2021 (6) TMI 370 - HC - Central Excise

Manufacture of RMC at site or not - TMaintainability of petition - petitioners have not filed this petition impugning the Order-in-original within the statutory period prescribed under Section 35 of the Excise Act - petitioners case hinges on the assertion that the installation at the project site for manufacture of CM (which is exempted) is different from the installations for manufacture of RMC, and they have manufactured controlled CM, as civil contractors executing civil works contract, for captive use at site and not for sale - HELD THAT - On examining the explanation offered by the petitioners for not filing statutory appeal and because of the absence of the necessary details, has opined in paragraph 16 above that the petitioners are superfluous in their explanation of the delay in availing/failure to avail the appeal remedy. The delay in impugning the Order-in-original, which is not sufficiently explained, must be construed as unreasonable 4 and therefore, the writ petition must fail at this threshold bar. This consideration would be distinct and separate from examining the explanation offered for the purposes of condoning the delay which would be in the teeth of the decision of the Hon ble Supreme Court in OIL NATURAL GAS CORP. LTD. VERSUS GUJARAT ENERGY TRANSMISSION CORPORATION. LTD. AND ORS. 2017 (3) TMI 1628 - SUPREME COURT . Whether a concrete mix manufactured at the site can be classified as RMC will have to be decided based on (1) the plant and machinery set-up for its manufacture, (2) the manufacturing processes involved, (3) the properties of the concrete mix and (4) the manner of delivery. It is undisputed that the petitioners have set-up a batching plant comprising of separate silos and concrete mixer with necessary pumps, piping system and control panel to manufacture concrete mix of required grades and quality as per the contractual terms and the concrete mix manufactured by them was no different from the concrete mix purchased by the petitioner in case of breakdown or maintenance - The petitioners, only because they had not installed either stone crushers with vibrators or sand mill or because they purchased stone aggregates, sand and other raw material from third-party vendors, cannot be permitted to contend that the machinery installed by them and the manufacturing process adopted by them are different and distinct from the machinery installed and process followed for manufacturing RMC. If the petitioners have manufactured RMC, it would be of no significance, given the text of the exemption under the relevant notification and the clarification, that it is used for captive use and not for sale. The writ petition is rejected concluding that the first respondent has rightly classified the concrete mix manufactured by the petitioners at the project site as RMC - petition dismissed.

Summary

Issues Involved:
1. Maintainability of the writ petition due to non-filing of statutory appeal within the prescribed period.
2. Classification of concrete mix manufactured at the project site as Ready Mix Concrete (RMC) or Controlled Mix (CM).
3. Jurisdiction of the Order-in-original issued by the first respondent.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The petitioners did not file an appeal within the statutory period prescribed under Section 35 of the Central Excise Act, 1944. They claimed that the delay was due to a bona fide error by their tax consultants. The court noted that the petitioners provided vague explanations without sufficient details such as the date of communication of the Order-in-original, the date records were handed over to the consultants, and actions taken for the failure to file the appeal. The court emphasized that the Hon’ble Supreme Court in Glaxo Smith Kline Consumer Healthcare Ltd. has underscored the principle that the High Court should exercise self-imposed restraint and not entertain writ petitions if an alternative remedy is available and the statutory period has lapsed. The court concluded that the writ petition cannot be rejected merely because a statutory appeal was not preferred within the prescribed period but must fail due to the unreasonable delay in impugning the Order-in-original.

2. Classification of Concrete Mix:
The petitioners argued that they manufactured Controlled Mix (CM) at the project site for captive use, not Ready Mix Concrete (RMC), and thus were exempt from excise duty. They relied on notifications dated 01.03.1997 and 17.03.2012, and a CBIC clarification dated 06.01.1998, which exempted CM manufactured at the site of construction from excise duty. The court examined the distinction between CM and RMC based on the plant and machinery set-up, manufacturing processes, properties of the concrete mix, and the manner of delivery. It was undisputed that the petitioners had set up a batching plant with separate silos and a concrete mixer, and the manufactured mix was no different from the mix purchased from third-party vendors. The court concluded that the petitioners manufactured RMC using elaborate batch plants to specific and precise requirements and standards, making it exigible. The absence of stone crushers or sand mills did not materially differentiate the process from manufacturing RMC.

3. Jurisdiction of the Order-in-original:
The petitioners contended that the Order-in-original was without jurisdiction as the first respondent failed to appreciate that they manufactured only CM, which is exempt from excise duty. The court noted that the first respondent conducted a search operation and recorded voluntary statements from the petitioners’ representative, confirming the installation of a batching plant for manufacturing concrete mix. The Hon’ble Supreme Court in Larsen and Toubro Ltd. v. Commissioner of Central Excise, Hyderabad held that the process of mixing differentiates CM from RMC. Given the elaborate batching plant set-up and precise manufacturing process, the court concluded that the first respondent rightly classified the concrete mix as RMC, and the Order-in-original did not suffer from lack of jurisdiction.

Conclusion:
The writ petition was rejected on the grounds of unreasonable delay in filing and the classification of the concrete mix as RMC, which is exigible. The court held that the Order-in-original was within jurisdiction and the first respondent correctly classified the concrete mix manufactured by the petitioners.