2024 (10) TMI 719 - AT - Central Excise

Manufacturer using builder-supplied materials for Ready Mix Concrete at construction sites constitutes job-work despite owning equipment

CESTAT Allahabad held that appellant manufacturing Ready Mix Concrete at construction sites using builder-supplied raw materials constituted job-work, ... Levy of of Central Excise Duty - Ready Mix Concrete (RMC) manufactured at construction sites - activity of job-work or not - extended period of limitation - HELD THAT:- The undisputed facts in the present case are that appellant was manufacturing “Ready Mix Concrete” (RMC) at the site of the builder, as per requirement of the builder and out of the raw material provided by the builder. The contention of the revenue for the reason that the plant (Plant and Machinery) used for such activities was procured by the appellant and was owned by them would not alter the situation that appellantwas manufacturing the entire goods out of the raw material provided by the builder. Thus he was the job worker as the ownership of plant and machinery is not relevant for determination whether the activities undertaken by him is job work or otherwise. It is the relationship between the material supplier and the processor which would determine whether the activity is of job work or not. In the present case when the activity was undertaken on the raw material supplied by the builder the processor is nothing but the job work. From perusal of the definition of job-work and job-worker, it is clear that the job-work and job-worker has been defined clearly with reference to the processing of raw material or sami-finished goods supplied to the job-worker. The definition does not make any reference to the plant and machinery or its ownership. As the appellant was undertaking clearances of the goods manufactured on behalf of builder, the duty was required to be assessed and paid by the appellant even if he was a job worker. Extended period of limitation - HELD THAT:- On account of change of opinion in view of the decision of Hon’ble Supreme Court in the case of Larsen and Tubro Ltd. [2015 (10) TMI 612 - SUPREME COURT], extended period could not have been invoked for making the demand as has been rightly held by Commissioner (Appeals) and the demand has been confined to the normal period of limitation. Commissioner (Appeals) has by the impugned order directed the original authority to calculate the demand of duty and interest payable for the normal period. In case appellant has raised the grounds that if excess duty was due, they were liable for concessional rate of duty as no Cenvat credit was paid, we do not have anything available on the record to verify the said claim, while determining the duty liability as per the directions of Commissioner (Appeals). Original Adjudicating Authority should consider this aspect and determine the duty after allowing for admissible exemptions, if any. Appellant has stated with regards to the exemption of normal period of limitation. There are no merit in the appeal filed by the appellant - the impugned order is upheld - appeal dismissed. Issues Involved:1. Applicability of Central Excise Duty on Ready Mix Concrete (RMC) manufactured at construction sites.2. Determination of the appellant's role as a job worker and its implications on excise duty liability.3. Invocation of the extended period of limitation for demand of duty.4. Applicability of service tax payments towards excise duty liability.5. Consideration of concessional duty rates and Cenvat credit adjustments.Detailed Analysis:1. Applicability of Central Excise Duty on RMC:The core issue revolves around whether the appellant, involved in manufacturing RMC at construction sites, is liable to pay Central Excise Duty. The tribunal examined the nature of RMC, distinguishing it from conventional concrete mix (CM) based on the process of mixing and the use of advanced machinery. The tribunal referred to the Supreme Court's decision in Larsen and Toubro Ltd. (2015) which clarified that RMC is distinct from CM and is not covered by the exemption notifications applicable to CM. Consequently, RMC manufactured at the site is subject to excise duty.2. Determination of the Appellant's Role as a Job Worker:The tribunal evaluated whether the appellant acted as a job worker for the builder by processing raw materials supplied by the builder. The definition of job work under Rule 2(n) of the Cenvat Credit Rules and Rule 10A of the Central Excise Valuation Rules was considered. It was determined that the appellant's activities constituted job work since the RMC was manufactured from materials provided by the builder, and the ownership of plant and machinery was irrelevant. However, despite being a job worker, the appellant was responsible for assessing and paying the duty on goods manufactured on behalf of the builder.3. Invocation of the Extended Period of Limitation:The tribunal addressed whether the extended period of limitation could be invoked for demanding duty. It was noted that prior to the Supreme Court's decision, the Madras High Court's interpretation was followed, which did not require duty payment. Therefore, the change in legal interpretation could not justify the invocation of the extended period. The Commissioner (Appeals) correctly confined the demand to the normal period of limitation, directing the recalculation of duty and interest for this period.4. Applicability of Service Tax Payments Towards Excise Duty Liability:The appellant argued that service tax payments on job work services should offset excise duty liability. However, the tribunal found that previous cases cited by the appellant, such as Osnar Chemical and KR Packaging, did not support this claim. These cases dealt with non-excisability and did not establish that service tax payments negate excise duty obligations when the activity amounts to manufacture.5. Consideration of Concessional Duty Rates and Cenvat Credit Adjustments:The appellant claimed eligibility for concessional duty rates due to the non-availment of Cenvat credit. The tribunal acknowledged the lack of evidence on record to verify this claim and instructed the Original Adjudicating Authority to consider any admissible exemptions while determining the duty liability. The tribunal also noted that the appellant's argument regarding the normal period of limitation was not raised before the Commissioner (Appeals) and did not find support in the cited cases.Conclusion:The tribunal upheld the impugned order, confirming the excise duty demand for the normal period of limitation. The Original Authority was directed to consider the tribunal's observations regarding concessional rates and exemptions while recalculating the duty and interest. The appeal was disposed of accordingly.