2018 (10) TMI 638 - AT - Central Excise

Penalty u/r 26 of CER 2002 - Whether the product manufactured by the appellant described by the revenue as ready-mix concrete eligible for exemption under Central Excise Notification 12/2012 dated 17.03.2012 as concrete mix manufactured at the site of construction for use and construction work at such site under Chapter 38 of the Central Excise Tariff? - time limitation. Held that - There is no change in the Central Excise Tariff Heading in so far as the ready mix concrete is concerned. The description ready mix concrete has been replaced by the description concrete ready to use known as ready mix concrete (RMC) - there is no change in tariff description or in the Notification as far as ready mix concrete is concerned. Similar issue was examined by Hon ble Apex Court in appellant s own case 2015 (10) TMI 612 - SUPREME COURT where there is no change in the Central Excise Tariff Heading in so far as the ready mix concrete is concerned - it is apparent that the sole distinction recognized by Hon ble Apex Court between the RMC and CM is the manner of manufacture whether conventional (manual) or automated. It is seen that in the entire findings of the Hon ble Apex Court from para 18 onwards there is no mention of any IS Specification anywhere. In fact Hon ble Apex Court has not relied at all on the IS Specifications. In these circumstances any changes in the IS Specifications cannot be used to distinguish the decision of Hon ble Apex Court. Time Limitation - Held that - The concrete mix prepared at site would be entitled to exemption under Notification 4/97. In these circumstances the benefit of limitation has to be extended to the appellant. Penalty - Held that - Since the issue was of interpretation no penalty can be imposed on Sh. Mukund K. Bangde. The demand against M/s Larson & Toubro for the period beyond the normal period of limitation is set aside - penalty also set aside - appeal allowed in part.

Summary

Issues Involved:
1. Eligibility of concrete mix manufactured at the site of construction for exemption under Notification 12/2012.
2. Applicability of the Hon’ble Supreme Court's decision in the appellant’s own case to the current case.
3. Changes in IS specifications and their impact on the classification of concrete mix and RMC.
4. Invocation of the extended period of limitation.
5. Imposition of penalties on the appellant and the Project Manager.

Issue-wise Detailed Analysis:

1. Eligibility of Concrete Mix for Exemption:
The primary issue is whether the concrete mix manufactured at the site of construction is exempt from excise duty under entry 144 of Notification 12/2012. The appellant argued that the product should be classified as "Concrete Mix" and not "Ready Mix Concrete (RMC)," thereby qualifying for the exemption. The exemption under Notification 12/2012 is for "Concrete Mix manufactured at the site of construction for use in construction work at such site" under Chapter 38 of the Central Excise Tariff.

2. Applicability of the Supreme Court's Decision:
The appellant contended that the Supreme Court's decision in their own case (2015 (324) ELT 646) is not applicable due to legislative changes and amendments in IS specifications. The Supreme Court had previously ruled that the exemption under Notification 4/1997-CE did not apply to RMC, which was classifiable under a different tariff heading (3824.20) compared to Concrete Mix (6807). The appellant argued that the distinction between Concrete Mix and RMC has been removed by legislative amendments, making the Supreme Court's earlier decision irrelevant.

3. Changes in IS Specifications:
The appellant highlighted that IS 456:1978, which prescribed manual batching and mixing of concrete, has been replaced by IS 456:2000 and further amended in 2013. The new standards allow for concrete to be manufactured in captive automated batching and mixing plants. The appellant argued that this change means that concrete produced in automated plants should still qualify as "Concrete Mix" under the exemption notification. The appellant also noted that IS 4925:2004 distinguishes between RMC plants and other batching and mixing plants, supporting their argument that not all automated plants produce RMC.

4. Invocation of the Extended Period of Limitation:
The appellant argued that the extended period of limitation was wrongly invoked. They relied on the Tribunal's decision in Shapoorji & Pallonji Co. Ltd vs. CCE, Mumbai (2016 (344) E.L.T. 1132) and the Supreme Court's decision in Continental Foundation Jt. Venture vs. CCE, Chandigarh-I (2007 (216) E.L.T. 177), which held that extended limitation cannot be invoked in cases of interpretational disputes. The appellant also cited favorable decisions from the Madras High Court and the Punjab & Haryana High Court, which supported their claim for exemption, indicating that there was no suppression of facts.

5. Imposition of Penalties:
The appellant contended that penalties were wrongly imposed on them and the Project Manager, arguing that the issue was one of interpretation. The Tribunal agreed, noting that since the issue involved interpretational disputes, penalties could not be justified. The appeal of the Project Manager, Sh. Mukund K. Bangde, was allowed, and the penalties imposed on M/s Larsen & Toubro were set aside.

Conclusion:
The Tribunal concluded that the product manufactured by the appellant, described by the revenue as 'ready-mix concrete,' was not eligible for exemption under Notification 12/2012 as 'concrete mix.' However, the demand for the period beyond the normal limitation period was set aside, and penalties imposed on the appellant and the Project Manager were also set aside. The appeal was partly allowed in these terms.