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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 6930-6931 OF 2005

M/S. LARSEN & TOUBRO LTD. & ANOTHER  ECC CONSTRUCTION GROUP

.....APPELLANT(S)

VERSUS

COMMISSIONER OF CENTRAL EXCISE,  HYDERABAD

.....RESPONDENT(S)

W I T H

CIVIL APPEAL NO. 2121 OF 2006

A N D

CIVIL APPEAL NO. 6138 OF 2008

J U D G M E N T

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.

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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

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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 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  ₹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

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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 application of sophisticated technique in order to achieve high

standards of quality.  It was submitted that use of additives to increase

the time period over which the concrete can be used is not a decisive

factor.  Since the L&T needed large quantities of ready mix concrete,

they had put up a plant for producing ready mix concrete at the site and

therefore, there was no need for use of retarders.  It was also pleaded

that the Commissioner ignored the contention of L&T that the subject

product was CM conforming to the requirements of IS 456:1978.  Rather,

he relied on IS 4726:1976 for the ready mix concrete and held that the

product manufactured by L&T at the site of construction is RMC.   

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6) L&T also referred to earlier proceedings by pointing out that the CBEC

had issued a Circular No.315/31/97-CX dated May 23, 1997, in which it

was clarified that RMC, even though it  is manufactured at the site of

construction,  is  chargeable  to  excise  duty  under  sub-heading

No.3824.20 of the Central Excise Tariff Act, 1985.  The exemption for CM

manufactured at the site of construction for use in construction work at

such site available under Notification No.4/97-CE dated March 01, 1997

is not applicable to RMC manufactured at the site of construction. L&T

had challenged this interpretation in the circular by filing a writ petition in

the High Court of Madras.  Before the High Court, the Additional Central

Government standing counsel specifically took a stand that excise duty

is not leviable on RMC if it is manufactured at the site of construction.  It

was,  thus,  argued  that  the  Revenue  was  bound  by  the  aforesaid

concession given in the Court.   

7) 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

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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.  However, at the same

time, penalty under Section 11 A(c) of the Excise Act is reduced to 10₹

lakhs  and  insofar  as  penalty  under  Rule  209A of  the  Excise  Rules

imposed  on  the  Construction  Manager  is  concerned,  the  same  is

altogether set aside.  Likewise, fine in lieu of confiscation of the plant

and  machinery  is  also  reduced  to  10  lakhs.   Levy  of  excise  duty,₹

however, is maintained.

8) Before we advert to the submissions made by Mr. Sahu attacking the

aforesaid approach of the Tribunal,  we deem it  proper to refer to the

legal provisions:

Prior to March 01, 1997 'Concrete Mix' was classified under Chapter 68

---sub-heading 68.07 of the Central Excise Tariff Act as applicable for the

year  1996-1997.   In  terms of  Notification  No.8/96-CE dated  July  23,

1996, following goods specified in sub-heading 68.07 was excisable to

'Nil' rate of duty as follows:-

(iii)   Goods  manufactured  at  the  site  of  construction  for  use  in

construction work at such site.

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In  terms  of  above  no  excise  duty  was  payable  for  'concrete  mix'

manufactured at the site of construction for use in construction work at

such site.

Prior to the above notification, under the previous applicable notification

also i.e. Notification No.36/94-C.E. dated March 01, 1994 'Concrete Mix'

manufactured at the site for use in construction work was exempted from

excise duty, i.e. all along the excise duty for 'concrete mix' manufactured

at the site remained 'NIL'

Prior  to  March 01,  1997 there was some doubt  expressed as to the

excisability and classification of the product 'Ready Mix Concrete'.  The

Trade was claiming classification of  the product  under  heading 68.07

with benefit of exemption from central excise whereas the department

stand was that 'Ready Mix Concrete' was classifiable under sub-heading

38.231 of the schedule of Central Excise Tariff Act as it  stood prior to

March 01, 1997.

9) It is clearly discernible from the above that the Legislature has treated

RMC and CM as two different  products.   Whereas CM has generally

been covered by the exemption notification, such an exemption is not

extended to RMC.  Even when doubts were raised from time to time

1         Chapter 38 ---heading 38.23 of the Central Excise Tariff for the year 1996-1997 provided as under:

“38.23   ---Prepared  binders  for  foundry  moulds  or  cores; chemical  products  and preparations of  the chemicals or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included” Goods falling under heading 38.23 were excisable to 20% excise duty.   

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about  the  two products,  Government  has  always  been clarifying  and

emphasizing that the two products are different and RMC attracts excise

duty and is not covered by the exemption notification.  The classification

entries have also been enacted accordingly.  We may also mention at

this stage itself that the duty which was demanded from L&T by issuing

show-cause notices cover the period from May 02, 1996 to February 28,

1997 and from March 01, 1997 to March 19, 1998.

10) Notification No.4/97-CE dated March 01, 1997 was issued under Section

5A(1) of the Act exempting certain goods from payment of excise duty at

Sl. No.51 Chapter 38 is covered and the description of goods mentioned

therein reads as follows:

“Concrete Mix manufactured at the site of construction for use in construction work at such site.”   

11) Another factual aspect which needs to be highlighted is the description

of RMC.  In Circular dated August 12, 1996 issued by the Board, it is

explained that the Ready Mix Concrete plant consists of stone crushers,

conveyors,  vibrator  screen  to  segregate  different  sizes  of  stone

aggregates, and a sand mill  to produce sand from stones.  A central

batching  plant  is  also  installed  in  which  all  aggregates  are  weighed,

batched by electrical controls and limit switches.  Cement from site is

carried  to  the  batching  plant  by  a  screw  conveyer  operated  with

automatic  weighing  gauges.   Water  is  fed  through  flow  meters  after

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subjecting  such  water  to  chemical  analysis.   The  mixture  of  stone

aggregates, sand, cement and water is mixed in a mixer.  The mixture so

obtained is loaded on a transit mixer mounted on truck chassis, which is

transported to the site of the customers and the same is discharged at

site for use in further construction of building etc.  The qualities accruing

to the Ready Mix Concrete so obtained far out weigh to those of the site

mixed concrete.  The final product Ready Mix Concrete is a material in

plastic,  wet  process  state  and  not  a  finished  product  like  blocks  or

precast tiles or beams.

12) This  Circular  further  clarifies  that  RMC  falls  within  the  ambit  of  the

meaning of the word  'manufacture' as envisaged under Section 2(f) of

the Central Excise and Salt Act, 1944 as the product RMC is marketable,

though within the time frame of its short shelf life and it also satisfies the

test of being 'goods'.

13) We now proceed to take note of the arguments that were addressed at

the Bar.  Mr. Sahu submitted that in the instant case demand of excise

duty from L&T on the footing that it has manufactured RMC at the site of

construction is not sustainable for various reasons.  In support of this

plea, he paraphrased his submissions in the following manner:

(i)   Product-wise,  there  is  no  difference  between  ready  mix  concrete  and

concrete mix.  This is clear from IS 456, industry standard for all types of

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concrete mix and IS 4926 industry standard for ready mix concrete.  IS

4926  refers  to  IS  456  for  specifications  on  product  ingredients  and

manufacturing  process.  IS  4926  defines  ready  mix  concrete  as  a

concrete  mixed  in  a  batching  plant  and  delivered  at  the  site  of  the

purchaser  for  use.  This  standard  deals  with  management  aspects  of

maintaining plant, delivery process, interaction with customer, sampling

and testing for quality control, order processing and records.  Thus, IS

4926  is  concerned  with  commercial  aspects  of  industry  practices  of

ready mix concrete, which by definition is concrete mix manufactured at

one place and delivered at another place for use.

(ii)   Since L&T was manufacturing concrete  mix  at  the site  for  self-use in

construction  of  cement  plant,  it  was  not  manufacturing  ready  mix

concrete.  For this reason, CBEC in Circular dated January 06, 1998,

has explained that  by  its  very  nature,  ready mix  concrete  cannot  be

manufactured at site.  This must be the logic on the basis of which, the

Government  counsel  made  a  concession  before  the  Hon'ble  Madras

High  Court  (Larsen  &  Toubro  Ltd.  v.  Union  of  India2 that  ready  mix

concrete manufactured at site is not taxable.

(iii)  Traditionally, articles manufactured at the site of construction have been

exempted from excise duty with respect to goods manufactured at the

site of construction.  A list  of notifications showing such uninterrupted

exemption for articles of cement falling under CH 68, articles of iron and

2 2006 (198) ELT 177 (Mad.)

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steel falling CH 73 and concrete mix falling under CH 38 is enclosed.

For  this  reason,  and  also  the  fact  that  the  product-wise  there  is  no

difference between ready mix concrete and concrete mix, this Court in

CCE, Belapur v. Simplex Infrastructure Ltd.3 has held that ready mix

concrete produced at the site of construction is entitled to exemption.

(iv)  Prior to March 01, 1996, this Court has upheld the position that ready mix

concrete was classifiable under  CH 68.07.  (Associated Cement Co.

Ltd. v.  CCE,  Mumbai4)  upheld  by  this  Court  in  CCE,  Mumbai  v.

Associated  Cement  Co.  Ltd.5  All  goods  manufactured  under  this

heading at the site for use in the construction at such site was all along

exempt from duty.  From March 01, 1997, ready mix concrete has been

inserted in CH 38.2420. If ready mix concrete and concrete mix are two

different  things  only  ready  mix  concrete  was  not  taken  to  CH  38.

Therefore,  concrete  mix  (manufactured  at  the  site  of  construction)

remained in CH 68.07 and was exempt under Notification No.4/97-CE

(Serial  No.  68.2).   Even  otherwise,  serial  no.  51  of  this  notification

exempts concrete mix falling under CH 38, if manufactured at the site of

construction.

(v)  The distinction between ready mix concrete and concrete mix is similar to

that  between  garment  and  ready  made  garment.  Another  analogy  is

home-made food and food ordered from restaurant for delivery at home.

3 2008 (225) ELT 338 (SC) 4 2001 (138) ELT 911  5 2001 (132) ELT A106 (SC)

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Concrete mix manufactured at site is like home-made food, and food

order from restaurant for delivery at home is like ready mix concrete.

Both are foods ready for consumption, but the former get beneficial tax

treatment.   

(vi)  Before the Commissioner, L&T had taken the following arguments, which

were not considered.

(a)  CBEC in circular dated January 06, 1998 has classified that ready mix

concrete could not be manufactured at the site.

(b)  Ready mix concrete is a type of concrete mix, which is manufactured at

one place and transported for delivery at the site of construction.  This is

not the case with L&T.

(c)  No sample has been drawn by the Department to find whether the goods

produced were ready mix concrete or concrete mix.

(d)  The concrete mix produced at the site was used without delay, and had no

shelf-life.  Hence, it was not excisable.

(e)   The  goods  are  classifiable  under  CH  68.07  in  view  of  the  ruling  in

Associated Cement Co. Ltd. (supra).  Hence, exempt under notification

No. 4/97 (serial No.68.2).  Alternatively, if classification is sought to be

made under CH 38, site mixed concrete was also exempt under this

notification.

14) From the aforesaid submissions of Mr. Sahu, it becomes apparent that

basic thrust of his argument is that CM and RMC are one and the same

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thing.  According to him, when Mixed Concrete is prepared at one place

from where it is packed and transported to some other place where the

same is to be used, that is known as RMC.  On the other hand, if CM is

prepared at the site and is used there only, it remains CM.  His argument

was that it is only when RMC is used at a place other than where it is

prepared, the same becomes exigible to excise duty and not when it is

used  at  the  site.   For  this  purpose,  he  referred  to  the  following

observations in the judgment rendered by this Court in  Commissioner

of  Central  Excise,  Belapur  v.  Simplex Infrastructures  Ltd.6,  which

reads as under:

“3.  As stated above, if RMC is produced at site, then alone the assessee is entitled to exemption under the requisite Notification.   We may state that the word 'site' has  not  been  defined  in  the  Notification  though  it  so defined in the later Circular.  We may also state that with the advancement of technology, there could exist batching plants which are mobile.   Ultimately, the question which would arise for determination would depend upon the facts of each case.  In the present case, the Commissioner, as an adjudicating authority, has held that cement concrete obtained  at  Pen  and  Padghe  sites  conforms  to  the definition  of  RMC.   However,  according  to  the Commissioner,  the  respondent-assessee  has manufactured RMC during the above period in  the said places,  namely,  Pen  and  Padghe  and,  thereafter,  they have  cleared  the  same  to  the  construction  sites  of  the customers/clients of the assessee herein without payment of  central  excise duty and without  observing the central excise formalities.”

15) Mr. Yashank Adhyaru, learned senior counsel appearing for the Revenue

while  rebutting the aforesaid arguments submitted that  CM and RMC

6 (2008 (225) ELT 338 (SC)

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were  two  different  products  which  was  clear  from  the  Chapter  Note

entries  itself.   He  further  submitted  that  it  is  the  process  by  which

concrete is mixed that determines as to whether it is CM or RMC and

consumption of the material at site was irrelevant.  According to him, the

process  of  CM  was  somewhat  crude  in  contra-distinction  to  the

sophisticated process by which RMC of a comparatively very high quality

is produced.  Referring to the order of the Tribunal, he pointed out that

since  in  the  instant  case,  high  quality  RMC  was  required  for  the

construction  of  the  highly  advanced quality  cement  plant,  that  too  in

large quantity, in the process not only heavy machines in the form of

Stone  Crushers,  Conveyors,  Vibrator  Screens  to  segregate  different

sizes of stone aggregates were used, there was addition of sand mill to

produce sand from stones and other sophisticated equipments were also

used for manufacture of RMC which are taken note of by the CESTAT

and these are:

(i)  Stone Crushers, Conveyors, Vibrator Screens to segregate different sizes

of stone aggregates.

(ii)  Sand mill to produce sand from stones.

(iii)  Two batching plants in which all aggregates were weighed and batched by

electrical controls and limit switches.

(iv)  Cement silo where cement is stored and carried to the batching plant by a

screw conveyor operated with automatic weighing gauges.

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(v)  Flow-meters to feed water after subjecting into chemical analysis.

(vi)  Mixer to mix stone aggregates sand, cement and water.

(vii)  Transit mixer mounted on a truck chassis for transporting the concrete to

the actual site of construction.

16) He, thus, argued that whether it was done at site or not was irrelevant.

He also submitted that the assessee itself accepts that what is produced

is RMC, which is different from CM, and the only reason for claiming

exemption from excise duty is that it is produced at site.   

17) We have considered the aforesaid submissions of the learned counsel

for the parties.

18) We may point out at the outset that the case which is now sought to be

set up by the assessee, namely, CM and RMC are one and the same

product, was never the case of the assessee.  On the contrary, in reply

dated June 12, 1998 to the letter dated May 18, 1998 issued by the

Assistant  Commissioner  of  Central  Excise,  Anantpur,  the  explanation

given by the assessee was that the product produced at the site is only

concrete mix,  which is  different  from RMC; and that  RMC cannot  be

manufactured at the site of construction; that chemicals/retarders are not

used in site mix concrete.  Further, we also find from Order-in-original as

well as order passed by the Tribunal that the assessee always accepted

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that what was being produced was RMC and claimed exemption only on

the  ground  that  it  was  manufactured  at  the  site  of  construction  and

captively used.   

Even  in  the  writ  petition  filed  by  the  assessee  in  the  High  Court  of

Madras,  the  assessee  itself  proceeded  on  the  basis  that  what  was

manufactured was RMC inasmuch as in para 3 of this writ, it was mentioned:

'the writ petitioner had set up a Unit for manufacture of Ready Mix Concrete at

Manapakkam.'  Paras 3 and 4 reads as under:

“3. The writ petitioner had set up an Unit for manufacture of  Ready  Mix  Concrete  at  Manapakkam  and  has registered itself with the Central Excise.  According to the respondents,  the  Ready  Mix  Concrete  manufactured  by the petitioner is not meant to be used at the site itself and they  have  to  be  cleared  and  sold  to  various  other construction  companies.   The  product  is  transported through  the  vehicle  fitted  with  mixing  drum  specifically designed to carry Ready Mix Concrete from the petitioner's unit to various concrete sites.  The product is marketable, transportable and eventually available for sale.

4.  The product concrete mix was not specified anywhere in Chapter 28 of the Central Excise Tariff Act, 1995.  It was classified under Chapter sub-heading 38.23.  However, as both  the  concrete  mix  and  Ready  Mix  Concrete  were closely  related  products,  confusion  arose  in  respect  of classification and levy of duty.”

19) We are also inclined to agree with the stand taken by the Revenue that it

is the process of mixing the concrete that differentiates between CM and

RMC.  In the instant  case, as it  is  found, the assessee installed two

batching plants and one stone crusher at site in their cement plant to

produce  RMC.   The  batching  plants  were  of  fully  automatic  version.

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Concrete mix obtained from these batching plants was delivered into a

transit mixer mounted on a self propelled chassis for delivery at the site

of  construction is  in  a  plastic  condition requiring no further  treatment

before being placed in the position in which it is to set and harden.  The

prepared  chassis  which  was  mounted  was  to  ensure  that  when  the

concrete  mix  is  taken  to  the  actual  place  of  construction,  it  keeps

rotating.  It is also significant to mention that for producing the concrete

mix, material used was cement, aggregates, chemically analysed water

and admixtures,  namely, retarders and plasticizers.   As the L&T was

constructing cement plant of a very high quality, it needed concrete also

of  a superior  quality  and to produce that  aforesaid sophisticated and

modernised process was adopted.  The adjudicating authority in its order

explained the peculiar feature of RMC and the following extracts from

the said discussion needs to be reproduced:

“32.   Central  Excise  Tariff  does  not  define  Ready  Mix Concrete.  Therefore, as per the established case-laws on the subject it is necessary to look for the meaning of this expression  as  understood  in  the  market  viz.,  as understood  by  the  people  who  buy  and  sell  this commodity.  In this connection it would be relevant to refer to the following excerpts from an article – what is ready mix  concrete,  appearing  in  internet  website  of  National Ready Mix Concrete Association, USA:-

(i)   Concrete,  in  its  freshly  mixed  state,  is  a  plastic workable mixture that can be cast into virtually any desired shape.  It starts to stiffen shortly after mixing, but remains plastic  and workable for  several  hours.   This  is  enough time for it  to be placed and finished.  Concrete normally sets or hardens within two to 12 hours after mixing and continue to gain strength within months or even years.

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(ii)  Ready Mix Concrete refers to concrete that is delivered to  the  customer  in  a  freshly  mixed  and  non-hardened state.  Due to its durability, low cost and its ability to be customized for different applications, Ready Mix Concrete is one of the world's most versatile and popular building materials.

(iii)  Admixtures are generally products used in relatively small  quantities  to  improve  the  properties  of  fresh  and hardened concrete.  They are used to modify the rate of setting  and  strength,  especially  during  solid  and  cold weather.  The most  common,  is  an  air-entraining  agent that develops millions of tiny holes in the concrete, which imparts the durability to concrete in freeing and thawing exposure.  Water reducing Admixtures enable concrete to be  placed  at  the  required  consistency  while  minimizing water used in the mixture, thereby increasing the strength and  improving  durability.   A  variety  of  fibers  are incorporated  in  the  concrete  to  control  or  improve aberration and impact resistance.”

20) After referring to some text as well, the adjudicating authority brought out

the  differences  between  Ready  Mix  Concrete  and  CM  which  is

conventionally produced.  The position which was summed up showing

that the two products are different reads as under:

“From the literature quoted above it is clear that Ready Mix Concrete  is  an  expression  now  well  understood  in  the market and used to refer to a commodity bought and sold with clearly distinguishable features and characteristics as regards the plant and machinery required to be set-up for its  manufacture  and  the  manufacturing  processes involved, as well as its own properties and the manner of delivery.  RMC refers to a concrete specially made with precision and of a high standard and as per the particular needs of a customer and delivered to the customer at his site.  Apparently due to the large demand resulting from rapid urbanization and pressure of completing projects on time,  consumption of  RMC has steadily grown replacing the conventional/manual concreting works.  Today leading cement  companies  have  entered  the  field  by  setting-up RMC plants  in which L&T ECC is  one.   RMC is  slowly replacing  site  or  hand  mixed  concrete  because  of  the

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distinct  advantages  due  to  technology,  speed  and convenience.  Furthermore, absence of the need to deal with multiple agencies for procuring and storing cement, sand, blue metal and water as well as the absence of the need  to  handle  unorganized  labour  force  are  factors influencing customers to go in for RMC in preference to CM.”  

21) In this backdrop, the only question is as to whether RMC manufactured

and used at site would be covered by notification. Answer has to be in

the  negative  inasmuch  as  Notification  No.  4  dated  March  01,  1997

exempts only 'Concrete Mix' and not 'Ready Made Mixed Concrete' and

we have already held that RMC is not the same as CM.   

22) In Simplex Infrastructures Limited case, this Court had not delved into

the issue at hand at all except stating that, “if RMC is produced at site

then alone  the assessee is  entitled  to  exemption  under  the requisite

notification.”  There is no discussion on this behalf as well.  Though, para

3 starts with the words:  'As stated above',  a reading of  earlier  paras

reveals that in the preceding paras also there is no discussion on this

aspect.  It appears that the parties proceeded on the basis that if RMC is

produced at site, it will be entitled to exemption.  Otherwise there is no

discussion that RMC is different from CM and the notification mentioned

only approves CM and not RMC. Moreover, para 5 of the said judgment

would disclose that after setting aside the order of the Tribunal and in an

appeal filed by the Revenue, matter was remitted back to the Tribunal

without expressing any opinion on the merits of the case.  Para 5 reads

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as under:

“5.   In  the  above  circumstances,  we  set  aside  the impugned order of the Tribunal and we remit the matter to the  Tribunal  to  decide,  in  accordance  with  law,  the dichotomy which arises in the present case between the existence of the batching plant, its location, its mobility and the area of the site.  We make it clear that we express no opinion on the merits of the case.  We remit this matter only on the basis of the statement made in the impugned order  of  the  Tribunal  that  the  above  position  was  not disputed.  Keeping the arguments on both sides open and further  giving  liberty  to  both  sides  to  file  additional documents, we set aside the impugned order and we remit the  mater  to  the  Tribunal  for  fresh  consideration  in accordance with law.”

Therefore, the aforesaid judgment would have no application.

23) On these facts, as far as appeal of the L&T is concerned that 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.

CIVIL APPEAL NO. 6138 OF 2008

24) In  the  instant  case,  the  CESTAT  has  held  that  as  the  RMC  was

manufactured at site and was used in construction work at site, the same

was covered vide Notification No.4/97-CE.  This view of the Tribunal has

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been upheld by the High Court  thereby dismissing the appeal  of  the

Revenue.  Having regard to our discussion in the case of L&T, this view

has  to  be  rejected.   At  the  same  time,  we  find  that  the  process  of

preparing the Concrete Mix at site has not been discussed at all.  It is

only  that  process  which would  determine as to  whether  the  produce

could be termed as CM or it would be treated as RMC.  Therefore, while

allowing the appeal of the Revenue and setting aside the order of the

Tribunal  as  well  as  the  High  Court,  we  remit  the  case  back  to  the

adjudicating  authority  to  look  into  the  matter  afresh  from this  angle,

keeping in view our observations in this judgment.   

25) Since it is an old matter, the Tribunal shall endeavour to decide the case

within one year.  Parties shall be free to produce material/evidence to

show how the Concrete was mixed.   

.............................................J. (A.K. SIKRI)

.............................................J. (ROHINTON FALI NARIMAN)

NEW DELHI; OCTOBER 06, 2015

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