Concrete Mix Produced at Metro Site not Excisable as RMC: CESTAT Sets Aside Duty and Penalties [Read Order]
The Tribunal held that even if manufacture were assumed, the concrete produced at the site was fully exempt under Notification No. 12/2012-CE.
The bench of the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru (CESTAT), held that the product manufactured at the project site did not satisfy the standards of Ready Mix Concrete (RMC) under the Central Excise Tariff and therefore could not attract excise duty, ultimately setting aside the demands and penalties raised in the Central Excise appeals concerning indirect tax liability.
M/s Ahluwalia Contracts India Limited, engaged in civil construction for the Bengaluru Metro Rail Corporation Limited (BMRCL), had established a batching plant at the construction site to produce concrete for the project. The Department alleged that the appellant manufactured RMC, an excisable product falling under Central Excise Tariff Heading 38245010 of the Central ExciseTariff Act, 1985, without obtaining registration or discharging duty.
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Based on this allegation, the adjudicating authority issued show cause notices demanding duty, along with interest and penalties under the Central Excise Act, 1944. The Commissioner (Appeals) upheld the duty, interest, and penalty against the company, leading to the present appeals before the Tribunal.
The appellants, represented by Chartered Accountant Prateek Marlecha, argued that the product manufactured at the site was merely concrete mix produced in accordance with Indian Standard IS 456 and not RMC, which must conform to IS 4926. They contended that no technical evidence, inspection, or sampling supported the Department’s classification of the product as RMC.
They highlighted Circular No. 368/1/98-CX dated 06 January 1998, which distinguishes RMC from conventional concrete mix produced at site. Further, submitted that concrete manufactured at site for use in construction was exempt under Notification No. 4/2006-CE up to 16.03.2012 and Notification No. 12/2012-CE thereafter.
The Bench of Judicial Member, P.A. Augustian and Technical Member, Pullela Nageswara Rao held that no evidence existed to establish that the batching plant produced RMC conforming to IS 4926. The Tribunal observed that no samples were taken, no technical inspection was conducted, and the authorities had relied solely on the statement of a finance officer who was not technically competent to classify the product.
Referring to Circular No. 368/1/98-CX and the Indian Standard specifications, the Tribunal held that concrete manufactured at the site in compliance with IS 456 is conventional concrete mix and not RMC. The Tribunal further noted that even assuming excisability, the product was exempt under the applicable central excise notifications for goods manufactured at the site for use in construction.
Consequently, the demand, interest, and penalties were found to be legally unsustainable. Both, the orders-in-appeals were set aside, and the appeals were allowed with consequential relief.
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