2019 (1) TMI 498 - AT - Central Excise

Clandestine removal - Ready Mix Concrete - Department entertained a view that the appellant is engaged in the manufacture of Ready Mix Concrete and the same is cleared by them from their plant situated at Kumbalgodu to the project site without taking any Central Excise Registration and without paying any excise duty - case of appellant is that the concrete mix prepared by them is classifiable as concrete mix under Chapter Heading 38245010 of Central Excise Tariff Act, 1985 as the same was being prepared at site of construction and the same is exempted from excise duty vide Sl. No. 144 of Notification No. 12/2012 CE dated 17.03.2012 - non-speaking order - scope of SCN - time limitation. Held that - As per the mahazar dated 05.03.2014 prepared on the spot in the presence of witnesses, it is clearly mentioned that the production of concrete mixing activity was in progress at the site of the project. Further we find that the original authority after considering the material on record and the statement of T.R. Umaprasad wherein he has fairly stated that the concrete was produced at their batching plant at the Kengeri site and used for construction of the said project. Further we find that the show-cause notice which has proposed to classify the impugned goods as RMC is without any evidence and basis. Further, in the show-cause notice there is no allegation that process adopted by the appellant to manufacture the impugned goods is similar to the process required for manufacturing RMC and the Department has never disputed or challenged or considered the manufacturing process adopted by the appellant. Time limitation - Held that - The investigation took place in March 2014 and all the records were taken by the Department during the investigation and statements were also recorded but the show-cause notice was issued in June 2016 which is beyond the normal period of limitation of one year. Though the Department has invoked the extended period alleging suppression whereas according to us there was no suppression on the part of the appellant to evade payment of duty and the appellant had a bona fide belief that the impugned goods are exempted from payment of duty - invoking the extended period of limitation to demand duty is not sustainable in law. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of the product as Ready Mix Concrete (RMC) or concrete mix.
2. Applicability of exemption under Notification No. 12/2012-CE dated 17.03.2012.
3. Validity of the show-cause notice and the impugned order.
4. Invocation of the extended period of limitation for demand of duty.

Issue-wise Detailed Analysis:

1. Classification of the Product:
The primary issue revolves around whether the product manufactured by the appellant is Ready Mix Concrete (RMC) or concrete mix. The appellant contended that the concrete mix prepared at the site is classifiable under Chapter Heading 38245010 of the Central Excise Tariff Act, 1985, and is exempt from excise duty. The Department argued that the product is RMC, which is not exempt.

The Tribunal found that the production of concrete mixing activity was in progress at the site of the project, as per the mahazar dated 05.03.2014. The original authority accepted the appellant's stand, stating that the concrete mix was produced at the batching plant at the Kengeri site and used exclusively for the project, thus qualifying for exemption. The Tribunal noted that the show-cause notice lacked evidence to classify the product as RMC and did not consider the manufacturing process, which is crucial for determining the nature of the product.

2. Applicability of Exemption under Notification No. 12/2012-CE:
The appellant claimed exemption under Sl. No. 144 of Notification No. 12/2012-CE dated 17.03.2012, which exempts concrete mix manufactured at the construction site. The Tribunal referred to the Board's Circular No. 237/71/96-CX dated 12.08.2016, which clarifies the classification of RMC. The Tribunal found no evidence in the show-cause notice to suggest that the appellant's manufacturing process was akin to that of RMC.

Moreover, the Tribunal noted that Notification No. 12/2012-CE was amended by Notification No. 12/2016-CE dated 01.03.2016 to extend the exemption to "Ready Mix Concrete as well," and held that such amendments are applicable retrospectively, as per the Supreme Court's ruling in Government of India Vs. Indian Tobacco Association.

3. Validity of the Show-Cause Notice and the Impugned Order:
The appellant argued that the impugned order was non-speaking and merely reproduced the show-cause notice without addressing their submissions. The Tribunal agreed, stating that the Commissioner (Appeals) ignored the process of preparing the concrete mix and proceeded on a different tangent. The Tribunal found that the show-cause notice did not specify how the goods were classifiable as RMC and lacked evidence to support the Department's claim.

4. Invocation of the Extended Period of Limitation:
The appellant contended that the demand was barred by limitation as the show-cause notice was issued beyond the normal period of one year. The Tribunal observed that the investigation took place in March 2014, but the show-cause notice was issued in June 2016, beyond the normal period. The Tribunal held that there was no suppression of facts by the appellant and that the issue involved the interpretation of the notification, which is legal in nature. Citing previous decisions, the Tribunal concluded that invoking the extended period was not justified.

Conclusion:
The Tribunal set aside the impugned order, holding that the product manufactured by the appellant was concrete mix, not RMC, and thus eligible for exemption under Notification No. 12/2012-CE. The Tribunal also found the show-cause notice and the invocation of the extended period of limitation to be unsustainable. The appeal was allowed with consequential relief to the appellant.

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