Revenue cannot invoke extended limitation period for penalty on concrete mix after 1997 circular clarification

CESTAT Allahabad dismissed Revenue's appeal regarding levy of penalty on concrete mix manufactured at construction site. The dispute concerned classification of goods as concrete mix versus ready-made concrete mix. While SC in Larsen Toubro case settled the issue favoring Revenue, CESTAT held that Revenue could not invoke extended limitation period since the issue was clarified by circular dated 23.05.1997. Revenue should have proceeded within normal limitation period if the matter was clear. Commissioner (Appeals) correctly deleted the penalty based on bonafide belief principle.

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Issues Involved:
1. Dutiability of Ready Mix Concrete (RMC)
2. Application of Extended Period of Limitation
3. Imposition of Penalty

Summary:

1. Dutiability of Ready Mix Concrete (RMC):
The core issue was whether the concrete mix manufactured at the site is the same as ready mix concrete (RMC) and thus subject to central excise duty. The Commissioner (Appeals) had concluded that RMC was a dutiable product based on the Apex Court's decision in Larsen & Toubro Vs Commissioner of Central Excise, Hyderabad [2015 (324) ELT 646 (SC)]. The Tribunal upheld this view, noting that the distinction between RMC and concrete mix was clarified by the Apex Court, which stated that RMC is not exempted from excise duty under Notification No.4/97-C.E., dated 01.03.1997.

2. Application of Extended Period of Limitation:
The Commissioner (Appeals) ruled that the demand raised was time-barred, as the issue was purely interpretational and settled only after the Apex Court's decision. The Tribunal agreed, emphasizing that extended period of limitation is not applicable in cases of interpretational disputes. The Tribunal cited the Hon'ble Gujarat High Court decision in Kay Kay Press Metal [2013 (297) E.L.T. 177 (SC)] and Bombay Bench decision in Shapoorji Pallonji & Co Ltd [2016 (344) E.L.T. 1132 (T-Mum)] to support this conclusion.

3. Imposition of Penalty:
The Commissioner (Appeals) found that the appellant was under a bona fide belief that they were not engaged in the manufacture of excisable goods and were paying service tax on the consideration received, which included the value of RMC. Therefore, no penalty was imposable under Section 11AC of the Central Excise Act, 1944. The Tribunal upheld this view, noting that the department did not refute the appellant's submission that they were already paying service tax and VAT, and any demand of central excise duty would amount to double taxation.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals)'s decision that the demand was time-barred and that no penalty was imposable due to the bona fide belief of the appellant. The appeal filed by the Revenue was dismissed.

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