Custom, Excise & Service Tax Tribunal
Eversmile Pre-Fab Pvt. Ltd vs Thane-Ii on 18 June, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO: E/2294/2002 (Arising out of Order-in-Original No. 16/2002-Commr.VI dated 30/03/2002 passed by Commissioner of Central Excise, Mumbai-VI) For approval and signature: Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. P. Karthikeyan, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3. Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4. Whether Order is to be circulated to the Departmental authorities?
:
Yes ====================================================== Eversmile Pre-Fab Pvt. Ltd.
...Appellant Vs. Commissioner of Central Excise Thane-II ...Respondent Appearance:
Shri A. Hidayatullah, Senior Advocate, with Shri M.P.S. Joshi, Advocate, for appellant Shri R.K. Mahajan, Authorised Representative (JCDR), for respondent CORAM:
Hon'ble Mr. P.G. Chacko, Member (Judicial) and Hon'ble Mr. P. Karthikeyan, Member (Technical) Date of Hearing: 12.3.2010 Date of Decision: 18.6.2010 ORDER NO.................................
Per: P.G. Chacko, Member (J), The appellant is engaged in the manufacture of what are referred to as "RCC cement blocks" in one of the show-cause notices, "concrete blocks" in another one and "cement blocks" in the rest of the notices. They filed a classification list effective from 23.6.1988 describing their products as "hollow/solid cement blocks constituting components of prefabricated buildings falling under Heading 94.06" and claiming the benefit of concessional rate of duty under Notification No.64/88-CE dated 1.3.1988. This and two other classification lists filed upto 1990 were approved. In respect of classification lists filed thereafter, however, only provisional approval was given in view of a classification dispute which arose between the department and one M/s. Excon Building Materials Manufacturing Co. Pvt. Ltd. in respect of identical goods. [It appears from the records that, after the dispute was settled by the Tribunal in favour of the Revenue in Excon case, the department, in June 2002, proposed to finalise the provisionally approved classification lists of the appellant by holding them liable to pay duty at Tariff rate for the relevant period]. With the amendment of Rule 173B by the Central Government, the appellant filed classification declarations from 1995-96 claiming concessional rate of duty for their products under successive Notifications. While so, from 1997-98, they were classifying the goods under SH 6807.20 of the CETA Schedule also. From 1998-99, they were paying duty on the goods at Tariff rate applicable to SH 6807.20. The department issued show-cause notices from time to time to the appellant alleging (for a major part of the total period of dispute from June 1988) that the "RCC cement blocks" manufactured by them were used for construction of walls and did not constitute intermediates or components of prefabricated buildings falling under Heading 94.06 and (for the rest of the period of dispute) that the blocks which were allegedly used as above were not of a kind used in prefabricated buildings of heading No.94.06. On this basis, it was further alleged that the assessee was not entitled to claim the benefit of concessional rate of duty under any of the Notifications or to claim the benefit of Tariff rate as applicable to SH 6807.20. These show-cause notices, which covered the period from June 1988 to September 2001 barring the period from 1.4.1989 to 25.12.1989, demanded differential duty from the appellant and also proposed to penalise them under Rule 173Q of the Central Excise Rules, 1944. The demand of duty was contested on merits as well as on the ground of limitation. In adjudication of the dispute, the Commissioner confirmed demand of duty of over Rs.3 crores against the appellant under the proviso to Section 11A(1) of the Central Excise Act. He also imposed a penalty of over Rs.1.3 crores on the party under Section 11AC for the period subsequent to 28.9.1996 and a penalty of over Rs.1.8 crores on them under Rule 173Q read with Rule 9(2) for the period prior to the said date. Interest on duty was also demanded under Section 11AB of the Act. The present appeal is directed against the Commissioner's order.
2. This case is before us in a second round. The final order passed by this Tribunal in the earlier round of litigation was recalled by the Bench vide order No. M/1645/08/C-II/EB dated 24.10.2008 in application No. E/ROM/276/07-Mum filed by the appellant, pursuant to the Hon'ble High Court's remand order dated 18.10.2007 in Writ Petition No.2237 of 2007. Accordingly, it is open to both sides to agitate before us all the issues barring any jurisdictional issue which was not raised by the party before the High Court and hence does not survive.
3. After hearing both sides, we find that one of the issues arising for consideration is whether, prior to 1.4.1997, the appellant was entitled to the benefit of concessional rate of duty in terms of serial No.3 of the Table annexed to Notification 64/86-CE dated 1.3.1988 and the corresponding provisions of the successor-Notifications in respect of the cement concrete blocks manufactured by them and cleared from their factory during the relevant period. The entries at serial No.3 ibid. read as follows:-
S.No. Chapter or Description of goods Rate of duty Heading No.
------ --------------- ------------------------- ---------------
3 68.07 Blocks, slabs, lintels, 5% ad valorem concrete beams and stairs constituting intermediates and components of pre-
fabricated buildings falling under Heading No. 94.06.
Heading No.68.07 of the CETA Schedule, which originally covered "All other articles of stone, plaster, cement, asbestos, mica or other similar materials not elsewhere specified or included" underwent a change under the Finance Act, 1997 and, accordingly, three sub-headings came into existence from 1.4.1997, of which SH 6807.20 covered "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06". The first two sub-headings (6807.10 and 6807.20) were followed by the residuary sub-heading 6807.90 (Other) which carried a higher rate of duty than SH 6807.20. From 1.4.1997, the department wanted to classify the blocks under sub-heading 6807.90 and levy duty at higher rate from the party by denying them the benefit of the relevant Notifications. Therefore, the second issue to be considered is whether, for the period from 1.4.1997, the assessee's blocks could be held to be of a kind used in prefabricated buildings of Heading 94.06 so as to grant them the benefit of the relevant Notifications or (in the absence of such Notifications) the benefit of lower rate of duty applicable to SH 6807.20. There are ancillary issues also.
4. Twenty show-cause notices were issued to the appellant covering the period of dispute, June 1988 to September 2001 barring 1.4.1989 to 25.12.1989. The learned Commissioner found nothing on record to hold that the hollow/solid blocks manufactured by the assessee were components or intermediates of prefabricated buildings and, therefore, the benefit of Notification 64/88-CE was denied to them. In this connection, he relied on the Tribunal's decision in CCE, Mumbai vs. Excon Building Material Mfg. Co. Pvt. Ltd. 1999 (112) ELT 516. For the period from 1.4.1997 also, similar benefit was denied to the assessee on the ground that the exemption which was available to "blocks of a kind used in prefabricated buildings" could not be extended to blocks which were normally used in construction of walls in buildings or used in floorings. The Commissioner, in this connection, noted that the assessee had not brought any material on record to establish that the blocks manufactured by them and cleared from the factory from 1.4.1997 were of a kind used in prefabricated buildings. The plea of limitation raised by the assessee was also rejected by the adjudicating authority which held that the assessee had misdeclared the goods in the relevant Classification Lists/Declarations and, therefore, the extended period of limitation under the proviso to Section 11A(1) of the Act was invocable against them. On the same basis, Section 11AB and Section 11AC of the Act were also held to be invocable for levy of interest on duty and for imposition of penalty respectively, but only with prospective effect from 28.9.1996. With regard to the assessee's plea that their Classification Lists filed in 1988-89 had been duly approved by the proper officer and, therefore, the demand of duty raised contrary to such classification of the goods was barred by limitation, the adjudicating authority observed that the date of acquisition of knowledge by the department about the activities of the assessee was not relevant to Section 11A of the Act and, therefore, any show-cause notice issued beyond the normal period of limitation, by invoking the extended period of limitation, would not be time-barred. The assessee's alternative claim for exemption under Notification 6/2000-CE dated 1.3.2000 was rejected on the ground that the benefit was available only to 'concrete blocks' and not to 'cement blocks'. In this context, the learned Commissioner reasoned that 'cement' and 'concrete' were two different things.
5. The learned Senior Advocate for the appellant submitted that the goods manufactured by them were cement concrete blocks of modular design with its three dimensions conforming to IS 2185. These blocks were also used in walls of buildings. They were capable of being used in prefabricated buildings and hence could be considered as intermediates or components of prefabricated buildings. In this connection, the learned counsel referred to the National Building Code published by the Bureau of Indian Standards (BIS), which defined the term "unit" to include a block and also indicated that the units formed part of prefabricated building/structure. On this basis, it was argued that the benefit of Notification 64/88 was available to the cement concrete blocks in question for the entire period of dispute. Referring to the Tribunal's decision in Excon case (supra) as affirmed by the Supreme Court vide Excon Building Material Mfg. Co. Pvt. Ltd. vs. CCE, Bombay 2005 (186) ELT 263 (SC), the learned counsel submitted that the assessee in that case had never claimed that their blocks would be used in prefabricated buildings or that they were intermediates or components of prefabricated buildings. The assessee in that case had only claimed that the benefit of the Notification was available even to blocks, slabs and lintels falling under Heading 68.07 even though such blocks, slabs and lintels did not constitute an intermediate or component of prefabricated building. Therefore, according to the learned counsel, the judgment of the Hon'ble Supreme Court in Excon case is not an authority for the proposition that walls are not part of prefabricated buildings or that the blocks used in the construction of walls are not components of prefabricated buildings. The counsel submitted that this issue never arose before the Supreme Court in Excon case. It was argued that the language of the Notification was descriptive in nature and did not require any actual user condition to be satisfied. For the benefit of the Notification, it was enough to show that the cement concrete blocks in question were components/intermediates of prefabricated buildings or capable of being used in prefabricated buildings. There was no requirement to establish actual use of the blocks. On this basis, it was argued that the evidentiary materials produced by the appellant, which were not rebutted by the Revenue, were enough to show that the cement concrete blocks in question answered the description of goods given under Notification 64/88-CE and successor-Notifications. The learned counsel further argued that the appellant's case was squarely covered by the Tribunal's decision in Orion Precast Pvt. Ltd. vs. CCE, Bangalore-III 2006 (202) ELT 305 (Tri.-Bang.), wherein solid concrete blocks were held to be classifiable under SH 6807.20 as blocks of a kind used in prefabricated buildings of Heading 94.06 and not under the residuary SH 6807.90. The counsel also claimed support from CCE, Ahmedabad vs. Encore GRC Pvt. Ltd. 2008 (225) ELT 144 (Tri.-Ahmd.), wherein classification of panel, cornice, arch, column, ceiling, bracket etc. under SH 6807.20 was held to be appropriate on the basis that these were only different names of blocks, slabs etc. capable of being used in prefabricated buildings.
6. Opposing the above contentions, the learned JCDR submitted that the cement concrete blocks manufactured and cleared by the appellant were actually used in place of bricks as masonry units by the buyers. In this connection, he referred to the statements of a few buyers, given under Section 14 of the Central Excise Act. One of these buyers, M/s. Sheth Developers Ltd., stated that they had purchased concrete blocks from M/s. Eversmile Pre-Fab Pvt. Ltd. and used the same in place of commercially known bricks for erecting walls of buildings at various project sites. Another buyer, M/s. Janki Kutir Co-op. Hsg. Society, stated that the solid blocks and interlocking pavers bought by them from the appellant had been used for the resurfacing of driveways of their society. They also stated that the solid blocks had been used in place of bricks. A third buyer, M/s. Sai Datta Developers, also stated that they had purchased solid blocks (C.C.) from the appellant and that these blocks were used in place of bricks for erecting external walls of buildings. On the basis of these statements, the JCDR submitted that the blocks in question were only used as substitute for common bricks in the erection of walls of buildings at sites and were never used as components or intermediates of prefabricated buildings. According to the learned JCDR, the I.S. specifications, which were meant for maintaining the purity or standard of the product were not to be used for classifying the product under the Tariff Schedule. In this connection, he referred to Collector vs. J.K. White 1994 (73) ELT 861 (Tri.). Relying on the Explanatory Notes under HSN Heading 94.06, the learned JCDR argued that, for claiming the benefit of the Notification, it should be shown that the blocks were actually used as components or intermediates of buildings presented in the form of (a) complete buildings, fully assembled, ready for use; (b) complete buildings, unassembled; or (c) incomplete buildings, whether or not assembled, having the essential character of prefabricated buildings. It was submitted that this essential requirement for claiming the benefit of the Notification for the period prior to 1.4.1997 was not satisfied by the appellant. For the subsequent period also, it was submitted that the appellant had failed to establish that the blocks manufactured and cleared by them were capable of being used in prefabricated buildings of Heading 94.06. An endeavour was also made to distinguish the cases of Orion Precast Pvt. Ltd. and Encore GRC Pvt. Ltd. from the case of the appellant. According to the JCDR, the issue in this case is squarely covered by the apex court's judgment in Excon case. He also relied on the Tribunal's decision in Aeon's Construction Products Ltd. vs. Commissioner 2005 (180) ELT 209 (Tri.-Chennai), which was upheld by the Supreme Court [2005 (184) ELT 120 (SC)].
7. With reference to the submissions made by the learned counsel on the basis of the approval of Classification Lists, the learned JCDR submitted that the practice of approval of Classification List under Rule 173B of the Central Excise Rules, 1944 was there only upto 30.4.1995. After the said date, any Classification List was not required to be filed by a manufacturer of excisable goods, who had to file only a declaration showing the full description of the excisable goods manufactured by him, the chapter/heading number/sub-heading number (if any) of the CETA Schedule covering the said goods, the applicable rate of duty, the Exemption Notification availed or proposed to be availed (if any) etc. There was no requirement, from 1.5.1995, for the proper officer to approve the declaration. Therefore, JCDR argued, it was not open to the appellant to resist the demand of duty on the strength of approval of old Classification Lists by the proper officer.
8. The learned JCDR had, at the outset, submitted that the goods in question were actually cement blocks and not concrete blocks. In this connection, he had also invited our attention to a Classification List for the year 1994-95 and a Classification Declaration for the year 1996-97, wherein the various products of the appellant were described as "cement hollow/solid blocks", "cement solid blocks", "cement hollow blocks", "cement hollow/solid broken blocks" etc. The learned counsel, in his rejoinder, successfully rebutted this submission of the JCDR by pointing out that the department themselves had described the goods as "R.C.C. (reinforced cement concrete) cement blocks (solid/hollow/broken)" in the relevant show-cause notices. In the annexures to the show-cause notices also, the goods were described in the same way.
9. We have carefully considered the submissions. A perusal of the records indicates that the assessee claimed the benefit of Notification No.64/88-CE dated 1.3.1988 (serial No.3) in their Classification Lists filed in 1989-90 and such claim was provisionally approved. The above Notification was replaced later by Notification No.59/90-CE dated 20.3.1990 whereunder the above benefit of concessional rate of duty continued to be available to "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading 94.06". The Classification Lists filed by the party in 1990-91 and 1991-92 claiming the benefit of concessional rate of duty under the new Notification were also provisionally approved. Notification No.59/90-CE ibid. was superseded by Notification No.36/94-CE dated 1.3.1994 which continued to provide concessional rate of duty in respect of the above goods. But the Classification List filed by the assessee, effective from 1.4.1994, claiming the benefit of Notification No.36/94-CE was not approved by the jurisdictional Assistant Collector. The requirement of filing Classification List under Rule 173B was subsequently done away with through an amendment of the Rule. Under Rule 173B as amended w.e.f. 1.5.1995, a manufacturer of excisable goods was required to file only a Classification Declaration. The assessee filed this declaration effective from 1.5.1995 furnishing the general description of the goods and indicating the Notification under which exemption was claimed by them. Notification No.36/94-CE ibid. was superseded by Notification No.8/96-CE dated 20.3.1996 which also continued to extend the benefit of concessional rate of duty to manufacturers of "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading 94.06". In their declaration filed in 1996-97, the assessee claimed the benefit of this Notification. It was during the currency of this Notification that Parliament, by way of the Finance Act, 1997, introduced sub-heading 6807.20 (under Heading 68.07) which reads as follows:- "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 96.06". In their subsequent declarations filed under Rule 173B, the assessee described their products as above and claimed the benefit of Notification 8/96-CE ibid. till this Notification was superseded by Notification 5/97-CE dated 1.3.1997. Subsequently, several declarations were filed by the assessee from time to time in 1996-97 and 1997-98 claiming concessional rate of duty under the new Notification 5/97-CE ibid. For the period from April 1998, the assessee, in their declarations filed under Rule 173B, classified their products under sub-heading 6807.20 as "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06" and proposed to pay duty at tariff rate.
10. As already noted, several show-cause notices were issued to the assessee from time to time for recovery of differential duty for the period from June 1988 to September 2001 (barring the period from 1.4.1989 to 25.12.1989). In most of these notices, the benefit of concessional rate of duty claimed under the relevant Notification was proposed to be denied to the party either on the ground that the blocks manufactured by them did not constitute intermediates and components of prefabricated buildings falling under Heading 94.06 or on the ground that these blocks were not of a kind used in prefabricated buildings of Heading 94.06. In the last few show-cause notices, the classification claimed by the assessee for these blocks under sub-heading 6807.20 was disputed by the department and the differential duty to be recovered from the assessee was worked out by classifying the goods under sub-heading 6807.90 which carried a higher rate of duty.
11. The appellant has also challenged the demand of duty on the ground of limitation and the learned counsel has submitted that the extended period of limitation was not invocable in this case inasmuch as all the relevant facts were disclosed to the department by the appellant by way of the Classification Lists/Declarations filed from time to time. It was also pointed out that the Classification Lists filed during the earlier part of the period of dispute were approved by the proper officer. The show-cause notice which invoked the longer period of limitation was issued on 2.7.1993 long after the first show-cause notice which was issued on 27.4.1989 raising similar allegations. The department had full knowledge of the relevant facts as on 27.4.1989 itself. It has been argued that, in such circumstances, the longer period of limitation could not be invoked on the ground of suppression or misstatement or misdeclaration of facts. The JCDR has opposed these arguments on the strength of the relevant findings of the Commissioner.
12. Three other issues raised in the written submissions dated 07/11/2005 filed on behalf of the appellant are (1) whether, in the event of the subject goods being held chargeable to duty, MODVAT / CENVAT credit on inputs can be allowed; (2) whether, in the same event, the benefit of the Supreme Court's judgment in Commissioner vs. Maruti Udyog Ltd. 2002 (141) ELT 3 (SC) can be granted; and (3) whether SSI exemption under the relevant Notifications can be allowed as an alternative relief in the event of the benefit of Notification 64/88 and successor-Notifications being denied. Some of these questions were raised in the memo of appeal also. The JCDR has pointed out that any of the above reliefs was not sought from the adjudicating authority.
13. We proceed to deal with the substantive issue periodwise:
a) From June 1988 to March 1997
(i) We have found that, in the Classification Lists/Declarations filed by the assessee from time to time, they described their products as "cement hollow/solid blocks", "cement solid blocks", "cement hollow blocks", "cement hollow/solid broken blocks" etc. The word "concrete" was used in the description of 'paving blocks'. In any case, the department always considered the subject-goods as 'cement concrete blocks' as is indicated by the expression "RCC cement blocks" used in the show-cause notices. Therefore, the distinction sought to be made by the learned JCDR between concrete and cement blocks is irrelevant to this case. It appears from the records that the classifiability of the cement concrete blocks in question under Heading 68.07 of the CETA Schedule for the above period has never been in dispute. The dispute in respect of this period is with reference to the description of the goods given at serial No.3 of the Table annexed to Notification 64/88-CE ibid. The Notification described the goods at serial No.3 ibid. as "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading 94.06." The appellant has contended that their blocks were chargeable to duty at the concessional rate given at serial No.3 of the above Notification, by virtue of the fact that they were classifiable under Heading 68.07 and also the fact that they were manufactured according to modular design with three dimensions specified and were capable of being used to make wall as component of a prefabricated building, answering the description of goods given at serial No.3 of the above Notification. To put it more explicitly, the blocks were used in the making of wall and the wall, in turn, was a component of prefabricated building and, therefore, the blocks would also be component of prefabricated building thereby falling within the ambit of serial No.3 of the Notification. The learned counsel has endeavoured to elaborate the point with reference to the National Building Code of India (1983) as adopted by the Bureau of Indian Standards, which was relied on in the written submissions dated 07/11/2005. Section 7 (Prefabrication and Systems Building) under Part VI (Structural Design) of the National Building Code (NBC, for short) refers, inter alia, to prefab elements with cementatious materials. This section gives recommendations regarding modular planning, component sizes, joints, manufacture, storage, transport and erection of prefabricated elements for use in buildings. The learned counsel referred to the definitions of a few technical terms, given below:-
'PREFABRICATE' - To fabricate components or assembled units prior to erection or installation in a building.
'PREFABRICATED BUILDING' - The completely assembled and erected building, of which the structural parts consist of prefabricated individual units or assemblies using ordinary or controlled materials, including service facilities; and in which the service equipment may be either prefabricated or constructed in situ.
'UNIT' - Building material formed as a simple article with all three dimensions specified, complete in itself but intended to be part of a compound unit or complete building. Examples are brick, block, tile, etc. Under a sub-heading "PREFABRICATION SYSTEMS AND STRUCTURAL SCHEMES", the word 'system' is defined as under:-
"The word 'system' is referred to a particular method of construction of buildings using the prefabricated components which are inter-related in functions and are produced to a set of instructions."
There is also a classification of prefabricated systems in NBC. It is said that the system of prefabricated construction depends on the extent of the use of prefab components, their materials, sizes and the technique adopted for their manufacture and use in building. The learned counsel has particularly referred to the OPEN PREFAB SYSTEM, one of the different prefabrication systems discussed in NBC, which explains OPEN PREFAB SYSTEM as follows:-
"6.3.1 OPEN PREFAB SYSTEM - This system is based on the use of the basic structural elements to form whole or part of a building. The standard prefab concrete components which can be used are:
a) Reinforced concrete channel units,
b) Hollow core slabs,
c) Hollow blocks and battens,
d) Precast planks and battens,
e) Precast joists and tiles,
f) Cellular concrete slabs,
g) Prestressed/reinforced concrete slabs,
h) Reinforced/prestressed concrete beams,
i) Reinforced/prestressed columns,
j) Precast lintels and chujjas,
k) Reinforced concrete waffle slabs/shells,
l) Room size reinforced/prestressed concrete panels,
m) Reinforced/prestressed concrete walling elements, and
n) Reinforced/prestressed concrete trusses.
NOTE - The elements may be cast at the site or off the site.
Foundation for the columns could be of prefabricated type or of the conventional cast in situ type depending upon the soil conditions and loads; and the columns may have hinged or fixed base connections depending upon the type of components used and the method of design adopted.
6.3.1.1 There are two categories of open prefab system depending on the extent of prefabrication used in the construction as given in 6.3.1.2 and 6.3.1.3.
6.3.1.2 PARTIAL PREFAB OPEN SYSTEM - This system basically emphasises the use of precast roofing and flooring components and other minor elements like lintels, chajjas, kitchen sills in conventional building construction. The structural system could be in the form of in-situ framework on load bearing walls.
6.3.1.3 FULL PREFAB OPEN SYSTEM - In this system almost all the structural components are prefabricated. The filler walls may be of bricks or of any other local material."
On the above basis, it has been pointed out that hollow concrete blocks are standard components used in an OPEN PREFAB SYSTEM. Such blocks are basic structural elements forming whole or part of a building. These blocks are themselves prefabricated units which could be used as structural parts of prefabricated buildings.
(ii) After considering the submissions, we are of the view that, as the dispute for the period under consideration is only as to whether the assessee's concrete blocks would fit in the description given in the 3rd column at serial No.3 of Notification 64/88, aid can be taken of authentic technical literature like the National Building Code for a correct understanding of prefabrication of buildings. There can be no dispute about the fact that the cement concrete blocks are basic structural units for buildings. The term "prefabricated building" has been described in the National Building Code as "completely assembled and erected building, of which the structural parts consist of prefabricated individual units or assemblies ......". This term has also been defined in Chapter 94 of the Schedule to the Central Excise Tariff Act vide Chapter Note 4, which reads as under:-
"For the purposes of heading No.94.06, the expression 'prefabricated buildings' 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."
Heading No.94.06 (Prefabricated buildings) in the CETA Schedule is aligned with Heading No.94.06 of the HSN (Harmonized Commodity Description and Coding System - Explanatory Notes). Note 4 to Chapter 94 of the CETA Schedule and the corresponding Chapter Note in the HSN read identically. The Explanatory Notes to HSN Heading 94.06 read as under:-
"94.06 - PREFABRICATED BUILDINGS.
This heading covers prefabricated buildings, also known as "industrialised buildings", of all materials.
These buildings, which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of:
- complete buildings, fully assembled, ready for use;
- complete buildings, unassembled;
- incomplete buildings, whether or not assembled, having essential character of prefabricated buildings.
In the case of buildings presented unassembled, the necessary elements may be presented partially assembled (for example, walls, trusses) or cut to size (beams, joists, in particular) or, in some cases, in indeterminate or random lengths for cutting on the site (sills, insulation, etc.)."
The definition of 'prefabricated buildings' given in Chapter Note 4 in the CETA Schedule coupled with the above Explanatory Notes would provide adequate insight into the issue agitated before us. The Chapter Note says that prefabricated buildings are buildings which are either finished in the factory or put up as elements, cleared together to be assembled on site. According to the Explanatory Notes, prefabricated buildings are generally presented in the form of (a) complete buildings, fully assembled, ready for use; or (b) complete buildings, unassembled; or (c) incomplete buildings, whether or not assembled, having the essential character of prefabricated buildings. The appellant did not clear from their factory any ready-for-use, fully assembled and complete building such as house, office building, school building, shop building or similar building. They did not clear any such building in unassembled form, either. They do not even have a case that any incomplete building with essential character of complete building was cleared unassembled. They cannot have such a case unless it is shown that the essential elements (components) of a prefabricated building, such as concrete slabs, beams, panels, trusses, walling elements, channel units, precast joints, tiles, lintels etc. (vide OPEN PREFAB SYSTEM supra) were prefabricated and cleared together from the factory to the construction site or that some of these components were so cleared and others constructed/erected in situ. What the assessee cleared from their factory were only cement concrete blocks (solid or hollow) which were used at the buyers' sites for erection/construction of walls or other parts of buildings, and such walls or other parts, which were erected/constructed in situ, were not "prefabricated buildings" or components thereof. The blocks were, indeed, used only as the basic masonry units like bricks in the in situ construction of conventional buildings. The assessee's buyers whose statements were recorded under Section 14 of the Central Excise Act have stated to this effect and their evidence has not been rebutted. The said statements were relied on in show-cause notice dated 21.3.2001 issued for the period March 2000 - January 2001. The assessee did not deny that the blocks were actually used in the aforesaid manner.
(iii) The question now to be considered is whether the blocks, which were cleared from the factory in the aforesaid manner, would fit in the description: "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading No.94.06", given at S.No.3 of Notification No.64/88. The Hon'ble Supreme Court, in Excon case, examined the above description of goods and interpreted it as under:-
"7. It is well settled that where the wording of a Notification are clear then the plain language of the Notification must be given effect to. An interpretation which is not borne out by the plain wordings of the Notification cannot be given. A reading of the Notification makes it clear that the concessional rate of duty is only available to blocks, slabs, lintels, concrete beams and stairs which constitute an intermediary or component of pre-fabricated buildings. We are unable to accept the submission that it is only the concrete beams and stairs which must constitute an intermediary or component of the pre-fabricated buildings. We are unable to accept the submission that blocks, slabs and lintels by themselves also are entitled to the benefit of this Notification. If the intention was to make a difference between blocks, slabs and lintels on the hand and concrete beams and stairs on the other they would have specifically done so. Then the words blocks, slabs and lintels would have had to be segregated from the concrete beams and stairs which constitute intermediary or components of pre-fabricated buildings. The fact that no such distinction has been made shows that all the items mentioned in the third column must constitute an intermediary or component of pre-fabricated buildings."
(emphasis supplied) In view of the above interpretation given by the apex court, the appellant's contention (as raised in their replies to show-cause notices and in the memorandum of appeal) that the concrete blocks would per se or independently attract the benefit of the Notification without having anything to do with prefabricated buildings has only to be rejected. As held by the court, the blocks must constitute intermediates/ components of prefabricated buildings of Heading 94.06 so as to get the benefit of the Notification. A pamphlet captioned "TECHNOLOGY FOR TOMORROW - HOLLOW & SOLID CONCRETE BLOCKS", issued in the name of the appellant, contains, inter alia, the following information:
"ABOUT OUR PRODUCTS The end product is the high quality Concrete blocks with practically no dimensional tolerance, extremely low shrinkage, water absorption, moisture content with high density and compressive strength."
(underlining supplied) What is held out, by the appellant, to be their end product cannot be claimed to be any intermediate or component of another product. The pamphlet contains no mention of blocks being used as intermediates or components of prefabricated buildings. On the contrary, it clearly indicates that the hollow concrete blocks manufactured by the appellant are meant for use as masonry units in the construction of walls of buildings. The following excerpts from the pamphlet reveal this fact:
"LOAD-BEARING / WALL CONSTRUCTION Hollow concrete Block walls should be planned on the basis of modular co-ordination with a view to making the maximum use of full and half length units. Modular planning results in minimum of cutting and proper fitting of units by the mason, which means speedier work, neater appearance of the finished walls and economy in construction,"
EVERSMILE Hollow Concrete Blocks of 200 series are ideal for constructing load bearing exterior & interior walls. For partitions and non-load bearing walls 150 series and 100 series blocks are suitable."
"Hollow concrete block is an important addition to the types of masonry units available to the builder and its use for masonry work on constant increase in this country. Some of the advantages of hollow concrete block construction are reduced mortar consumption light weight and greater speed of work compared to brick masonry. Concrete block masonry is well known in many countries of the world and experience in these countries has added considerably to the knowledge and confidence about its role in building construction."
(underlinings supplied)
(iv) It has been argued by the learned counsel that the language of the Notification is descriptive in nature and does not require any actual user condition to be satisfied. According to him, as the blocks were designed to be used for prefabricating walls for buildings, they should be treated as components of prefabricated buildings for purposes of the Notification. In other words, it is not necessary to show that the blocks were actually used as components of prefabricated buildings. These arguments are contrary to what the Supreme Court held in para 8 of Excon, which reads as follows:-
"8. Great reliance was placed upon the order of the Collector, who has held in favour of the Appellants, on the following reasoning:-
"The only condition is that such blocks, slabs, etc. should be used as intermediates and components of prefabricated buildings under heading 94.06. This is not the case of the department that the blocks, slabs, etc. manufactured by the respondent are not used in pre-fabricated buildings. The Respondent have also IS: in para 0.3 of the Foreword to the Indian Standard Specification for Concrete Masonry Units, it has been stated that Concrete Masonry Construction "is also economical because fewer joints result in considerable saving in mortar as compared to normal masonry construction also in increasing the strength of the wall". This should prove that masonry work is a must for any pre-fabricated buildings. The blocks are being manufactured according to the ISI Specification and would thus be entitled to exemption under Notification No.64/88 dated 1.3.88. In view of the discussions above, there is no merit in the departmental application and is rejected."
In our view, the Collector has erred in holding that it was not the case of the Department that the blocks and slabs manufactured by the Respondents are not used in pre-fabricated buildings. A perusal of the show cause notice shows that it was the specific case of the Department that the goods manufactured by the Appellants were not intermediates or components of pre-fabricated buildings. The Collector has omitted to note that it was not the case of the Appellants that their goods could be used in pre-fabricated buildings or that they constituted intermediaries of components of a pre-fabricated building. The Collector has also erred in relying upon the Indian Standard Specification for Concrete Masonry Units and concluding that the blocks which are being manufactured according to the ISI Specification would become entitled to the benefit of the Notification. As has been mentioned earlier it is only such blocks as are intermediaries or components of pre-fabricated buildings that get the benefit of the Notification. Merely because some block, which is not a component or intermediary of a pre-fabricated building, has an ISI specification does not mean that block gets the benefit of Notification. The Order of the Collector was therefore entirely erroneous and has been rightly set aside by the Tribunal."
(emphasis supplied) The excerpt found in the above para of the court's judgment in Excon case is from Order-in-Appeal No. SKM/1941/89-BII dated 20.9.1989 which was passed by the Collector (Appeals) sustaining the approval given by the Assistant Collector for 2 Classification Lists filed in 1988 by Excon Company. It was followed by the Collector (Appeals) in Order-in-Appeal No. AND/29/91-BIII dated 18/04/1991 in a similar case of the appellant also.
The appellant in the present case has admitted that the goods in question are similar to Excon Company's product and has claimed support from the above Orders-in-Appeal. They have even taken the plea of res judicata (in their written submissions) with reference to Order-in-Appeal dated 18/04/1991 ibid. But the findings of the Collector (Appeals) were disapproved by the Supreme Court which noted that it was the specific case of the department that the blocks and slabs manufactured by Excon were not used in prefabricated buildings or (in other words) they were not components or intermediates of prefabricated buildings. The Supreme Court approved the department's view and held thus: "........... it is only such blocks as are intermediates or components of prefabricated buildings that get the benefit of the Notification". The blocks & slabs manufactured by Excon were not actually used in prefabricated buildings or (in other words) did not constitute intermediates/components of prefabricated buildings. Therefore Excon failed to obtain a favourable verdict from the apex court. Excon's claim was that the benefit of the Notification was available even to blocks, slabs and lintels falling under Tariff Heading 68.07 even though these did not constitute intermediates or components of prefabricated buildings. The present appellant has also contended in their replies to show-cause notices and in their memo of appeal that their blocks per se / independently attracted the benefit of the Notification without having to constitute intermediates or components of prefabricated buildings. Therefore, the distinction which was sought to be drawn between the two cases, by the learned counsel, is without any rationale. In any case, the interpretation given by the Hon'ble Supreme Court to the relevant provision in the Notification and the decision rendered on that basis cannot be set at naught on any frivolous ground.
(v) The Tribunal's decision in Excon case (which was, later on, upheld by the Supreme Court as we have already noted) was followed by the Tribunal, in the case of Aeon's Construction Products Ltd. (vide supra), in the context of dealing with the question whether the benefit of concessional rate of duty under Notification No.36/94-CE [S.No.1(b)] and Notification No.5/97-CE [S.No.117(2)] was available to paving blocks which were heavy weight concrete blocks of interlocking type used for paving floors. The Tribunal, in Aeon's case, held:-
"6. ....Notifications 36/94 and 5/97 required that the blocks be actually used as components of prefabricated buildings for the period prior to 1.3.1997 or be of a kind used in such buildings for the subsequent period. This requirement could be met only through positive evidence, which is missing in the instant case. Therefore, following the ratio of the decision rendered in the case of Excon (supra), we hold that the Concrete Blocks in question were not eligible for the benefit of concessional rate of duty in terms of Sl.No. 1(b) of the Notification No.36/94-CE or in terms of Sl.No.117(2) of Notification No.5/97-CE."
(underlining supplied) It is significant to note that the relevant entry in Notification No.36/94-CE is pari materia with S.No.3 of Notification No.64/88-CE. The Tribunal's decision in Aeon's case was also upheld by the Supreme Court vide 2005 (184) ELT 120 (SC).
(vi) Having found that the apex court's decision on the relevant point in Excon and Aeon's cases is squarely applicable to the present case and that the cement concrete blocks in question were not used in prefabricated buildings, we hold that the benefit of concessional rate of duty under Notification No.64/88 (S.No.3) or under the corresponding provisions of successor-Notifications cannot be extended to the blocks cleared during the relevant period.
b) From April 1997 to September, 2001
(i) This period is covered by the ten show-cause notices (SCNs) described below:-
Sl. No. Date of SCN Period for which SCN issued Basis of demand of differential duty.
1.
26/09/1997 3/1997 to 6/1997 Denial of benefit of Notification 5/97-CE dated 01/03/1997 [Entry No. 117(2)]
2. 02/02/1998 07/1997 to 11/1997
-- do --
3. 02/07/1998 12/1997 to 03/1998
-- do --
4. 29/10/1998 04/1998 to 09/1998 Classification under SH 6807.90
5. 13/04/1999 10/1998 to 03/1999
-- do --
6. 22/09/1999 04/1999 to 08/1999
-- do --
7. 02/02/2000 09/1999 to 01/2000
-- do --
8. 20/06/2000 2/2000
-- do --
9. 21/03/2001 03/2000 to 01/2001
-- do --
10. 03/01/2002 02/2001 to 09/2001
-- do --
The first 3 SCNs classified the assessee's blocks under heading 68.07, held the goods to be chargeable to duty @ 18% applicable to sub-headings 6807.20 and 6807.90 and denied the benefit of Notification No. 5/97 [Entry No. 117(2)] to the assessee by alleging that, as the blocks were not used in prefabricated buildings, the said benefit was not available to them. These SCNs did not raise a classification dispute in the nature of "SH 6807.20 versus SH 6807.90". The remaining SCNs classified the goods under SH 6807.90 and denied to the assessee the benefit of SH 6807.20 which provided a concessional rate of duty (8%) from April, 1998 to February 2000 and 'nil' rate of duty from March 2000. The SCNs at Sl. Nos. 1 to 8 alleged that the blocks were not used in prefabricated buildings and hence did not constitute intermediates or components of prefabricated buildings of heading 94.06 and, therefore, the benefit of the Notification or SH 6807.20, as the case may be, was not admissible. These notices ignored the expression, "of a kind used", which was there in the text of entry No. 117(2) of the Notification as well as in the text of SH 6807.20 of the CETA Schedule. The remaining two SCNs took note of the above expression but alleged that the blocks did not constitute intermediates or components of prefabricated buildings of heading 94.06 and hence could not be considered to be "of a kind used" in such buildings. Entry 117 (2) of Notification 5/97 is pari materia with the description of goods under SH 6807.20 and the same reads:
"Blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of heading No. 94.06"
(underlining supplied by us) Thus the case of the Revenue, common to all the ten SCNs, is that the blocks in question did not fall within the ambit of the above description inasmuch as they were not used in prefabricated buildings of heading 94.06 or (in other words) they did not constitute intermediates or components of such buildings.
(ii) In their reply, the assessee consistently argued that the expression "of a kind used" was not applicable to blocks and hence this building unit was independently eligible for the benefit of the Notification or of SH 6807.20, as the case may be. They contended that there was no requirement, whether under the Notification or under the Tariff entry, of their blocks having to be of a kind used in prefabricated buildings of heading 94.06. The same contentions have been raised in the present appeal also. The assessee, in their written submissions dated 27/02/2002 filed with the Commissioner, went a step further to state thus:
"3.2 We respectfully submit that nowhere in the world any of the blocks falling within chapter sub-heading No. 68.07 are used for making prefabricated buildings which are either finished in the factory or put up as elements cleared together to be assembled at the site. We further submit that no evidence had also been adduced in the show-cause notices to the effect that there is a different type of concrete block which is capable of being used in prefabricated buildings satisfying the requirements as provided under heading 94.06"
(underlining supplied by us) In their pamphlet on "HOLLOW & SOLID CONCRETE BLOCKS" vide excerpts in an earlier part of this order, the assessee has not claimed that these blocks are meant for, or capable of being used in, prefabricated buildings. On the other hand, it clearly says that the modular design of the blocks helps the mason make the maximum use of full and half length units through minimum cutting and proper fitting of units. The avowed objects are "speedier work, neater appearance of the finished walls and economy in construction". Apparently, if the appellant manufactured concrete blocks with modular design in accordance with NBC, they did so only to make the mason's work at the building site speedier and neater and not to use the blocks in prefabricated buildings. Their pamphlet, significantly, mentions some advantage of hollow concrete block masonry over brick masonry. Two buyers of such blocks, in their statements under Section 14 of the Central Excise Act, categorically stated that they had used the concrete blocks supplied by the appellant in the place of bricks for erecting walls of buildings at the construction sites vide para (6) of this order. The appellant has not rebutted this evidence. Therefore, in an overall view, it cannot be held that the concrete blocks manufactured and cleared by the appellant during the period of dispute were of a kind used in prefabricated buildings of heading 94.06.
(iii) The blocks cannot be considered to be of the above kind solely by reason of their modular design. At the same time, the manufacturer is not compulsorily required to show that the blocks were actually used by him in prefabricated buildings of 94.06 though, by so showing, he can at once establish that his blocks are of a kind used in such prefabricated buildings [In this case, we have already found that the blocks manufactured by the appellant were not actually used by them in such prefabricated buildings]. However, he has to prove otherwise that his blocks are of a kind used in such prefabricated buildings. This evidence is not forthcoming in this case. General technical literature on prefabricated buildings is no substitute for positive evidence, nor can another manufacturer's evidence be adopted to support the appellant's claim. Therefore, the Tribunal's decision in other cases like Orion Precast and Encore GRC cannot be followed in support of the appellant's case. Neither classification of goods under the Tariff nor eligibility for exemption under a Notification can be determined on ipse dixit. The requirement of the manufacturer having to establish through positive evidence that the concrete blocks manufactured by him are of a kind used in prefabricated buildings so as to have the goods classified under SH 6807.20 and claim the benefit of Notification No. 5/97-CE [Sl. No. 117(2)] was affirmed by the apex court in AEON's case vide para (4) of the court's judgment, quoted below:
"The Commissioner as well the Tribunal have both held that no evidence have been led by the party to show that blocks manufactured by them or that the kind of blocks manufactured by them are used in a pre-fabricated building. Nothing could be shown to us that these findings are incorrect. Reference was made by Mr. A.K. Ganguli, learned Senior Counsel appearing on behalf of the Appellants, upon a lot of material which deals with what is a pre-fabricated building and what are pre-fabricated blocks. But nothing could be shown to us to indicate that blocks of the kind manufactured by the Appellants are used in pre-fabricated building. As there is no material on record it is clear that the blocks manufactured by the Appellants cannot fall under Tariff Item 6807.20. It must necessarily fall under Tariff Item 6807.90."
(underlining supplied) Though the above judgment of the Supreme Court was cited by the Revenue before the Tribunal in Orient Precast case, it was not considered. The Tribunal's decision in Encore GRC case was also rendered without taking note of the above judgment. We are, therefore, of the view that the present issue is covered by AEON'S and cannot be decided by following the Tribunal's decision in Orient Precast case or Encore GRC case.
(iv) In view of the apex court's decision in AEON's case, the classification of the concrete blocks under SH 6807.90 is upheld for the period under consideration and, consequently, the benefit of Entry 117(2) of Notification 5/97-CE and similar provisions of successor-Notifications cannot be claimed by the appellant for the said period.
14. As regards the appellant's alternative claim for the benefit of Notification 6/2000-CE dated 01/03/2000, we note that the lower authority denied this benefit on the wrong premise that the goods were 'cement blocks' and not 'concrete blocks'. We have already rejected the distinction (as drawn by the JCDR) between 'cement blocks' and 'concrete blocks', which are expressions interchangeably used in the trade to describe cement concrete blocks. In the show-cause notice issued on 27/04/1989, the department described the goods as "R.C.C. Cement Blocks". In the SCN issued on 27/06/1990, they described the goods as "Concrete Blocks". No corrigendum was issued to correct the description of goods. Apart from this, the learned Commissioner himself chose to follow the Tribunal's decision rendered in Excon case wherein, admittedly, the question considered was whether the party was eligible for the benefit of Notification 64/88 in respect of "concrete blocks". It has never been in dispute that the blocks manufactured by the appellant were identical to the Excon products. For all these reasons, the learned Commissioner's decision to deny the benefit of Notification No. 6/2000 to the appellant by holding their products to be different from concrete blocks is not acceptable on facts or in law. To deny the benefit on the ground of belated claim is also not justifiable inasmuch as the benefit of an exemption Notification can be claimed even at the appellate stage. Full and unconditional exemption was available to "light weight (solid or hollow) concrete building blocks" under entry No. 170 of Notification No. 6/2000-CE. This benefit is admissible to the subject goods.
15. It appears from SCN dated 27/06/1990 that the appellant was allowed to enjoy SSI benefit under Notification No. 175/86-CE dated 01/03/1986 (as amended) from 01/04/1989 till their aggregate value of clearances for the fiscal year reached the prescribed limit of Rs. 75 lacs. The limit was crossed on 26/12/1989 and, therefore, the SCN demanded duty for the remaining part of the fiscal year. Any SSI benefit was not availed or claimed by the assessee for any period barring 1989-90. Before the adjudicating authority, they submitted that the benefit was not availed because, they thought, they were entitled to the benefit of Notification No. 64/88. They also pleaded for SSI benefit as an alternative to the benefit of Notification 64/88. Though the learned Commissioner noted these submissions of the party, he did not consider the same. He should have considered their plea.
16. The impugned order does not indicate that, before the Commissioner, the assessee claimed MODVAT /CENVAT credit on inputs as an alternative relief, nor does it show that they prayed for abatement of duty from the sale price of the goods to arrive at the assessable value. These reliefs have been claimed by the appellant before the Tribunal, without prejudice to their principal contentions. It is settled law, vide apex court's decision in Maruti Udyog case, that the value realised from the buyer of excisable goods should be treated as cum-duty price. Therefore, the appellant's prayer for abatement of duty from the invoice price of the goods to arrive at its assessable value is liable to be allowed. The appellant will also be entitled to MODVAT / CENVAT credit on the inputs used in or in relation to the manufacture of the concrete blocks if they can prove that such inputs were duty-paid and were used in the said manner.
17. Limitation issue
(i) One of the 20 SCNs invoked the proviso to sub-section (1) of Section 11A of the Central Excises & Salt Act to recover duty for a period totally beyond the normal period of limitation and that is the one issued on 30/06/1993 demanding duty for the period from June to September, 1988. This SCN alleged that the assessee had, with mala fide intention to qualify for exemption under Notification No. 64/88, "wilfully misstated in their classification list stating that their products falling under chapter heading No. 94.06". It further alleged that the assessee had "deliberately suppressed the facts and falsely declared the incorrect description in respect of products under reference with an intent to evade payment of appropriate amount of Central Excise duty". The assessee, in their reply, denied these allegations by submitting that "the department was aware that we were availing the concession under Notification No. 64/88 dated 01/03/1988 and that our buyers were not the manufacturers of prefabricated building". In this connection, they claimed support from order-in-appeal No. AND/29/91/BIII dated 18/04/1991 also. In the present appeal and written submissions, they have also laid much emphasis on the fact that the relevant classification lists (CLs) were approved by the Assistant Collector.
(ii) We note that there were three CLs relevant to the above period, No. 16/88-89 effective from 01/04/1988, No. 144/88-89 effective from 23/06/1988 and No. 232/88-89 effective from 30/08/1988 (numbers allotted by the Central Excise Range Officer). In all these CLs, the blocks were classified under SH 6807.00 and the benefit of Notification No. 64/88-CE dated 01/03/1988 was claimed. In the second and third CLs, the goods were also described as "constituting components of pre-fabricated building falling under heading No. 94.06". All the three CLs were approved by the Assistant Collector and these approvals were effective from the respective dates viz. 01/04/1988, 23/06/1988 and 30/08/1988 covering the period, June to September, 1988. The clearances of the goods during this period should, therefore, be considered to have been made in terms of approved classification lists. This apart, it is also pertinent to note that, when the appellant stated / declared any particulars of their goods in their classification list under Rule 173B, they were doing so with the awareness that the competent authority whose burden it was to safeguard the revenue would conduct enquiry under the said Rule to ascertain the correctness of such particulars. Therefore, as rightly submitted by the learned counsel, the appellant cannot be said to have wilfully misstated, deliberately suppressed or falsely declared anything before the department with intent to evade payment of duty. The subsequent reversal, by the Collector (Appeals), of the Assistant Collector's decision or even the ultimate disapproval, by the apex court, of the appellate Collector's view did not alter the fact that the assessee had not misstated, suppressed or misdeclared anything with intent to evade payment of appropriate duty. Therefore, the demand of duty for the period, March to September, 1988 is time-barred.
(iii) The other show-cause notices, barring one or two, also invoked the proviso to sub-section (1) of Section 11A of the Act by alleging that the notices had falsely or deliberately declared incorrect description in respect of their products. The total period covered by these SCNs can be divided into two parts -- the first being the period for which the appellant's CLs were provisionally approved and the next being the period [from 01/05/1995] for which the appellant was filing 'classification declarations' instead of classification lists under the amended provisions of Rule 173B. For the first period, pre - 01/05/1995, we hold, for the same reasons as we have recorded for the period covered by SCN dated 30/06/1993, that the appellant cannot be said to have deliberately misdescribed their goods with intent to evade payment of appropriate duty inasmuch as our reasoning cannot be materially altered by the provisional nature of the approval of CLs. Therefore, any demand of duty beyond the normal period is liable to be set aside as the proviso to sub-section (1) of Section 11A is not applicable to the facts of the case for the pre - 01/05/1995 period.
(iv) For the period from 01/05/1995, the appellant, admittedly, filed classification declarations under Rule 173B (as amended) furnishing the necessary particulars of the goods, from time to time. These declarations were filed with the proper officer of Central Excise who had the power, under sub-rules (3) and (4) of the said Rule, to conduct enquiries for ascertaining the correctness of the declared particulars and for reassessing the correct amount of duty to be paid by the assessee. Therefore, it cannot be said that the appellant deliberately misdescribed their goods with intent to evade payment of appropriate duty during the above period, and consequently the proviso to Section 11A(1) was not to be invoked for the said period also.
(v) The learned Commissioner should have noted that the amendment to Section 11A(1) by Section 97 of the Finance Act, 2000 (which had retrospective effect from 17/11/1980) only meant that any approval of classification list would not preclude the department from demanding duty short-levied, short-paid, etc., from an assessee for the normal period of limitation prescribed under the main part of sub-section (1) of Section 11A. It did not, in any way, affect the department's burden of proof under the proviso to the sub-section for invoking the extended period of limitation. We have already found that this burden was not successfully discharged in this case.
(vi) "Protective demand notices" like the ones under consideration must be issued within the normal period prescribed under the main part of sub-section (1) of Section 11A. The learned JCDR has not offered any explanation as to why the proviso to the sub-section was pressed into service by the show-cause notices in this case.
(vii) In the result, we hold that all demands of duty beyond the normal period of limitation, in this case, are time-barred.
18. As the grounds for invoking the extended period of limitation do not exist in this case, there can be no levy of interest on duty under Section 11AB nor any penalty under Section 11AC (even for the period from 28.9.1996) inasmuch as these provisions also worked on the same grounds during the material period. However, penal liability under Rule 173Q read with Rule 9(2) appears to be inescapable for the assessee as they had not determined or paid the correct amount of duty during the said period. The amount of penalty has to be determined afresh upon requantification of duty.
19. In the result, it is ordered as follows:
(a) The benefit of concessional rate of duty under Notification No. 64/88 (entry No. 3) or under similar provisions of successor-Notifications cannot be extended to the cement concrete (solid or hollow) blocks cleared by the appellant from June 1988 to March 1997.
(b) The classification of the products under SH 6807.90 is upheld for the period from April 1997 and consequently the benefit of entry 117(2) of Notification No. 5/97-CE or similar provisions of successor-Notifications cannot be claimed for the said period;
(c) The appellant is eligible for the benefit of Notification No. 6/2000 (entry 170) for the period from 01/03/2000;
(d) Their alternative plea for SSI benefit has to be considered for the period prior to 01/03/2000;
(e) The appellant's claim for MODVAT / CENVAT credit on inputs has to be allowed subject to fulfilment of mandatory requirements;
(f) Abatement of duty from sale price of the goods to determine the assessable value has to be allowed;
(g) The demand of duty for any period beyond the normal period of limitation prescribed under sub-section (1) of Section 11A of the Act is time-barred;
(h) Interest on duty is not leviable under Section 11AB, nor is any penalty imposable under Section 11AC;
(i) The Commissioner is directed to requantify the duty to be recovered from the appellant in terms of this order and also to redetermine the amount of penalty to be imposed on them under Rule 173Q read with Rule 9(2) of the Central Excise Rules, 1944, for which a reasonable opportunity of being heard should be given to the assessee;
(j) The proper officer of Central Excise may dispose of all pending classification lists (provisionally approved) and declarations in the light of this order after following the procedure laid down under the erstwhile Rule 173B.
20. The appeal is disposed of as above.
(Pronounced in Court on 18.6.2010) (P. Karthikeyan) Member (Technical) (P.G. Chacko) Member (Judicial) tvu 46 2