11 October, 2015

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Whether benefit of Doubt of Exemption Notification Should Go to Revenue ?

Ready Mix Concrete and Concrete Mix are Different for Excise Perspective - Supreme Court

In case of Doubt of Exemption Notification - Benefit should be Given to “Revenue” Helds Supreme Court

Cititation:- M/s Larsen & Toubro Ltd. & Another, ECC Construction Group Versus Commissioner of Central Excise, Hyderabad 2015 { (10) TMI 612 - SUPREME COURT }

Issue :-  Whether RMC manufactured at the assessee's plant would be entitled to exemption inasmuch as the Notification No. 4/1997-CE dated March 01, 1997 exempts all kinds of CM from payment of duty?


Revenue’s Contention:- 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.

CESTAT Held :- The CESTAT, however, was not amused by these contentions of L&T. While dismissing the appeal, the CESTAT distinguished between RMC and CM explaining that the same were understood differently in trade and commerce. It accepted the finding of the Commissioner that the manner in which the product was manufactured by L&T, it was clearly RMC. It was pointed out that the facility put up by L&T involved various machines coupled with sophisticated process which was indicative of the fact that it was for the manufacture of RMC and the only reason for manufacture thereof at site was that the larger quantities of RMC which was required by L&T.

According to CESTAT, it is the high degree of precision and stringent quality control observed in the selection and processing of ingredients, namely, aggregates, cement, sand, additives and water, which made the product as RMC in contra-distinction with CM.

Punjab & Haryana HC In Favour of Assessee :- Punjab & Haryana High Court held in the present case that RMC manufactured at the assessee's plant would be entitled to exemption inasmuch as the Notification No. 4/1997-CE dated March 01, 1997 exempts all kinds of CM from payment of duty, which would include RMC as well. The View is to be Clarified by Hon’ble SC in this Appeal

Supreme Court Held in Revenue’s Favour :- Appeal warrants to be dismissed when we find that the 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. Appeals of L&T, therefore, fails and are dismissed.

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