TaxTMI 
TaxTMI 
2010 (6) TMI 697
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....on dispute which arose between the department and one M/s. Excon Building Materials Manufacturing Co. Pvt. Ltd. in respect of identical goods, [it appears from the records that, after the dispute was settled by the Tribunal in favour of the Revenue in Excon case, the department, in June 2002, proposed to finalise the provisionally approved classification lists of the appellant by holding them liable to pay duty at Tariff rate for the relevant period]. With the amendment of Rule 173B by the Central Government, the appellant filed classification declarations from 1995-96 claiming concessional rate of duty for their products under successive Notifications. While so, from 1997-98, they were classifying the goods under SH 6807.20 of the CETA Schedule also. From 1998-99, they were paying duty on the goods at Tariff rate applicable to SH 6807.20. The department issued show-cause notices from time to time to the appellant alleging (for a major part of the total period of dispute from June 1988) that the "RCC cement blocks" manufactured by them were used for construction of walls and did not constitute intermediates or components of prefabricated buildings falling under Heading 94.06 and (f....
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....s follows :- S. No. Chapter or Heading No. Description of goods Rate of duty 3 68.07 Blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of pre-fabricated buildings falling under Heading No. 94.06. 5% ad valorem Heading No. 68.07 of the CETA Schedule, which originally covered "All other articles of stone, plaster, cement, asbestos, mica or other similar materials not elsewhere specified or included" underwent a change under the Finance Act, 1997 and, accordingly, three sub-headings came into existence from 1-4-1997, of which SH 6807.20 covered "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06". The first two sub-headings (6807.10 and 6807.20) were followed by the residuary sub-heading 6807.90 (Other) which carried a higher rate of duty than SH 6807.20. From 1-4-1997, the department wanted to classify the blocks under sub-heading 6807.90 and levy duty at higher rate from the party by denying them the benefit of the relevant Notifications. Therefore, the second issue to be considered is whether, for the period from 1-4-1997, the assessee's blocks could be held to be o....
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....extended period of limitation, would not be time-barred. The assessee's alternative claim for exemption under Notification 6/2000-C.E. dated 1-3-2000 was rejected on the ground that the benefit was available only to 'concrete blocks' and not to 'cement blocks'. In this context, the learned Commissioner reasoned that 'cement' and 'concrete' were two different things. 5. The learned Senior Advocate for the appellant submitted that the goods manufactured by them were cement concrete blocks of modular design with its three dimensions conforming to IS 2185. These blocks were also used in walls of buildings. They were capable of being used in prefabricated buildings and hence could be considered as intermediates or components of prefabricated buildings. In this connection, the learned counsel referred to the National Building Code published by the Bureau of Indian Standards (BIS), which defined the term "unit" to include a block and also indicated that the units formed part of prefabricated building/structure. On this basis, it was argued that the benefit of Notification 64/88 was available to the cement concrete blocks in question for the entire period of dispute. Referring to the Tr....
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....ferent names of blocks, slabs etc. capable of being used in prefabricated buildings. 6. Opposing the above contentions, the learned JCDR submitted that the cement concrete blocks manufactured and cleared by the appellant were actually used in place of bricks as masonry units by the buyers. In this connection, he referred to the statements of a few buyers, given under Section 14 of the Central Excise Act. One of these buyers, M/s. Sheth Developers Ltd., stated that they had purchased concrete blocks from M/s. Eversmile Pre-Fab Pvt. Ltd. and used the same in place of commercially known bricks for erecting walls of buildings at various project sites. Another buyer, M/s. Janki Kutir Co-op. Hsg. Society, stated that the solid blocks and interlocking pavers bought by them from the appellant had been used for the resurfacing of driveways of their society. They also stated that the solid blocks had been used in place of bricks. A third buyer, M/s. Sai Datta Developers, also stated that they had purchased solid blocks (C.C.) from the appellant and that these blocks were used in place of bricks for erecting external walls of buildings. On the basis of these statements, the JCDR submitted ....
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....e rate of duty, the Exemption Notification availed or proposed to be availed (if any) etc. There was no requirement, from 1-5-1995, for the proper officer to approve the declaration. Therefore, JCDR argued, it was not open to the appellant to resist the demand of duty on the strength of approval of old Classification Lists by the proper officer. 8. The learned JCDR had, at the outset, submitted that the goods in question were actually cement blocks and not concrete blocks. In this connection, he had also invited our attention to a Classification List for the year 1994-95 and a Classification Declaration for the year 1996-97, wherein the various products of the appellant were described as "cement hollow/solid blocks", "cement solid blocks", "cement hollow blocks", "cement hollow/solid broken blocks" etc. The learned counsel, in his rejoinder, successfully rebutted this submission of the JCDR by pointing out that the department themselves had described the goods as "R.C.C. (reinforced cement concrete) cement blocks (solid/hollow/broken)" in the relevant show-cause notices. In the annexures to the show-cause notices also, the goods were described in the same way. 9. We have care....
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....laimed the benefit of Notification 8/96-C.E. ibid, till this Notification was superseded by Notification 5/97-C.E. dated 1-3-1997. Subsequently, several declarations were filed by the assessee from time to time in 1996-97 and 1997-98 claiming concessional rate of duty under the new Notification 5/97-C.E. ibid. For the period from April 1998, the assessee, in their declarations filed under Rule 173B, classified their products under sub-heading 6807.20 as "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06" and proposed to pay duty at tariff rate. 10. As already noted, several show-cause notices were issued to the assessee from time to time for recovery of differential duty for the period from June 1988 to September 2001 (barring the period from 1-4-1989 to 25-12-1989). In most of these notices, the benefit of concessional rate of duty claimed under the relevant Notification was proposed to be denied to the party either on the ground that the blocks manufactured by them did not constitute intermediates and components of prefabricated buildings falling under Heading 94.06 or on the ground that these blocks were not of a kind used in ....
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....s "cement hollow/ solid blocks", "cement solid blocks", "cement hollow blocks", "cement hollow/solid broken blocks" etc. The word "concrete" was used in the description of 'paving blocks', in any case, the department always considered the subject-goods as 'cement concrete blocks' as is indicated by the expression "RCC cement blocks" used in the show-cause notices. Therefore, the distinction sought to be made by the learned JCDR between concrete and cement blocks is irrelevant to this case. It appears from the records that the classifiability of the cement concrete blocks in question under Heading 68.07 of the CETA Schedule for the above period has never been in dispute. The dispute in respect of this period is with reference to the description of the goods given at serial No. 3 of the Table annexed to Notification 64/88-C.E. ibid. The Notification described the goods at serial No. 3 ibid, as "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading 94.06". The appellant has contended that their blocks were chargeable to duty at the concessional rate given at serial No. 3 of the above Notification, b....
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....onstruction depends on the extent of the use of prefab components, their materials, sizes and the technique adopted for their manufacture and use in building. The learned counsel has particularly referred to the OPEN PREFAB SYSTEM, one of the different prefabrication systems discussed in NBC, which explains OPEN PREFAB SYSTEM as follows :- "6.3.1 OPEN PREFAB SYSTEM - This system is based on the use of the basic structural elements to form whole or part of a building. The standard prefab concrete components which can be used are : (a) Reinforced concrete channel units, (b) Hollow core slabs, (c) Hollow blocks and battens, (d) Precast planks and battens, (e) Precast joists and tiles, (f) Cellular concrete slabs, (g) Prestressed/reinforced concrete slabs, (h) Reinforced/prestressed concrete beams, (i) Reinforced/prestressed columns, (j) Precast lintels and chajjas, (k) Reinforced concrete w....
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....t vide Chapter Note 4, which reads as under : - "For the purposes of heading No. 94.06, the expression 'prefabricated buildings' means buildings which are finished in the factory or put up as elements, cleared together, to be assembled on site, such as housing, or work site accommodation, offices, schools, shops, sheds, garages or similar buildings." Heading No. 94.06 (Prefabricated buildings) in the CETA Schedule is aligned with Heading No. 94.06 of the HSN (Harmonized Commodity Description and Coding System-Explanatory Notes). Note 4 to Chapter 94 of the CETA Schedule and the corresponding Chapter Note in the HSN read identically. The Explanatory Notes to HSN Heading 94.06 read as under :- "94.06 - PREFABRICATED BUILDINGS. This heading covers prefabricated buildings, also known as "industrialised buildings", of all materials. These buildings, which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of - complete buildings, fully assembled, ready for use; - complete buildings, unassembled; - incomplete buildings, whether or not assembled....
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.... have stated to this effect and their evidence has not been rebutted. The said statements were relied on in show-cause notice dated 21-3-2001 issued for the period March 2000 - January 2001. The assessee did not deny that the blocks were actually used in the aforesaid manner. (iii) The question now to be considered is whether the blocks, which were cleared from the factory in the aforesaid manner, would fit in the description : "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading No. 94.06", given at S. No. 3 of Notification No. 64/88. The Hon'ble Supreme Court, in Excon case, examined the above description of goods and interpreted it as under :- "7. It is well settled that where the wording of a Notification are clear then the plain language of the Notification must be given effect to. An interpretation which is not borne out by the plain wordings of the Notification cannot be given. A reading of the Notification makes it clear that the concessional rate of duty is only available to blocks, slabs, lintels, concrete beams and stairs which constitute an intermediary or component of pre-fab....
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....ntermediate or component of another product. The pamphlet contains no mention of blocks being used as intermediates or components of prefabricated buildings. On the contrary, it clearly indicates that the hollow concrete blocks manufactured by the appellant are meant for use as masonry units in the construction of walls of buildings. The following excerpts from the pamphlet reveal this fact : "LOAD-BEARING / WALL CONSTRUCTION Hollow concrete Block walls should be planned on the basis of modular co-ordination with a view to making the maximum use of full and half length units. Modular planning results in minimum of cutting and proper fitting of units by the mason, which means speedier work, neater appearance of the finished walls and economy in construction," EVERSMILE Hollow Concrete Blocks of 200 series are ideal for constructing load bearing exterior & interior walls. For partitions and non-load bearing walls 150 series and 100 series blocks are suitable." "Hollow concrete block is an important addition to the types of masonry units available to the builder and its use for masonry work on constant increase in this country. Some of the advantages of hollow concrete blo....
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....s or components of pre-fabricated buildings. The Collector has omitted to note that it was not the case of the Appellants that their goods could be used in pre-fabricated buildings or that they constituted intermediaries of components of a pre-fabricated building. The Collector has also erred in relying upon the Indian Standard Specification for Concrete Masonry Units and concluding that the blocks which are being manufactured according to the ISI Specification would become entitled to the benefit of the Notification. As has been mentioned earlier it is only such blocks as are intermediaries or components of pre-fabricated buildings that get the benefit of the Notification. Merely because some block, which is not a component or intermediary of a pre-fabricated building, has an ISI specification does not mean that block gets the benefit of Notification. The Order of the Collector was therefore entirely erroneous and has been rightly set aside by the Tribunal." (emphasis supplied) The excerpt found in the above para of the court's judgment in Excon case is from Order-in-Appeal No. SKM/1941/89-BII dated 20-9-1989 which was passed by the Collector (Appeals) sustaining the approva....
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....with the question whether the benefit of concessional rate of duty under Notification No. 36/94-C.E. [S. No. 1(b)] and Notification No. 5/97-C.E. [S. No. 117(2)] was available to paving blocks which were heavy weight concrete blocks of interlocking type used for paving floors. The Tribunal, in Aeon's case, held :- "6.....Notifications 36/94 and 5/97 required that the blocks be actually used as components of prefabricated buildings for the period prior to 1-3-1997 or be of a kind used in such buildings for the subsequent period. This requirement could be met only through positive evidence, which is missing in the instant case. Therefore, following the ratio of the decision rendered in the case of Excon {supra), we hold that the Concrete Blocks in question were not eligible for the benefit of concessional rate of duty in terms of Sl. No. 1(b) of the Notification No. 36/94-C.E. or in terms of Sl. No. 117(2) of Notification No. 5/97-C.E." (underlining supplied) It is significant to note that the relevant entry in Notification No. 36/94-C.E. is pari materia with S. No. 3 of Notification No. 64/88-C.E. The Tribunal's decision in Aeon's case was also upheld by the Supreme Court v....
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.... entry No. 117(2) of the Notification as well as in the text of SH 6807.20 of the CETA Schedule. The remaining two SCNs took note of the above expression but alleged that the blocks did not constitute intermediates or components of prefabricated buildings of heading 94.06 and hence could not be considered to be "of a kind used" in such buildings. Entry 117(2) of Notification 5/97 is pari materia with the description of goods under SH 6807.20 and the same reads : "Blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of heading No. 94.06" (underlining supplied by us) Thus the case of the Revenue, common to all the ten SCNs, is that the blocks in question did not fall within the ambit of the above description inasmuch as they were not used in prefabricated buildings of heading 94.06 or (in other words) they did not constitute intermediates or components of such buildings. (ii) In their reply, the assessee consistently argued that the expression "of a kind used" was not applicable to blocks and hence this building unit was independently eligible for the benefit of the Notification or of SH 6807.20, as the case may be. They contended that there ....
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....kind solely by reason of their modular design. At the same time, the manufacturer is not compulsorily required to show that the blocks were actually used by him in prefabricated buildings of 94.06 though, by so showing, he can at once establish that his blocks are of a kind used in such prefabricated buildings [In this case, we have already found that the blocks manufactured by the appellant were not actually used by them in such prefabricated buildings]. However, he has to prove otherwise that his blocks are of a kind used in such prefabricated buildings. This evidence is not forthcoming in this case. General technical literature on prefabricated buildings is no substitute for positive evidence, nor can another manufacturer's evidence be adopted to support the appellant's claim. Therefore, the Tribunal's decision in other cases like Orion Precast and Encore GRC cannot be followed in support of the appellant's case. Neither classification of goods under the Tariff nor eligibility for exemption under a Notification can be determined on ipse dixit. The requirement of the manufacturer having to establish through positive evidence that the concrete blocks manufactured by him are of a k....
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....d the goods as "R.C.C. Cement Blocks". In the SCN issued on 27-6-1990, they described the goods as "Concrete Blocks". No corrigendum was issued to correct the description of goods. Apart from this, the learned Commissioner himself chose to follow the Tribunal's decision rendered in Excon case wherein, admittedly, the question considered was whether the party was eligible for the benefit of Notification 64/88 in respect of "concrete blocks". It has never been in dispute that the blocks manufactured by the appellant were identical to the Excon products. For all these reasons, the learned Commissioner's decision to deny the benefit of Notification No. 6/2000 to the appellant by holding their products to be different from concrete blocks is not acceptable on facts or. in law. To deny the benefit on the ground of belated claim is also not justifiable inasmuch as the benefit of an exemption Notification can be claimed even at the appellate stage. Full and unconditional exemption was available to "light weight (solid or hollow) concrete building blocks" under entry No. 170 of Notification No. 6/2000-C.E. This benefit is admissible to the subject goods. 15. It appears from SCN dated 27-....
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....he facts and falsely declared the incorrect description in respect of products under reference with an intent to evade payment of appropriate amount of Central Excise duty". The assessee, in their reply, denied these allegations by submitting that "the department was aware that we were availing the concession under Notification No. 64/88 dated 1-3-1988 and that our buyers were not the manufacturers of prefabricated building". In this connection, they claimed support from order-in-appeal No. AND/29/91/BIII dated 18-4-1991 also. In the present appeal and written submissions, they have also laid much emphasis on the fact that the relevant classification lists (CLs) were approved by the Assistant Collector. (ii) We note that there were three CLs relevant to the above period, No. 16/88-89 effective from 1-4-1988, No. 144/88-89 effective from 23-6-1988 and No. 232/88-89 effective from 30-8-1988 (numbers allotted by the Central Excise Range Officer). In all these CLs, the blocks were classified under SH 6807.00 and the benefit of Notification No. 64/88- C.E. dated 1-3-1988 was claimed. In the second and third CLs, the goods were also described as "constituting components of pre-fabrica....
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....l period is liable to be set aside as the proviso to sub-section (1) of Section 11A is not applicable to the facts of the case for the pre - 1-5-1995 period. (iv) For the period from 1-5-1995, the appellant, admittedly, filed classification declarations under Rule 173B (as amended) furnishing the necessary particulars of the goods, from time to time. These declarations were filed with the proper officer of Central Excise who had the power, under sub-rules (3) and (4) of the said Rule, to conduct enquiries for ascertaining the correctness of the declared particulars and for reassessing the correct amount of duty to be paid by the assessee. Therefore, it cannot be said that the appellant/deliberately misdescribed their goods with intent to evade payment of appropriate duty during the above period, and consequently the proviso to Section 11A(1) was not to be invoked for the said period also. (v) The learned Commissioner should have noted that the amendment to Section 11A(1) by Section 97 of the Finance Act, 2000 (which had retrospective effect from 17-11-1980) only meant that any approval of classification list would not preclude the department from demanding duty short-levied, ....