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TMI Blog2015 (10) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee installed two batching plants and one stone crusher at site in their cement plant to produce RMC. The batching plants were of fully automatic version. Concrete mix obtained from these batching plants was delivered into a transit mixer mounted on a self propelled chassis for delivery at the site of construction is in a plastic condition requiring no further treatment before being placed in the position in which it is to set and harden. The prepared chassis which was mounted was to ensure that when the concrete mix is taken to the actual place of construction, it keeps rotating. It is also significant to mention that for producing the concrete mix, material used was cement, aggregates, chemically analysed water and admixtures, namely, retarders and plasticizers. As the L&T was constructing cement plant of a very high quality, it needed concrete also of a superior quality and to produce that aforesaid sophisticated and modernised process was adopted. - adjudicating authority brought out the differences between Ready Mix Concrete and CM which is conventionally produced. In this backdrop, the only question is as to whether RMC manufactured and used at site would be covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2005 Civil Appeal No. 2121/2006 3) L T was constructing its own cement plant at Bhogasamundram, Anantpur. For the purpose of the construction of civil structure of the said cement plant, L T required CM, it used to prepare said CM at site with the help of machinery installed there and the said CM was captively consumed in the construction of the said cement plant by L T. L T did not pay any central excise duty on this product taking shelter under Notification No. 4/1997-CE dated Mach 01, 1997, which exempted CM from payment of excise duty. 4) The Central Excise Officers visited the site and found that the L T are manufacturing ready mix concrete and not concrete mix. A show-cause notice dated July 22, 1998 was issued by the Commissioner of Customs and Central Excise, Hyderabad-II Commissionerate, proposing excise duty demand of ₹ 1,97,47,626 along with interest, penalty and fine. L T refuted the aforesaid demand by filing its reply dated September 09, 1998 and submitting that since concrete was prepared at the site and was consumed captively at site, it had to be treated as CM and, therefore, was eligible for exemption under the said Notification which exempted CM fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty under sub-heading No.3824.20 of the Central Excise Tariff Act, 1985. The exemption for CM manufactured at the site of construction for use in construction work at such site available under Notification No.4/97-CE dated March 01, 1997 is not applicable to RMC manufactured at the site of construction. L T had challenged this interpretation in the circular by filing a writ petition in the High Court of Madras. Before the High Court, the Additional Central Government standing counsel specifically took a stand that excise duty is not leviable on RMC if it is manufactured at the site of construction. It was, thus, argued that the Revenue was bound by the aforesaid concession given in the Court. 7) The CESTAT, however, was not amused by these contentions of L T. While dismissing the appeal, the CESTAT distinguished between RMC and CM explaining that the same were understood differently in trade and commerce. It accepted the finding of the Commissioner that the manner in which the product was manufactured by L T, it was clearly RMC. It was pointed out that the facility put up by L T involved various machines coupled with sophisticated process which was indicative of the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le from the above that the Legislature has treated RMC and CM as two different products. Whereas CM has generally been covered by the exemption notification, such an exemption is not extended to RMC. Even when doubts were raised from time to time about the two products, Government has always been clarifying and emphasizing that the two products are different and RMC attracts excise duty and is not covered by the exemption notification. The classification entries have also been enacted accordingly. We may also mention at this stage itself that the duty which was demanded from L T by issuing show-cause notices cover the period from May 02, 1996 to February 28, 1997 and from March 01, 1997 to March 19, 1998. 10) Notification No.4/97-CE dated March 01, 1997 was issued under Section 5A(1) of the Act exempting certain goods from payment of excise duty at Sl. No.51 Chapter 38 is covered and the description of goods mentioned therein reads as follows: Concrete Mix manufactured at the site of construction for use in construction work at such site. 11) Another factual aspect which needs to be highlighted is the description of RMC. In Circular dated August 12, 1996 issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4926 is concerned with commercial aspects of industry practices of ready mix concrete, which by definition is concrete mix manufactured at one place and delivered at another place for use. (ii) Since L T was manufacturing concrete mix at the site for self-use in construction of cement plant, it was not manufacturing ready mix concrete. For this reason, CBEC in Circular dated January 06, 1998, has explained that by its very nature, ready mix concrete cannot be manufactured at site. This must be the logic on the basis of which, the Government counsel made a concession before the Hon'ble Madras High Court (Larsen Toubro Ltd. v. Union of India 2006 (198) ELT 177 (Mad.) that ready mix concrete manufactured at site is not taxable. (iii) Traditionally, articles manufactured at the site of construction have been exempted from excise duty with respect to goods manufactured at the site of construction. A list of notifications showing such uninterrupted exemption for articles of cement falling under CH 68, articles of iron and steel falling CH 73 and concrete mix falling under CH 38 is enclosed. For this reason, and also the fact that the product-wise there is no difference betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made under CH 38, site mixed concrete was also exempt under this notification. 14) From the aforesaid submissions of Mr. Sahu, it becomes apparent that basic thrust of his argument is that CM and RMC are one and the same thing. According to him, when Mixed Concrete is prepared at one place from where it is packed and transported to some other place where the same is to be used, that is known as RMC. On the other hand, if CM is prepared at the site and is used there only, it remains CM. His argument was that it is only when RMC is used at a place other than where it is prepared, the same becomes exigible to excise duty and not when it is used at the site. For this purpose, he referred to the following observations in the judgment rendered by this Court in Commissioner of Central Excise, Belapur v. Simplex Infrastructures Ltd. (2008 (225) ELT 338 (SC), which reads as under: 3. As stated above, if RMC is produced at site, then alone the assessee is entitled to exemption under the requisite Notification. We may state that the word 'site' has not been defined in the Notification though it so defined in the later Circular. We may also state that with the advancement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a truck chassis for transporting the concrete to the actual site of construction. 16) He, thus, argued that whether it was done at site or not was irrelevant. He also submitted that the assessee itself accepts that what is produced is RMC, which is different from CM, and the only reason for claiming exemption from excise duty is that it is produced at site. 17) We have considered the aforesaid submissions of the learned counsel for the parties. 18) We may point out at the outset that the case which is now sought to be set up by the assessee, namely, CM and RMC are one and the same product, was never the case of the assessee. On the contrary, in reply dated June 12, 1998 to the letter dated May 18, 1998 issued by the Assistant Commissioner of Central Excise, Anantpur, the explanation given by the assessee was that the product produced at the site is only concrete mix, which is different from RMC; and that RMC cannot be manufactured at the site of construction; that chemicals/retarders are not used in site mix concrete. Further, we also find from Order-in-original as well as order passed by the Tribunal that the assessee always accepted that what was being produced was RMC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant of a very high quality, it needed concrete also of a superior quality and to produce that aforesaid sophisticated and modernised process was adopted. The adjudicating authority in its order explained the peculiar feature of RMC and the following extracts from the said discussion needs to be reproduced: 32. Central Excise Tariff does not define Ready Mix Concrete. Therefore, as per the established case-laws on the subject it is necessary to look for the meaning of this expression as understood in the market viz., as understood by the people who buy and sell this commodity. In this connection it would be relevant to refer to the following excerpts from an article - what is ready mix concrete, appearing in internet website of National Ready Mix Concrete Association, USA:- (i) Concrete, in its freshly mixed state, is a plastic workable mixture that can be cast into virtually any desired shape. It starts to stiffen shortly after mixing, but remains plastic and workable for several hours. This is enough time for it to be placed and finished. Concrete normally sets or hardens within two to 12 hours after mixing and continue to gain strength within months or even years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and water as well as the absence of the need to handle unorganized labour force are factors influencing customers to go in for RMC in preference to CM. 21) In this backdrop, the only question is as to whether RMC manufactured and used at site would be covered by notification. Answer has to be in the negative inasmuch as Notification No. 4 dated March 01, 1997 exempts only 'Concrete Mix' and not 'Ready Made Mixed Concrete' and we have already held that RMC is not the same as CM. 22) In Simplex Infrastructures Limited case, this Court had not delved into the issue at hand at all except stating that, if RMC is produced at site then alone the assessee is entitled to exemption under the requisite notification. There is no discussion on this behalf as well. Though, para 3 starts with the words: 'As stated above', a reading of earlier paras reveals that in the preceding paras also there is no discussion on this aspect. It appears that the parties proceeded on the basis that if RMC is produced at site, it will be entitled to exemption. Otherwise there is no discussion that RMC is different from CM and the notification mentioned only approves CM and not R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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