CESTAT Allahabad Holds Department Must Prove RMC Manufacture Before Levying Excise Duty On Concrete Mix

The Allahabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 14 May held that concrete mix manufactured and consumed at construction sites for residential projects qualifies for exemption from central excise duty and cannot be classified as “Ready Mix Concrete” (RMC) without technical evidence establishing the characteristics of RMC manufacturing.

Judicial Member P.K. Choudhary and Technical Member Rajeev Tandon held that the Department failed to prove that Ahluwalia Contracts (India) Ltd. manufactured RMC and allowed all five appeals with consequential relief. The Bench observed:

“The final product - RMC is a material in plastic, wet process state and not a finished product like blocks or precast tiles or beams.”

The dispute arose after the Revenue alleged that the appellant manufactured Ready Mix Concrete at the construction sites of residential projects including “The Jewel of India”, “Celeste Towers”, “Jaypee Knight Court”, “Kensington Boulevard”, “Logix Blossom Green”, “Assotech Windsor Court” and “Lotus Boulevard” without paying excise duty.

Acting on intelligence inputs, departmental officers visited various project sites and drew panchnamas after finding batching plants installed for manufacturing concrete. According to the Department, the product manufactured by the appellant fell under Tariff Heading 38245010 as RMC and attracted excise duty.

It argued that the use of chemicals and mechanised batching processes distinguished the product from ordinary concrete mix. It further contended that the appellant availed Cenvat credit and therefore could not claim the benefit of exemption notifications applicable to concrete mix manufactured at site.

The appellant, however, argued that it merely manufactured and consumed concrete mix at the construction sites and that the product did not satisfy the technical requirements of RMC under IS 4926 standards. It contended that the Department neither drew samples nor conducted technical tests to establish that the batching plants possessed the sophisticated infrastructure associated with RMC manufacturing.

The Tribunal observed that an RMC plant typically comprises sophisticated infrastructure including stone crushers, conveyors, vibrator screens for segregating aggregates of different sizes and sand mills for producing sand from stones. It noted:

“A central batching plant is also installed in which all aggregate are weighed, batched by electrical control and limit switches. Cement from site is carried to the batching plant by a screw conveyor, operated with automatic weighing gauges.”

The Bench further observed that the process supplies water through flow meters after chemical treatment, while batching mixers process the mixture of aggregates, sand, cement and water before workers load it into transit mixers mounted on truck chassis for transportation to construction sites.

Finding no such evidence on record in the present case, the Tribunal held that the Department failed to establish that the appellant manufactured RMC and therefore could not levy excise duty on the concrete mix manufactured at site.

Accordingly, the CESTAT set aside the Revenue's orders.

For Appellant: Shri Atul Gupta, Advocate

For Respondent: Shri Santosh Kumar, Authorized Representative