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2015 Supreme(SC) 975
SUPREME COURT OF INDIA
A.K. SIKRI, ROHINTON FALI NARIMAN, JJ.
M/S. LARSEN & TOUBRO LTD. & ECC CONSTRUCTION GROUP ANOTHER – APPELLANTS
VERSUS
COMMISSIONER OF CENTRAL EXCISE, HYDERABAD – RESPONDENT
CIVIL APPEAL NOS. 6930-6931 OF 2005 WITH CIVIL APPEAL NO. 2121 OF 2006 A N D CIVIL APPEAL NO. 6138 OF 2008
Decided on : 06-10-2015
IMPORTANT POINT
‘Concrete Mix’ and ‘Ready Concrete Mix’ are not one and the same things.
Headnote:(a) Central Excise Tariff Act, 1985 – Chapter 68, sub-heading 68.07 and Chapter 38, sub-heading 38.23 – Notification No.8/96-CE dated July 23, 1996 – 'Concrete mix' manufactured at the site of construction for use in construction work falling under chapter heading 68.07 – Exempted from excise duty – RCM on the other hand, falling under chapter heading 38.23 not exempted – Process of preparing RCM described in Circular dated August 12, 1996 as manufacture – It is also marketable. (Para 8, 9, 11, 12)
(b) Central Excise Tariff Act, 1985 – Chapter 68, sub-heading 68.07 and Chapter 38, sub-heading 38.23 – Notification No.8/96-CE dated July 23, 1996 – Appellant L&T contending for first time before Supreme Court that CM and RCM are one and the same product – The process of mixing the concrete differentiates between CM and RMC – Both are different products – In that view, it is immaterial if RCM is use at the site or transported to be used elsewhere – a (Para 18, 19, 21,
2001 (138) ELT 911; 2001 (132) ELT A106 (SC) – Referred
2008 (225) ELT 338 (SC) – Distinguished
Interpretation of statute – Taxing statute – Exemption notifications require strict construction – Incase of any doubt the benefit of doubt should be given to the Revenue. (Para 23)
Facts of the Case:
Notification No. 4/1997-CE dated March 01, 1997 exempted 'Concrete Mix' (CM). The appellant using ready mix concrete (RCM) and not paying any duty contending that it is covered under the said notification.
Revenue held that CM and RCM are different and hence the notification did not apply to RCM.
CESTAT Bangalore approved the stand of the Revenue whereas High Court of Punjab & Haryana approved the stand of the assessee.
Finding of the Court:
CESTAT rightly holding that CM and RCM are different.
Result: Appeals filed by L&T dismissed. CIVIL APPEAL NO. 6138 OF 2008 remitted back to High Court.
Judgment :
A.K. Sikri, J.
In the first two appeals, i.e. Civil Appeal Nos. 6930-6931 of 2004, the assessee is M/s. Larsen & Toubro Limited (hereinafter referred to as 'L&T'). Two appeals are filed by L&T assailing the orders dated April 28, 2005 and October 24, 2005 passed by the Bangalore Bench of the Customs, Excise & Service Tax Appellate Tribunal (for short, 'CESTAT') whereby it held that L&T was not entitled to exemption on the goods known as 'Ready Mix Concrete' (for short, 'RMC') under Notification No. 4/1997-CE dated March 01, 1997 as the said Notification exempted 'Concrete Mix' (for short, 'CM') and not RMC. In the other appeal, wherein the assessee/respondent is M/s. Chief Engineer, Ranjit Sagar Dam (hereinafter referred as 'Ranjit Sagar Dam'), the judgment impugned is that of the Punjab & Haryana High Court taking a contrary view. Here, the High Court has held that RMC manufactured at the assessee's plant would be entitled to exemption inasmuch as the Notification exempts all kinds of CM from payment of duty, which would include RMC as well.
2) It is clear from the above that the issue which arises for consideration is identical in all these appeals. For this reason, they were heard analogously and are being disposed of by the present judgment. We shall, in the first instance, take up the appeals of L&T.
CIVIL APPEAL NOS. 6930-6931/2005 AND CIVIL APPEAL NO. 2121/2006
3) L&T was constructing its own cement plant at Bhogasamundram, Anantpur. For the purpose of the construction of civil structure of the said cement plant, L&T required CM, it used to prepare said CM at site with the help of machinery installed there and the said CM was captively consumed in the construction of the said cement plant by L&T. L&T did not pay any central excise duty on this product taking shelter under Notification No. 4/1997-CE dated Mach 01, 1997, which exempted CM from payment of excise duty.
4) The Central Excise Officers visited the site and found that the L&T are manufacturing ready mix concrete and not concrete mix. A show-cause notice dated July 22, 1998 was issued by the Commissioner of Customs and Central Excise, Hyderabad-II Commissionerate, proposing excise duty demand of Rs. 1,97,47,626 along with interest, penalty and fine. L&T refuted the aforesaid demand by filing its reply dated September 09, 1998 and submitting that since concrete was prepared at the site and was consumed captively at site, it had to be treated as CM and, therefore, was eligible for exemption under the said Notification which exempted CM from payment of any excise duty. This defence did not find favour with the Commissioner, who passed Order-in-Original dated January 29, 2002 raising the demand in the sum of Rs. 81,39,326 with interest, penalty and fine. In the Order-in-original, the Commissioner has stated that ready mix concrete refers to a concrete specially made with precision and of high standard and as per particular needs of a customer and delivered to the customer at his site. According to him, the conventional site mixed concrete lacks consistency in quality. He also noted that there are advantages of having ready mix concrete over conventional site mixed concrete, the way it is produced and delivered. On this reasoning, he concluded that ready mix concrete as a product is different from concrete mix. After taking into account the way L&T produced concrete mix by using machinery at the site, he concluded that the product is ready mix concrete and not concrete mix. He reasoned that what distinguishes ready mix concrete from concrete mix is the manner in which it is manufactured, the high degree of precision and stringent quality control over the mix of ingredients.
5) Feeling aggrieved by this order, L&T preferred appeal before the CESTAT with the plea that aforesaid reasoning of the Commissioner was faulty. It was sought to be explained that having regard to the high quality of the cement plant that was required, CM was prepared at site with the applica
