Concrete Mix Manufactured at BMRCL Site Not Classifiable as Ready-Mix Concrete: CESTAT Sets aside Excise Demand and Penalties [Read Order]

The Bangalore Bench Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the Excise Duty Demand and ruled that the concrete mix manufactured by the appellant at the construction site at Bengaluru Metro Rail Corporation Ltd (BMRCL) for consumption did not qualify as 'Ready Mix Concrete' (RMC), which was an excisable product.

Ahluwalia Contracts India Limited (appellant) was engaged in construction for the Bengaluru Metro Rail Corporation Ltd. (BMRCL). The Revenue Department alleged that the appellant was manufacturing RMC at their site established batching plant and failing to pay appropriate Central Excise duty, classifying the product under Central Excise Tariff Heading 38245010.

The Adjudicating Authority confirmed the duty demand along with interest and penalties. This decision was later upheld by the Commissioner (Appeals). Aggrieved, the appellant approached the CESTAT.

The appellant's counsel argued that the product was merely 'concrete mix' manufactured at the site for captive consumption, conforming to the Indian Standard IS 456, which applies to conventional concrete mix.

The counsel submitted that RMC, on the other hand, conforms to IS 4926. The counsel relied on Circular No. 368/1/98-CX dated 06.01.1998, which specifically clarifies that RMC, by its very nature, cannot be manufactured at the site of construction but was brought from the manufacturer's factory.

The bench comprising P.A. Augustian (Judicial Member) and Pullela Nageswara Rao (Technical Member), observed that the contract with BMRCL required the appellant to manufacture concrete as per IS 456.

The tribunal noted that no samples were drawn, and no technical inspection was conducted to prove the manufactured goods were RMC. The tribunal observed that the finding was heavily based on the statement of a non-technical person (a Finance Officer), which was deemed unreliable for determining the nature of the product.

The bench relied on the Circular, which distinguished between site-manufactured concrete mix (IS 456, exempt) and factory-manufactured Ready Mix Concrete (IS 4926, excisable).

The tribunal also noted that the concrete mix manufactured at the site for use in construction was fully exempted from duty under various notifications (No. 4/2006-CE and No. 12/2012-CE) during the relevant period.

The tribunal set aside the impugned order and allowed the appeals filed by both the company and its General Manager, A.R. Sreekanta noting a lack of admissible evidence to classify the product as RMC and noting the categorical exemption for site-manufactured concrete mix. The appeal was allowed.

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