2015 (10) TMI 612 - SC - Central Excise

SC rules Ready Mix Concrete and Concrete Mix are distinct products, denies exemption under Notification 4/1997-CE

SC held that Ready Mix Concrete (RMC) and Concrete Mix (CM) are distinct products, rejecting assessee's claim for exemption under Notification No. ... Entitlement to exemption on Ready Mix Concrete (RMC) under Notification No. 4/1997-CE - manufacturing at site - the basic thrust of argument is that CM and RMC are one and the same thing. - Captive consumption - Distinction between Concrete Mix (CM) and Ready Mix Concrete (RMC) - Held 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. - the assessee itself proceeded on the basis that what was manufactured was RMC. It is the process of mixing the concrete that differentiates between CM and RMC. - 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 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. - Decided against the assessee. Assessee was producing RMC and the exemption notification exempts only CM and the two products are different. Even if there is a doubt, which was even accepted by the assessee, since we are dealing with the exemption notification it has to be strict interpretation and in case of doubt, benefit has to be given to the Revenue. - Decided in favor of revenue. Issues Involved:1. Entitlement to exemption on Ready Mix Concrete (RMC) under Notification No. 4/1997-CE.2. Distinction between Concrete Mix (CM) and Ready Mix Concrete (RMC).3. Applicability of excise duty on RMC manufactured at the site of construction.4. Interpretation of exemption notifications and their applicability to RMC and CM.5. Legal precedents and their relevance to the classification of RMC and CM.Detailed Analysis:1. Entitlement to Exemption on Ready Mix Concrete (RMC) under Notification No. 4/1997-CE:L&T filed appeals challenging the orders of the CESTAT which held that L&T was not entitled to exemption on RMC under Notification No. 4/1997-CE dated March 01, 1997. The notification exempted 'Concrete Mix' (CM) but not RMC. The CESTAT's decision was based on the distinction between RMC and CM, emphasizing that RMC was a different product from CM and thus not covered by the exemption notification.2. Distinction between Concrete Mix (CM) and Ready Mix Concrete (RMC):The Commissioner and CESTAT both concluded that RMC and CM are distinct products. The Commissioner noted that RMC is a concrete specially made with precision and high standards, delivered to the customer at the site, whereas conventional site-mixed concrete lacks consistency in quality. The CESTAT upheld this distinction, pointing out that RMC involves a high degree of precision and stringent quality control in the selection and processing of ingredients, making it different from CM.3. Applicability of Excise Duty on RMC Manufactured at the Site of Construction:L&T argued that since the concrete was prepared and consumed at the site, it should be treated as CM and exempt from excise duty under the said notification. However, the Commissioner and CESTAT rejected this argument, stating that the manner of production and the sophisticated machinery used indicated that the product was RMC, which attracts excise duty. The CESTAT maintained the levy of excise duty on RMC produced by L&T at the site.4. Interpretation of Exemption Notifications and Their Applicability to RMC and CM:The Supreme Court examined the legal provisions and past notifications, noting that the legislature has consistently treated RMC and CM as different products. While CM has generally been covered by exemption notifications, RMC has not. The court highlighted that even when doubts were raised, the government clarified that RMC attracts excise duty and is not covered by exemption notifications. The court emphasized that the exemption notification dated March 01, 1997, specifically exempted 'Concrete Mix' manufactured at the site, not RMC.5. Legal Precedents and Their Relevance to the Classification of RMC and CM:L&T referred to various legal precedents to support their argument. They cited the case of Simplex Infrastructure Ltd., where the Supreme Court stated that if RMC is produced at the site, it is entitled to exemption. However, the court clarified that this judgment did not delve into the distinction between RMC and CM and was not applicable to the present case. The court also noted that L&T's own submissions in previous proceedings accepted that the product was RMC, not CM.Conclusion:The Supreme Court dismissed L&T's appeals, holding that RMC and CM are different products and that the exemption notification applies only to CM. The court emphasized the need for strict interpretation of exemption notifications and ruled that in case of doubt, the benefit should be given to the Revenue. The court remitted the case involving the Chief Engineer, Ranjit Sagar Dam, back to the adjudicating authority to determine whether the product was CM or RMC based on the process of preparation. The adjudicating authority was directed to decide the case within one year, allowing parties to produce relevant evidence.