construction at site cannot be extended to them. Moreover, the contention of the assessee that they have reversed the proportionate amount of Cenvat Credit is not supported by any documentary evidence. Further, to avail such benefit, procedure prescribed under the Cenvat Credit Rules, 2004 is required to be followed which has not been done by the assessee in this case therefore, the contention of the assessee claiming the concessional rate of duty at 2% is liable to be rejected.
3.7 He further submits that the adjudicating authority has rightly relied upon the decision of this Hon‟ble CESTAT (Larger Bench) in the case of NIZAM SUGAR FACTORY Vs. CCE, HYDERABAD- 1999 (114) ELT 429 (Tri.- LB). He submits that in view of the above judgment, the adjudicating authority has rightly invoked the larger period. He submits that the assessee have contravened the Central Excise Act, 1944 claimed thereunder by way of willful misstatement, suppression of fact with an intent to evade the payment of central excise duty. The assessee failed to examine the taxable value by way of suppression and wrong description of their product in their periodical returns. Thus, in the instant case the ingredients as specified under Section 11A(4) of the Central Excise Act, 1944 are fulfilled and the contention that unit having been audited previously does not take away the invocation of extended period to raise demand.
04. We have carefully considered the submissions made by both the sides and perused the records. From both the appeals, the issue arises for our considerations are as follows:
12 | P a g e E/10155,10173/2020
(i) Whether the assessee is eligible for exemption Notification No.12/2012-CE dated 17.03.2012 in respect of Ready Mix Concrete for the period April, 2014 to September, 2015.
(ii) Whether the adjudicating authority has rightly invoked the larger period for confirmation of demand in terms of Section 11A(4) of the Central Excise Act, 1944.
(iii) Whether the assessee is entitle for exemption Notification No.67/95-CE dated 16.03.1995 in respect of Ready Mix Concrete (RMC) manufactured and used captively at their site.
(iv) Whether the assessee is eligible for concessional rate of duty at the rate of 2% in terms of Notification No.1/2011-CE dated 01.03.2011.
(v) Whether the assessee is entitled for exemption under Notification No.12/2016-CE dated 01.03.2016 for the period April, 2016 to June, 2017 in respect of Ready Mix Concrete (RMC) manufactured and used at their site.
4.1 As regard the exemption Notification No.12/2012-CE Sr.No.144 dated 17.03.2012 for the period April, 2014 to September, 2015. We find that there were contrary judgments on the issue however, finally the hon‟ble Supreme Court in the case of LARSEN & TOUBRO LTD. Vs. CCE- 2015 (324) ELT 646 (SC) held that the exemption under Notification No.4/97-CE which is identically worded to Sr.No.144 of Notification No.12/2012-CE dated 17.03.2012 is inapplicable to Ready Mix Concrete. The relevant judgment is reproduced below:
19. We are also inclined to agree with the stand taken by the Revenue that it is the process of mixing the concrete that differentiates between CM and RMC. In the instant case, as it is found, the assessee installed two batching plants and one stone crusher at site in their cement plant to produce RMC. The batching plants were of fully automatic version. Concrete mix obtained from these batching plants was delivered into a transit mixer mounted on a self propelled chassis for delivery at the site of construction is in a plastic condition requiring no further treatment before being placed in the position in which it is to set and harden. The prepared chassis which was mounted was to ensure that when the concrete mix is taken to the actual place of construction, it keeps rotating. It is also significant to mention that for producing the concrete mix, material used was cement, aggregates, chemically analysed water and admixtures, namely, retarders and plasticizers. As the L&T was 13 | P a g e E/10155,10173/2020 constructing cement plant of a very high quality, it needed concrete also of a superior quality and to produce that aforesaid sophisticated and modernised process was adopted. The adjudicating authority in its order explained the peculiar feature of RMC and the following extracts from the said discussion needs to be reproduced :
"32. Central Excise Tariff does not define Ready Mix Concrete. Therefore, as per the established case-laws on the subject it is necessary to look for the meaning of this expression as understood in the market viz., as understood by the people who buy and sell this commodity. In this connection it would be relevant to refer to the following excerpts from an article - what is ready mix concrete, appearing in internet website of National Ready Mix Concrete Association, USA :-
(i) Concrete, in its freshly mixed state, is a plastic workable mixture that can be cast into virtually any desired shape. It starts to stiffen shortly after mixing, but remains plastic and workable for several hours. This is enough time for it to be placed and finished.
Concrete normally sets or hardens within two to 12 hours after mixing and continue to gain strength within months or even years.
(ii) Ready Mix Concrete refers to concrete that is delivered to the customer in a freshly mixed and non-hardened state. Due to its durability, low cost and its ability to be customized for different applications, Ready Mix Concrete is one of the world‟s most versatile and popular building materials.
(iii) Admixtures are generally products used in relatively small quantities to improve the properties of fresh and hardened concrete. They are used to modify the rate of setting and strength, especially during solid and cold weather. The most common, is an air- entraining agent that develops millions of tiny holes in the concrete, which imparts the durability to concrete in freeing and thawing exposure. Water reducing Admixtures enable concrete to be placed at the required consistency while minimizing water used in the mixture, thereby increasing the strength and improving durability. A variety of fibers are incorporated in the concrete to control or improve aberration and impact resistance."
20. After referring to some text as well, the adjudicating authority brought out the differences between Ready Mix Concrete and CM which is conventionally produced. The position which was summed up showing that the two products are different reads as under :
"From the literature quoted above it is clear that Ready Mix Concrete is an expression now well understood in the market and used to refer to a commodity bought and sold with clearly distinguishable features and characteristics as regards the plant and machinery required to be set-up for its manufacture and the manufacturing processes involved, as well as its own properties and the manner of delivery. RMC refers to a concrete specially made with precision and of a high standard and as per the particular needs of a customer and delivered to the customer at his site. Apparently due to the large demand resulting from rapid 14 | P a g e E/10155,10173/2020 urbanization and pressure of completing projects on time, consumption of RMC has steadily grown replacing the conventional/manual concreting works. Today leading cement companies have entered the field by setting-up RMC plants in which L&T ECC is one. RMC is slowly replacing site or hand mixed concrete because of the distinct advantages due to technology, speed and convenience. Furthermore, absence of the need to deal with multiple agencies for procuring and storing cement, sand, blue metal and water as well as the absence of the need to handle unorganized labour force are factors influencing customers to go in for RMC in preference to CM."
21. In this backdrop, the only question is as to whether RMC manufactured and used at site would be covered by notification. Answer has to be in the negative inasmuch as Notification No. 4, dated March 1, 1997 exempts only „Concrete Mix‟ and not „Ready Made Mixed Concrete‟ and we have already held that RMC is not the same as CM In view of the above judgment, the Apex Court held that RMC is not the same as Concrete Mix and exemption is granted to Concrete Mix only and not to the Ready Mix Concrete. In view of the above judgment, it is clear that the assessee‟s product i.e. Ready Mix Concrete (RMC) is not eligible for exemption under Notification No.12/2012-CE dated 17.03.2012 (Sl.No.144) which is pari materia to the exemption entry provided in Notification No.4/97-CE involved in the case of LARSEN & TOUBRO (supra).
4.2 As regard the ground raised by the assesse on time bar, in as much as their submission is that the extended period could not have been invoked as there is no suppression of fact on the part of the assessee. We find that the issue of limitation is mainly based on the facts of each case therefore, the facts of present case need to be examined. We find that before the judgment of Hon‟ble Supreme Court in the case of LARSEN & TOUBRO (supra) there are judgments in favour of the assessee in the case of CHIEF ENGG.RANJIT SAGAR DAM (supra) , this Larger Bench judgment was upheld by the Hon‟ble Punjab & Haryana High Court vide their judgment reported in 2007 (217) ELT 345. There was a Hon‟ble Supreme Court judgment also on this issue in the case of SIMPLEX INFRASTRUCTURES LTD.(supra) wherein ,it was held that Ready Mix Concrete was eligible for exemption only to be used at site. We find that in view of the above legal position, the bonafide belief of the assessee regarding eligibility of the exemption Notification NO.12/2012-CE cannot 15 | P a g e E/10155,10173/2020 be doubted. In the above judgment also taken a note of Board Circular No.315/37/97-CX dated 23.05.1997 and 368/1/98-CX dated 06.01.1998 therefore, after the aforesaid judgment this Board Circulars have lost its sanctity being contrary to the judgments of Courts. Therefore, subsequent to the aforesaid judgment, even the department cannot rely upon this Circular. It is settled law by the Hon‟ble Supreme Court in the case of CCE Vs. RATAN MELTING AND WIRE INDUSTRIES (supra) which mainly dealt with the issue related to effect of circular viz-a-viz. the decisions of a Court held as under;
"6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court of the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view express in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law."
From the aforesaid judgment, when such circulars dated 23.05.1997, 06.01.1998 and 20.11.2001 has been eclipsed from their operation, in view of the above settled position in law, it cannot be said that the assessee had any malafide intention with intent to evade payment of duty. Moreover, the issue involved is the interpretation of exemption Entry in respect of which even there are contrary views of the Hon‟ble Supreme Court judgment of SIMPLEX INSFRASTRUCTURES LTD.(supra) and LARSEN & TOUBRO (supra) therefore, in a case where there is a possibility of different interpretation which is not in dispute in the present case, it cannot be alleged that the assessee had any malafide intention with intent to evade payment of duty. As regard the factual matrix on the issue of limitation, we find that the assessee have been filing their ER-1 Returns regularly. Relevant page of ER-1 Returns are scanned below:-
16 | P a g e E/10155,10173/2020 17 | P a g e E/10155,10173/2020 From the above ER-1 Returns, it is observed that the assessee have declared the description of the product in question as „Concrete Mix/Ready Mix Concrete‟ and they have also claimed the exemption under Notification No. 12/12-CE dated 17.03.2012 (Sl.No.144). As per this information, there is no confusion that the assessee was manufacturing Ready Mix Concrete and they are availing the exemption Notification. With this information there was absolutely no difficulty for the 18 | P a g e E/10155,10173/2020 departmental Officers to verify the facts related to manufacture and use of Ready Mix Concrete and the eligibility of the exemption notification on such product. The same description i.e. Concrete Mix/Ready Mix Concrete was also mentioned in the sales invoice and also claimed exemption Notification No.12/2012-CE in the said invoice. The sample invoice is scanned below:-
From the above invoice also, it can be seen that the assessee have declared the description as Concrete Mix/Ready Mix Concrete in their sales invoice and also claimed exemption Notification No.12/2012-CE dated 17.03.2012 (Sr.No. 144). The assessee declared the description as Concrete Mix/Ready Mix Concrete instead of Ready Mix Concrete. It is clear from the invoice that the assessee are clearing Ready Mix Concrete also under exemption Notification No.12/2012-CE (Sr.No.144) therefore, 19 | P a g e E/10155,10173/2020 if the department had any objection, on the basis of this information itself action such as issuance of show cause notice could have been taken.
From this explicit information given in the ER-1 Returns and Invoice, it cannot be said that there is any suppression of fact on the part of assessee.
4.3 It is also observed that even the entire case was made out on the basis of the same ER-1 Returns therefore, all the information required for issuance of Show Cause Notice was available with the department. In this fact, it cannot be said that the assessee have suppressed the fact with intent to evade payment of duty. The adjudicating authority has rejected the contention of the asessee on demand being time barred on the ground that the assessee have mis-declared the product as Concrete Mix/Ready Mix Concrete. We are not convinced with this finding of the learned Adjudicating Authority for the simple reason that even though the assesee have mentioned as Concrete Mix but after „/‟ Ready Mix Concrete is also mentioned. At the most, it can be said that the assessee have declared both the product i.e. Concrete Mix/Ready Mix Concrete but in the exemption Notification column they have clearly claimed the notification No.12/2012-CE dated 17.03.2012 (Sl.No.144). With this information, if at all the department is of the view that the assessee is not entitled for exemption in respect of Ready Mix Concrete (RMC) department could have called the specific quantity of Ready Mix Concrete and could have issued a show cause notice well within the normal period. The department has failed to do so therefore, for this reason on the part of the department, suppression of fact or mis-declaration cannot be alleged on the part of the assessee. It is also a fact on record that the assessee‟s records were audited from time to time and no issue of RMC and exemption threron was raised despite all the information available on records.
4.4 In our view, it is the vital part for auditors to verify that whether the claim of the assessee in respect of exemption notification no.12/2012-CE dated 17.03.2012 in their ER-1 returns. On this basis, it is clear that the assessee have not mis-declared any fact from the department. The assessee in their argument relied upon the judgment of the Hon‟ble Supreme Court on the issue of limitation, the same is reproduced below:-
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(i) CONTINENTAL FOUNDATION JT. VENTURE Vs. CCE- 2007 (216) ELT 177 (SC)
8.In response, learned counsel for the respondents submitted that the circulars dated 1-2-1996, 23-6-1997 and 6-1-1998 have no relevance and the judgment in Chief Engineer Ranjit‟s case (supra) does not reflect the correct position.
9.We are not really concerned with the other issues as according to us on the challenge to the extended period of limitation ground alone the appellants are bound to succeed.
Section 11A of the Act postulates suppression and, therefore, involves in essence mens rea.
10.The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as „fraud‟ or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.
11.Factual position goes to show the Revenue relied on the circular dated 23-5-1997 and dated 19-12-1997. The circular dated 6-1-1998 is the one on which appellant places reliance. Undisputedly, CEGAT in Continental Foundation Joint Venture case (supra) was held to be not correct in a subsequent larger Bench judgment. It is, therefore, clear that there was scope for entertaining doubt about the view to be taken. The Tribunal apparently has not considered these aspects correctly. Contrary to the factual position, the CEGAT has held that no plea was taken about there being no intention to evade payment of duty as the same was to be reimbursed by the buyer. In fact such a plea was clearly taken. The factual scenario clearly goes to show that there was scope for entertaining doubt, and taking a particular stand which rules out application of Section 11A of the Act.
12.As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word „wilful‟, preceding the words "mis- statement or suppression of facts" which means with intent to evade duty. The next set of words „contravention of any of the provisions of this Act or Rules‟ are again qualified by the 21 | P a g e E/10155,10173/2020 immediately following words „with intent to evade payment of duty.‟ Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis- statement of fact must be wilful.
(ii) JAIPRAKASH INDUSTRIES- 2002 (146) 481 (SC)
6.We will first take up the second question. The law on this point is well-settled. In the case of Padmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195 (S.C.), this Court has held that wherever there is the scope for believing that the goods are not excisable to duty and, therefore, no licence is required to be taken out, then the extended period of limitation for demand under Section 11A is inapplicable. This Court has held that mere failure or negligence on the part of the manufacturer in not taking out a licence and in not paying duty does not attract the extended period of limitation. This Court has held that there must be evidence to show that the manufacturer knew that the goods were liable to duty and that he was required to take out a licence. This Court has held that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion, wilful mis-statement, suppression of fact or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or wilful mis-statement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation.
7.Mr. Sridharan, Advocate, for the Appellant has apart from this authority also relied upon number of other authorities wherein the Tribunal has taken an identical view. In our view, the law having been settled by this Court, it is not necessary to refer to the decisions of the Tribunal. As the decisions have been cited, we merely set out the citations viz.:
(a) 1997 (89) E.L.T. 123 (Tri.) - Hindustan Construction Co. v.
CCE, Chandigarh.
(b) 1994 (73) E.L.T. 91 (Tri.) - Jaypee Rewa Cement v. CCE, Raipur.
(c) 1997 (23) RLT 260 (CEGAT) - Bhawanthadi Minerals v. CCE, Raipur.
(d) 1998 (104) E.L.T. 66 (T) = 1998 (27) R.L.T. 474 (Tri.) - New Vikram Cement v. CCE, Indore
(e) 1990 (104) E.L.T. 505 - Duriappa Lime Products v. CCE, Madras 22 | P a g e E/10155,10173/2020
8.In this case, there was a divergent view of the various High Courts whether crushing of bigger stones or boulders into smaller pieces amounts to manufacture. In view of the divergent views, of the various High Courts, there was a bona fide doubt as to whether or not such an activity amounted to manufacture. This being the position, it cannot be said that merely because the Appellants did not take out a licence and did not pay the duty the provisions of Section 11A got attracted. There is no evidence or proof that the licence was not taken out and/or duty not paid on account of any fraud, collusion, wilful mis-statement or suppression of fact. We, therefore, set aside the demand under the show cause notice dated 3rd May, 1993.
The ratio of the above judgments is clearly applicable in the present case being the facts are similar. The Authorized Representative of the Revenue heavily relied upon various judgments on the limitation. We are of the view that as regard the issue of limitation, the case is based on facts of each case. As per the facts of the present case, as discussed above it is clear that there is absolutely no suppression of fact on the part of the assessee with intent to evade payment of duty therefore, the judgments relied upon by the Revenue are not applicable in the facts of the present case. Accordingly, the entire demand is under extended period i.e. from April, 2014 to September, 2015 and April, 2016 to June, 2017 whereas, the Show Cause Notice was issued on 15.04.2019 therefore, the entire demand is time barred.
4.5 Without prejudice to our above findings on time bar, we find that the revenue has also filed appeal against the dropping of demand of Rs.8,31,68,920/- i.e. for the period April, 2016 to June, 2017 however, as per the above finding even demand for this period is also time barred but for academic purpose, we are inclined to deal with the merit of this Department‟s appeal. The relevant notification no.12/2016-CE (Entry No.144) is reproduced below:-
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(vi) for serial number 144 and the entries relating thereto, the following shall be substituted, namely:
(1) (2) (3) (4) (5) "144 38 Concrete Mix or Ready Mix- Nil -"
Concrete (RMC), manufactured at the side of construction for use in construction work at such site.
Explanation.- For the purpose of this entry, the expression „site‟ means any premises made available for the manufacture of goods by way of a specific mention in the contract or agreement for such construction work, provided that the goods manufactured at such premises are solely used in the said construction work only.
From the above notification not only the Concrete Mix but also the Ready Mix concrete (RMC) manufactured at the site of construction for use in construction work at such site is exempted. The revenue in their appeal contends that the assessee are not only consuming the Ready Mix Concrete (RMC) in their factory at site but part of the Ready Mix Concrete (RMC) are sold outside the factory. It was contended by the revenue that to become eligible for this exemption, it is necessary that entire Ready Mix Concrete manufactured at site should be used at such site and if any part of it cleared outside, the condition as given in the above explanation is violated.
4.6 We do not agree with this contention of the revenue for the reason that the exemption is always qua the goods not qua the factory, accordingly, only those goods which are solely used at the site of construction are exempted and the goods which are not used in the construction site and cleared outside shall not be eligible for exemption as the same will be chargeable to excise duty. The assessee have correctly followed the condition of the notification and paid the excise duty on the quantity of RMC cleared outside the factory and rightly claimed the exemption in respect of quantity of Ready Mix Concrete (RMC) used at the premises of site in the construction work only. There is no such condition prescribed under the notification that entire manufactured 24 | P a g e E/10155,10173/2020 goods i.e. Ready Mix Concrete (RMC) should be used within the premises of manufacturer for construction work and no any part of the manufactured goods should be cleared outside the factory. In absence of such condition, the department cannot impose artificially such condition to deny the exemption to the assessee. We are, therefore, of the clear view that the adjudicating authority had rightly extended the benefit of exemption notification in respect of Ready Mix Concrete (RMC) used by the assessee in their manufacturing premises for construction work hence, the demand for the period April, 2016 to June, 2017 was rightly dropped by the adjudicating authority on the ground of its merit. Since, we have decided the matter in both the appeals on the ground of limitation and in the Department‟s appeal also on merit, we are not inclined to deal with other issues such as claim of exemption notification No.67/95-CE and Notification No.2/2011-CE dated 01.03.2011 (Sl.No.46).
05. As per our above discussions and findings, the impugned order stands modified. As a result assessee‟s appeal No E/10173/2020 is allowed with consequential relief and Revenue‟s appeal No E/10155/2020 is dismissed. CO also stands disposed of.
(Pronounced in the open court on 07.03.2022) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Mehul