2002 (1) TMI 236 - AT - Central Excise

Summary

Issues Involved:

1. Classification and excise duty applicability on Ready Mix Concrete (RMC).
2. Marketability and valuation of RMC.
3. Bona fide belief and time-bar of demand.
4. Eligibility for Modvat credit.
5. Imposition of penalties.

Summary:

1. Classification and Excise Duty Applicability on RMC:

The Commissioner of Central Excise, Chandigarh issued a show cause notice alleging that the construction companies were manufacturing Ready Mix Concrete (RMC) without discharging central excise duty, classifying it under Chapter Heading No. 3824.20 of the Central Excise Tariff Act. The appellants contended that the product made was 'concrete mix' and not RMC, arguing that RMC should be manufactured away from the work site and transported, whereas their product was made and used at the site itself. The Tribunal held that the product manufactured by the appellants is RMC falling under sub-heading 3824.20 and subject to duty, rejecting the argument that the concrete made at the site is not RMC.

2. Marketability and Valuation of RMC:

The appellants argued that their product was not marketable. However, the Tribunal rejected this argument, stating that the concrete made as per BIS standards IS: 456/1978 is capable of being sold in the market. The Commissioner adopted the value of comparable goods manufactured at Ranjit Sagar Dam to assess the duty, which was contested by the appellants. The Tribunal directed the appellants to furnish relevant data to the Commissioner for determining the value of the product for assessment.

3. Bona Fide Belief and Time-Bar of Demand:

The appellants claimed a bona fide belief that their product was exempt from duty based on the Board's Circular and the exemption notification. The Tribunal found this claim unsupported by evidence, noting that the appellants did not seek clarification from the authorities and the Board Circular was issued after the RMC was brought under excise net. The plea of bona fide belief was rejected, and the demand for the period from 1-3-97 was upheld, applying the extended period for demand under Rule 9(2) of the Central Excise Rules, 1944 read with proviso to Section 11A(1) of the Central Excise Act, 1944.

4. Eligibility for Modvat Credit:

The appellants argued for eligibility for Modvat credit on the cement used as an input. The Tribunal allowed the appellants to establish their case before the original authority for eligibility to the Modvat credit with documentary proof.

5. Imposition of Penalties:

A penalty of Rs. 30 lakhs was imposed on M/s. NJPC under Rule 209A. The Tribunal directed the Commissioner to reconsider the imposition of penalties and the amounts thereof for each appellant, including M/s. NJPC, on de novo consideration.

Conclusion:

The Tribunal set aside the impugned order and remanded the case with specific directions to the Commissioner for re-examination of valuation, eligibility for Modvat credit, and reconsideration of penalties. The appeals were disposed of by remand in these terms, and the appellants were to be given a reasonable opportunity of hearing before a final decision.