2010 (8) TMI 246 - HC - Central Excise

Construction Industry Classified as Service Industry for Excise Duty

COMMISSIONER OF C. EX., BANGALORE-II Versus MYSORE CEMENTS LTD.

The High Court upheld the Tribunal's decision, recognizing the construction industry as a service industry for excise duty purposes and affirming the ... Exemption - cement is sold in not packed condition - assessee would be entitled to the benefit of concessional rate of Rs. 400/- per metric tonne - if packaged in 50 Kgs bags, the assessee is not entitled to the benefit - clearances are made to the construction industry is held to be a service industry - then the assessee is entitled to the benefit – Held that: - construction activity has been considered as a service industry by the Finance Ministry - general construction work for building, general construction work for civil engineering installation and assembly work building, completion and finishing work and assessee is treated as a service industry - entitled to the benefit under the Notification – Appeal is dismissed Issues:1. Classification of construction industry as a service industry for concessional rate of excise duty on cement.2. Eligibility of manufacturer for concessional rate of duty on cement supplied to institutional consumers.3. Interpretation of Notifications and Rules governing duty rates on packaged commodities.Issue 1: Classification of construction industry as a service industryThe High Court heard an appeal challenging a Tribunal's decision that the construction industry qualifies as a service industry for excise duty purposes. The Tribunal based its ruling on precedents, considering construction as a significant industry. The appellant argued that the construction industry does not fall under the service industry category, emphasizing that the concessional rate applies only to unpackaged cement sales. However, the Court upheld the Tribunal's decision, citing the construction industry's recognition as a service industry by the Finance Ministry and foreign trade policy, supporting the view that the construction industry qualifies for the concessional rate.Issue 2: Eligibility for concessional rate of duty on cement supplied to institutional consumersThe case involved a manufacturer of packaged cement who claimed the concessional rate of duty for cement supplied to institutional consumers. The manufacturer contended that since the cement was supplied to institutional consumers, including the construction industry, they were entitled to the lower duty rate. The adjudicating authority initially rejected this claim, citing non-compliance with packaging rules. However, the Tribunal overturned this decision, aligning with previous judgments that recognized the construction industry as a service industry. The Court upheld the Tribunal's decision, emphasizing that the manufacturer had met the requirements for the concessional rate under the relevant Notification.Issue 3: Interpretation of Notifications and Rules on duty rates for packaged commoditiesThe dispute also centered on the interpretation of Notifications and Rules governing duty rates on packaged cement. The manufacturer argued that the specific circumstances of supplying cement to institutional consumers warranted the concessional rate, as per relevant Notifications. The adjudicating authority initially disagreed, highlighting the lack of evidence supporting the exemption from declaring retail prices on packaged goods. However, the Tribunal, guided by previous rulings and industry recognition, ruled in favor of the manufacturer, allowing the concessional rate. The High Court affirmed this decision, noting that the Tribunal's interpretation aligned with established precedents and did not warrant interference.In conclusion, the High Court upheld the Tribunal's decision, recognizing the construction industry as a service industry for excise duty purposes and affirming the manufacturer's eligibility for the concessional rate of duty on cement supplied to institutional consumers. The Court emphasized the industry's classification by relevant authorities and the consistency of the Tribunal's decision with previous judgments, dismissing the appeal for lacking merit.