9911796707
TMI Blog2000 (11) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... oss in India. One of the most common items used in the construction and building industry in India is concrete. Concrete is used at tens of thousands of sites throughout the country where buildings, bridges, dams, etc. are being built. The appellants state that the excise during the relevant periods and periods prior thereto did not contain any entry covering "concrete" or an "in process" material called "READY MIX CONCRETE" (RMC) and even otherwise concrete/RMC was not regarded as excisable commodity by the department. It is further stated by the appellants that in the present proceedings for the first time after several decades the excise department is trying to levy duty on RMC even though neither the expression "RMC" nor "concrete" is used in tariff entry 38.23 where the department seeks to classify this subject item. The assessee received show cause notice dated 9-5-1996 calling upon the assessee as to why duty amounting to Rs. 41,69,103/- should not be recovered. Another show cause notice was issued on 26-6-1967 calling upon the assessee to pay a sum of Rs. 8,26,43,587/-. In the first show cause notice period in dispute is from November, 1995 to March, 1996 and in the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f use apparent and in such a situation invocation of the larger period of limitation is wrong in law. He further stated that the department at the highest level had entertained the doubt about the exigibility. This is after 56 years of the present enactment. When such is the position he stated that when the department itself is having such a doubt then how could the assessee be charged with allegation of suppression? He further stated that bringing the product under 3824 of the CETA is wrong because as stated earlier show cause notice does not state as to how it could be done so. He further stated that no material has been produced to justify the goods under the residuary entry of chemicals. He further stated that no material has been produced by the department to show that READYMIX CONCRETE is a chemical product. Burden is on the department to prove the classification which has not been discharged. For the above propositions he cited the following cases : (1) The Central India Spinning and Weaving and Manufacturing Co. Ltd., The Empress Mills v. The Municipal Committee - 1958 (S.C.) 341 page 344 para 28, page 347 para 31 and page 348. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal provisions under the Act and Rules. As far as the Board's circular is concerned she read through the same and pointed out the difference as to what is "READYMIX CONCRETE" and the shelf life etc. We shall refer to the same in the body of the judgment later. She invited our attention to exhibit 'D' in Appeal No. E/688 especially page 31 and first paragraph of page 32. 6. We have considered the rival submissions. The appellant case are two appeals, one relates to the factory at Bandra (East) and the other one relates to Kalamboli. Shri Hidayatullah stated that concrete is normally made out of agglomeration of water, sand, cement, aggregated stones along with plasticizer in the desired proportion mixed with certain chemicals like plasticizers. The entire mixture is agitated in a concrete mixture with the help of power. If proper care is not taken the concrete may not form or set in a proper way which will not come in a desired result. The entire thing called hardening of the concrete after the elapse of the period for setting in. The question of the exigibility of duty and payment thereof started in this case with issue of a Board's Circular No. 237/71/96-CX dated 12-8-1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods have a short shelf life, the same are marketable. Thus to put it simply, the product "Ready Mix Concrete" is marketable through within the time frame of its short shelf life. As such, the product satisfies the twin test of "goods" and "marketability" which are needed if they are to be held as chargeable to Central Excise duty under CETA, 1985. 4. Regarding classification it is stated that the impugned goods which are non-refractory and used in the construction/building activity is more akin to "Non-refractory mortars and concrete". As per HSN Explanatory note on pages 540-541, "Non-refractory Mortars and Concrete" fall under Heading No. 38.23, sub-heading 3823.50. Further, the CETA 1985 (Chapter 38 of the same) is fully aligned to the HSN. Therefore, applying the Rules of Interpretation, viz., Rule 2(b) it is seen that the classification of the goods under reference is appropriate under Heading No 38.23 (sub-heading 3823.00) of CETA, 1985. 5. In view of the above and the case law on the subject, the Board has taken a view that Ready Mix Concrete is an excisable product and would merit classification under Heading No. 38.23 of the CETA, 1985. Accordingly, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "A doubt has been raised as to whether exemption from excise duty is available to concrete mix manufactured at or on the site of construction for use in construction work at site is applicable to Concrete Mix manufactured at the site of construction for use in construction work at site is applicable to "Ready Mix Concrete" manufactured at the site of construction." In paragraph 4 thereof the Board seeks to explain that - "Ready Mix Concrete and Concrete Mix are two separate and distinctive commodities. Ready Mix Concrete, even if it is manufactured at site, is chargeable to duty at 13% under sub-heading 3824.20 of the Central Excise Tariff Act, 1985. The exemption for concrete mix manufactured at the site of construction for use in construction work at site available vide Sr. No. 51 of Notification 4/97 is not applicable to Ready Mix Concrete manufactured at site of construction." When we see the letter dated 22-1-1997 of Shri Mohile, Member, Central Excise it also states that prior to issue of Circular dated 12-8-1996 there was a long standing practice not to levy duty on Ready Mix Concrete. When we look into the circulars and the understanding of the department as reflected i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticees. Here such actions are absent. We are therefore of the view that the principles of audi alterum partem has not been complied with. 8. This takes us to the another argument of Shri Hidayatullah namely when there is a question of doubt where two views are possible, the benefit of such a doubt should be given to assessee. When we go through the Circulars No. 237/7/96 dated 12-8-1996 and 315/31/97 dated 23-5-1997 the word doubt as stated already is in the first para of the first circular and in the second para of the second circular. Even subsequently the Circular No. 368/1/98 dated 6-1-1998 the doubt still persisted. In paragraphs 2 & 5 of the circular the Board observes as follows : "2. The Board has examined the issue of "RMC" afresh and finds that a clear distinction needs to be made between the two types - (a) concrete mix at site and (b) Ready Mix Concrete. The Ready Mix Concrete plant consists of stone crushers, conveyors, vibrator screen to segregate different sizes of stone aggregates, and a sand mill to produce sand from stones. A central batching plant is also installed in which all aggregates are weight, batched by electrical controls and limit switches. Cemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the minds of the authority which deals with the administration of the excise duty exists as reflected in the Board's circulars (supra). When that is the position we cannot hold the appeals in favour of the department. We therefore accept the arguments made by the learned Senior Counsel. 11. As far as the exigibility and the classification is concerned, burden is on the department to prove the classification. This has been succinctly stated by the judgment of the Supreme Court in the case of UOI v. Garware Nylons Ltd. - 1996 (87) E.L.T. 12 at page 18 para 15 thereof :- "In our view, the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have referred to above have not been discussed at all except to state that they do not have any relevance on the issue. In our view whenever any authority is passing an order it should not be prejudicial to the interest of the assessee if it does not discuss the materials given before it. 12. This takes us to question of invocation of larger period. It is curious and relevant for us to refer to the Board's letter dated 22-1-1997 written by S.D. Mohile. In para 3 thereof it has been stated as follows : "It may also be clarified whether prior to issue of notification dated 12-8-1996 there was a long standing practice not to levy duty on readymix concrete made in batching plants". In our view this seems to be the entire scenario. When the Board makes such a statement it is not possible for us to agree with the argument of the SDR that prior to March, 1996 the party should be asked to pay duty/tax. The show cause notice in this case is for the period from December, 1993 to October, 1996. When the Board's member in-charge himself says there is a long standing practice of not to levy duty, how could for the period in question December, 1993 to October, 1996 the department issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kinds of concretes, certain chemicals are added in small quantities to achieve the derived end results of quick setting, acid resistance or render the same suitable for marine use. The cement used is normally Port land Cement, but other speciality cements as per end use requirements could also be used. My search on 'Ready Mix Concrete' reveals it to be :- (i) Proportioned and mixed at a central plant site and removed in plain trucks or agitater trucks or (ii) Proportioned at a central Point and mixed in a mixer truck (truck mixed concrete) equipped with water tanks, during transportation. It is largely displacing job-mixed concrete in metropolitan areas. The truck agitators and mixers are essentially rotary mixers, mounted on trucks. There is no deleterious effect on the concrete, if it is used within one hour after the cement has been added to the aggregate, this period can be increased by lowering the temperature by adding ice or/and other coolants to maintain freezing range. (iii) Mixtures for concrete are also centrally batched, particularly for road construction, transported to the site in batcher trucks with compartments to keep aggregate sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be considered/applied and are relevant only when the classification by employing the statutory rules of interpretation is ambiguous and resort to their assistance is called for. One cannot read HSN head notes to determine classifications, when the same will result, and conflicts with the Statutory Rules of Interpretation. However, if legislature enacts a heading and places it under chapter 38 then that heading becomes specific and has to be applied as provided by Rule 2 of the Interpretative Rules by ignoring the Chapter Heading. For the period under consideration there was no specific heading for ready mix concrete, which has been enacted under Chapter 38 only after as 3824.20 after the period under dispute. (e) I would also find that the Board's Circulars mentioned and extracted in my learned Brother's order would lead to a firm conclusion, that there was a definite understanding regarding the doubts regarding the excisibility of the process and the product being entertained by the assessees and the department. Data on the pending assessments/disputes was therefore sought and was under collection. That should have been considered under Section 11C of the Act. The B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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