Customs, Excise and Gold Tribunal - Delhi
Chief Engg. Ranjit Sagar Dam vs Cce on 23 January, 2006
ORDER M.V. Ravindran, Member (J)
1. This matter is referred to Larger Bench by a division Bench in its referral Order No. 207/05-Ex dated 26.7.2005. At Para No. 2 the referral Bench noted as follows:
It is the contention of the revenue that the issue remains covered against the assessee by the decision of this Tribunal in the case of Continental Foundation Joint Venture v. CCE, Chandigarh - 2002 (150) ELT 216. Learned Counsel for the assessee also fairly concedes this position, even though he seeks to distinguish that decision on some other grounds like there being no sale or purchase.
We note that the exemption is in regard to "concrete mix manufacturer" at side and used at site. Perusal of the Indian Standard specifications and other materials produced before us would appear to suggest that there is no difference between concrete mix and ready mix concrete. After all, concrete mix for construction is the same irrespective of method of preparation. In this view of the matter, we are not able to agree with the decision in the case of Continental Foundation Joint Venture v. CCE, Chandigarh. That decision would appear to require re-consideration by a Larger Bench. Registry is, therefore, directed to place the file before the Hon'ble President for the constitution of a Larger Bench.
2. In this case the appellant was executing a project of construction of a Dam known as "Ranjit Sagar Dam". The appellants in the course of construction of Dam, prepared concrete mix at site and used the same in the Dam construction. The Revenue demanded duty on the said concrete mix on the ground that the said concrete mix would be covered under the Tariff Sub-heading No. 3824.90 of Central Excise Tariff 1985 relying upon Central Board of Excise & Customs Circulars dated 1.2.96, 23.6.97 and 6.1.98 and decision of the Tribunal in the case Continental Foundation Joint Venture v. CCE, Chandigarh - 2002 (150) ELT 216. It is the contention of the appellant that they are eligible for exemption from payment of duty vide Serial No. 51 of Notification No. 4/97. The adjudicating authority relying upon the Board's Circular and the case of Continental Foundation classified the concrete mix under Sub-heading No. 3824.90 and confirmed the demand for the period 1.3.97 to 1.6.98 and also imposed the penalty and interest was also sought to be recovered from the appellants.
3. The learned Senior Advocate appearing for the appellants contends that the product manufactured by the appellant would not get covered under the Sub-heading as Ready Mix Concrete. It was submitted that the product "Ready Mix Concrete" and the "Concrete Mix" are the same, and reliance was placed on Standards IS 4926:2003 and IS 456:2000 as issued by Bureau of Indian Standards. It was submitted that the Standards for Concrete Mix are covered under the IS 456:2000, which lays down the procedure for "Plain and reinforced concrete - code of practice" in detail, while IS 4926:2003 lays down the standard of "Ready Mixed Concrete - Code of practice," wherefrom it would be noticed that the selection and quality of ingredients like cement, gravel chemical, etc. are laid down in detail in IS 456: 2000 and IS 4926: 2000 relies upon the earlier Standards IS 456:2000 for quality of ingredients. It was urged that there is no difference between "plain & reinforced concrete" and "Ready Mixed Concrete". It was also contended that the benefit of the exemption notification No. 4/97 is available to the appellants as the concrete mix is manufactured by the appellants at the site of construction of a Dam. Intervening Advocate also points out that in writ petition No. 15035 of 1995 in the Hon'ble High Court at Madras, the department has accepted and conceded that Ready Mix Concrete manufactured at site is eligible for exemption and now department cannot take a different stand here. He also submits that in an identical issue in the case of Larsen Tubro Ltd., the Hon'ble Supreme Court has admitted the civil appeal filed by L & T as reported at 2006 (194) ELT A57.
4. The learned D.R. on the other hand contends that the concrete mix manufactured by the appellant is transported by the appellants to the site of the Dam and there is a transportation of the concrete mix. It was submitted that the concrete mix manufactured with the aid of sophisticated machinery would mean that the same is covered under Heading of "Ready Mixed Concrete." It was also urged that benefit of exemption under notification would not be available to the appellants as the said notification exempts only concrete mix and does not exempt "Ready Mix Concrete."
5. We have considered the submissions made by both sides and perused records.
6. In the case of Continental Foundation Joint Venture case (supra) the Tribunal after noting the process of manufacture of Ready Mix Concrete and Concrete Mix at Para No. 14 came to the following conclusion:
Thus, on carefully taking into consideration the manufacturing process adopted by the appellants, the Board's instructions and the expert opinion of the BIS on the subject, we are of the view that the product manufactured by the appellants is RMC falling under sub-heading 3824.20 of the Central Excise Tariff and shall be subject to the corresponding rate of duty. This RMC is not eligible to the exemption under Srl. No. 51 of the Table attached to Notification No. 4/97-C.E. as this notification exempts concrete mix manufactured and used at the site of construction and not the RMC.
7. The exemption granted under Serial NO. 51 of Notification No. 4/97 during the relevant period stood as under:
Chapter or Sl. Heading/sub-
No. heading No. Description of goods Rate
51.38 Concrete mix manufactured
at the site of Nil
construction for use in
construction work
at such site
8. During the relevant period i.e. from 1.3.97 to 1.6.98 the Chapter heading Nos. were as under:
1996-97 38.22 3823.00 Prepared binders for foundry moulds or 20% cores; chemical products and pre-
parations of the chemicals or allied industries (including those consisting mixtures of natural products), not else-
where specified or included; resi-
dual products of the chemical or allied industries, not elsewhere specified or included 1997-98 38.24 Prepared binders for foundry moulds or Cores; chemical products and preparations of the chemical or allied industries (including Those consisting of mixtures of natural products), not elsewhere specified or included; Residual products of the chemical or allied industries, not elsewhere specified or included 3824.10 - Phosphogypsum 13% 3824.20 - Ready mix concrete 13% 3824.90 -Others 18%
9. It can be seen from the above that the "concrete mix", and "Ready mix concrete" get covered under Chapter No. 38, and it is not in dispute.
10. General exemption notification No. 4/97-C.E. was issued by the Central Government by the powers conferred by Sub-section (1) of Section 5A of the Central Excise Act, 1944. The said Section 5(A) authorizes the government to issue exemption from payment of duty by issuing a notification. The exemption notification No. 4/97-CE reads as under:
In exercise of powers conferred by Sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest to do so, hereby exempts excisable goods specified in column (3) of the table below....
It can be seen that the exemption granted vide above notification, by Government to the excisable goods, is in the public interest and that also after being satisfied that it is so. To our mind the exemption granted to "concrete mix" at serial No. 51, "manufactured at the site of construction for use in construction work at such site", should not be given a narrow meaning as to include only "Concrete Mix" and exclude from its ambit Ready Mix Concrete manufactured at site. It was the contention of learned D.R. that in this case also the concrete mix is not manufactured at Dam site, but away from the site and transported hence would not be eligible for exemption as it would become "Ready Mix Concrete". It is a known fact that the sites of dams are at places surrounded by the hills and there may not be any place near the "Dam Site" to erect a concrete mixing plant. The concrete mixing plant, by necessity has to be located at place within the vicinity of the Dam Site, which may depend upon the contours of the area where the Dam is being constructed. This itself would not exclude the concrete mix manufactured at this plant from exemption granted under Serial No. 51 of the Notification No. 4/97-CE. We find strength in this conclusion from the wording of the entry at serial No. 51. The heading to Table to notification in column No. 2 talks about the "Chapter or heading No. or sub-heading No." that is sought to be exempted by the notification. In the case before us the entry at column No. 2 at serial No. 51 says only "38" i.e. it refers to only Chapter No. The said entry does not refer to any heading No. or Sub-heading No. To our mind the Central Government had every intention to exempt all kinds of "Concrete Mix" from payment of duty, which is very evident from the fact that, the said notification in respect of many items indicates heading No. and Sub-heading Nos. specifically. If the law makers did not intend to exempt "Ready Mix Concrete" falling under Chapter Sub-heading No. "3824.20/3824.90" they would have categorically said so, by indicating in the serial No. 51 only the specific heading Nos. which are eligible for exemption. Since, the notification intends to cover all the "Concrete Mix manufactured at the site of construction for the use in construction work at such site", it would also cover the "Ready Mix Concrete" in its ambit of exemption.
11. In the case of Larsen & Toubro Ltd., before the Hon'ble High Court of Judicature at Madras the Additional Central Government Standing Counsel conceded the issue. It is recorded by the Hon'ble High Court at Para 6 which reads as under:
At the hearing the learned Additional Central Government Standing Counsel specifically took a stand that Ready Mix Concrete is not leviable even if it is manufactured at the site of construction, but it is leviable only if such Ready Mix Concrete, which is manufactured in a place other than the place of construction for the one's own purpose or for its use somewhere else or by sale and by transportation of the same from Ready Mix Plant to such site of third parties or consumers as the case may be.
After recording the views of the Central Government Counsel, the Hon'ble High Court has disposed of the writ petition as under:
7. Though there is some inconsistency in para-4 of the Notification issue by the Board, since the learned Standing Counsel for the respondents had clarified that Ready Mix Concrete is exempted only if it is manufactured at site by the promoter or builder for use as the case may be for its own construction at the site of construction.
8. The learned Additional Central Government Standing Counsel further represented that duty is leviable in respect of Ready Mix Concrete if it is manufactured in a Ready Mix unit installed for the purpose, supplied or transported through containers to sites of construction, which is different from the sites of mixing plant. In the light of the said stand taken by Mr. Veeraraghavan, Additional Central Government Standing Counsel, it is unnecessary to examine the contentions set out in the writ petition.
9. In the result, while recording the representation submitted by the learned Additional Central Government Standing Counsel, this writ petition is disposed of accordingly. Parties shall bear their respective costs.
The above said order of the Hon'ble High Court fortifies our view that benefit of exemption under notification No. 4/97 is available to Ready Mix Concrete also provided it is "manufactured at the site of construction....
12. As we have held above that the entry at serial No. 51 of notification No. 4/97, exempts all "Concrete Mixes" which fall under Chapter 38, and as it is not disputed that the product of the appellant gets covered under Chapter 38, the reference is answered in favour of the appellants. We also allow the appeal since no other issue arises in this case.
12. The reference to the Larger Bench and appeal are disposed of in the above terms.
(Operative portion pronounced in Open Court.)