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TMI Blog2010 (6) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... department and one M/s. Excon Building Materials Manufacturing Co. Pvt. Ltd. in respect of identical goods, [it appears from the records that, after the dispute was settled by the Tribunal in favour of the Revenue in Excon case, the department, in June 2002, proposed to finalise the provisionally approved classification lists of the appellant by holding them liable to pay duty at Tariff rate for the relevant period]. With the amendment of Rule 173B by the Central Government, the appellant filed classification declarations from 1995-96 claiming concessional rate of duty for their products under successive Notifications. While so, from 1997-98, they were classifying the goods under SH 6807.20 of the CETA Schedule also. From 1998-99, they were paying duty on the goods at Tariff rate applicable to SH 6807.20. The department issued show-cause notices from time to time to the appellant alleging (for a major part of the total period of dispute from June 1988) that the "RCC cement blocks" manufactured by them were used for construction of walls and did not constitute intermediates or components of prefabricated buildings falling under Heading 94.06 and (for the rest of the period of disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g No. Description of goods Rate of duty 3 68.07 Blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of pre-fabricated buildings falling under Heading No. 94.06. 5% ad valorem Heading No. 68.07 of the CETA Schedule, which originally covered "All other articles of stone, plaster, cement, asbestos, mica or other similar materials not elsewhere specified or included" underwent a change under the Finance Act, 1997 and, accordingly, three sub-headings came into existence from 1-4-1997, of which SH 6807.20 covered "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06". The first two sub-headings (6807.10 and 6807.20) were followed by the residuary sub-heading 6807.90 (Other) which carried a higher rate of duty than SH 6807.20. From 1-4-1997, the department wanted to classify the blocks under sub-heading 6807.90 and levy duty at higher rate from the party by denying them the benefit of the relevant Notifications. Therefore, the second issue to be considered is whether, for the period from 1-4-1997, the assessee's blocks could be held to be of a kind used in prefabricated buildings of Heading 94.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's alternative claim for exemption under Notification 6/2000-C.E. dated 1-3-2000 was rejected on the ground that the benefit was available only to 'concrete blocks' and not to 'cement blocks'. In this context, the learned Commissioner reasoned that 'cement' and 'concrete' were two different things. 5. The learned Senior Advocate for the appellant submitted that the goods manufactured by them were cement concrete blocks of modular design with its three dimensions conforming to IS 2185. These blocks were also used in walls of buildings. They were capable of being used in prefabricated buildings and hence could be considered as intermediates or components of prefabricated buildings. In this connection, the learned counsel referred to the National Building Code published by the Bureau of Indian Standards (BIS), which defined the term "unit" to include a block and also indicated that the units formed part of prefabricated building/structure. On this basis, it was argued that the benefit of Notification 64/88 was available to the cement concrete blocks in question for the entire period of dispute. Referring to the Tribunal's decision in Excon case (supra) as affirmed by the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refabricated buildings. 6. Opposing the above contentions, the learned JCDR submitted that the cement concrete blocks manufactured and cleared by the appellant were actually used in place of bricks as masonry units by the buyers. In this connection, he referred to the statements of a few buyers, given under Section 14 of the Central Excise Act. One of these buyers, M/s. Sheth Developers Ltd., stated that they had purchased concrete blocks from M/s. Eversmile Pre-Fab Pvt. Ltd. and used the same in place of commercially known bricks for erecting walls of buildings at various project sites. Another buyer, M/s. Janki Kutir Co-op. Hsg. Society, stated that the solid blocks and interlocking pavers bought by them from the appellant had been used for the resurfacing of driveways of their society. They also stated that the solid blocks had been used in place of bricks. A third buyer, M/s. Sai Datta Developers, also stated that they had purchased solid blocks (C.C.) from the appellant and that these blocks were used in place of bricks for erecting external walls of buildings. On the basis of these statements, the JCDR submitted that the blocks in question were only used as substitute for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be availed (if any) etc. There was no requirement, from 1-5-1995, for the proper officer to approve the declaration. Therefore, JCDR argued, it was not open to the appellant to resist the demand of duty on the strength of approval of old Classification Lists by the proper officer. 8. The learned JCDR had, at the outset, submitted that the goods in question were actually cement blocks and not concrete blocks. In this connection, he had also invited our attention to a Classification List for the year 1994-95 and a Classification Declaration for the year 1996-97, wherein the various products of the appellant were described as "cement hollow/solid blocks", "cement solid blocks", "cement hollow blocks", "cement hollow/solid broken blocks" etc. The learned counsel, in his rejoinder, successfully rebutted this submission of the JCDR by pointing out that the department themselves had described the goods as "R.C.C. (reinforced cement concrete) cement blocks (solid/hollow/broken)" in the relevant show-cause notices. In the annexures to the show-cause notices also, the goods were described in the same way. 9. We have carefully considered the submissions. A perusal of the records indicates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was superseded by Notification 5/97-C.E. dated 1-3-1997. Subsequently, several declarations were filed by the assessee from time to time in 1996-97 and 1997-98 claiming concessional rate of duty under the new Notification 5/97-C.E. ibid. For the period from April 1998, the assessee, in their declarations filed under Rule 173B, classified their products under sub-heading 6807.20 as "blocks, slabs, concrete beams and stairs of a kind used in prefabricated buildings of Heading 94.06" and proposed to pay duty at tariff rate. 10. As already noted, several show-cause notices were issued to the assessee from time to time for recovery of differential duty for the period from June 1988 to September 2001 (barring the period from 1-4-1989 to 25-12-1989). In most of these notices, the benefit of concessional rate of duty claimed under the relevant Notification was proposed to be denied to the party either on the ground that the blocks manufactured by them did not constitute intermediates and components of prefabricated buildings falling under Heading 94.06 or on the ground that these blocks were not of a kind used in prefabricated buildings of Heading 94.06. In the last few show-cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt hollow/solid broken blocks" etc. The word "concrete" was used in the description of 'paving blocks', in any case, the department always considered the subject-goods as 'cement concrete blocks' as is indicated by the expression "RCC cement blocks" used in the show-cause notices. Therefore, the distinction sought to be made by the learned JCDR between concrete and cement blocks is irrelevant to this case. It appears from the records that the classifiability of the cement concrete blocks in question under Heading 68.07 of the CETA Schedule for the above period has never been in dispute. The dispute in respect of this period is with reference to the description of the goods given at serial No. 3 of the Table annexed to Notification 64/88-C.E. ibid. The Notification described the goods at serial No. 3 ibid, as "blocks, slabs, lintels, concrete beams and stairs constituting intermediates and components of prefabricated buildings falling under Heading 94.06". The appellant has contended that their blocks were chargeable to duty at the concessional rate given at serial No. 3 of the above Notification, by virtue of the fact, that they were classifiable under Heading 68.07 and also the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technique adopted for their manufacture and use in building. The learned counsel has particularly referred to the OPEN PREFAB SYSTEM, one of the different prefabrication systems discussed in NBC, which explains OPEN PREFAB SYSTEM as follows :- "6.3.1 OPEN PREFAB SYSTEM - This system is based on the use of the basic structural elements to form whole or part of a building. The standard prefab concrete components which can be used are : (a) Reinforced concrete channel units, (b) Hollow core slabs, (c) Hollow blocks and battens, (d) Precast planks and battens, (e) Precast joists and tiles, (f) Cellular concrete slabs, (g) Prestressed/reinforced concrete slabs, (h) Reinforced/prestressed concrete beams, (i) Reinforced/prestressed columns, (j) Precast lintels and chajjas, (k) Reinforced concrete waffle slabs/shells, (l) Room size reinforced/prestressed concrete panels, (m) Reinforced/prestressed concrete walling elements, and (n) Reinforced/prestressed concrete trusses. NOTE - The elements may be cast at the site or off the site. Foundation for the columns could be of prefabricated type or of the conventional cast in situ type depending upon the soil conditions and load ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Harmonized Commodity Description and Coding System-Explanatory Notes). Note 4 to Chapter 94 of the CETA Schedule and the corresponding Chapter Note in the HSN read identically. The Explanatory Notes to HSN Heading 94.06 read as under :- "94.06 - PREFABRICATED BUILDINGS. This heading covers prefabricated buildings, also known as "industrialised buildings", of all materials. These buildings, which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of - complete buildings, fully assembled, ready for use; - complete buildings, unassembled; - incomplete buildings, whether or not assembled, having essential character of prefabricated buildings. In the case of buildings presented unassembled, the necessary elements may be presented partially assembled (for example, walls, trusses) or cut to size (beams, joists, in particular) or, in some cases, in indeterminate or random lengths for cutting on the site (sills, insulation, etc.)." The definition of 'prefabricated buildings' given in Chapter Note 4 in the CETA Schedule coupled with the above Explanatory Notes wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstituting intermediates and components of prefabricated buildings falling under Heading No. 94.06", given at S. No. 3 of Notification No. 64/88. The Hon'ble Supreme Court, in Excon case, examined the above description of goods and interpreted it as under :- "7. It is well settled that where the wording of a Notification are clear then the plain language of the Notification must be given effect to. An interpretation which is not borne out by the plain wordings of the Notification cannot be given. A reading of the Notification makes it clear that the concessional rate of duty is only available to blocks, slabs, lintels, concrete beams and stairs which constitute an intermediary or component of pre-fabricated buildings. We are unable to accept the submission that it is only the concrete beams and stairs which must constitute an intermediary or component of the pre-fabricated buildings. We are unable to accept the submission that blocks, slabs and lintels by themselves also are entitled to the benefit of this Notification. If the intention was to make a difference between blocks, slabs and lintels on the hand and concrete beams and stairs on the other they would have specifically do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block is an important addition to the types of masonry units available to the builder and its use for masonry work on constant increase in this country. Some of the advantages of hollow concrete block construction are reduced mortar consumption light weight and greater speed of work compared to brick masonry. Concrete block masonry is well known in many countries of the world and experience in these countries has added considerably to the knowledge and confidence about its role in building construction." (underlinings supplied) (iv) It has been argued by the learned counsel that the language of the Notification is descriptive in nature and does not require any actual user condition to be satisfied. According to him, as the blocks were designed to be used for prefabricating walls for buildings, they should be treated as components of prefabricated buildings for purposes of the Notification. In other words, it is not necessary to show (that the blocks were actually used as components of prefabricated buildings. These arguments are contrary to what the Supreme Court held in para 8 of Excon, which reads as follows :- "8. Great reliance was placed upon the order of the Collector, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the above para of the court's judgment in Excon case is from Order-in-Appeal No. SKM/1941/89-BII dated 20-9-1989 which was passed by the Collector (Appeals) sustaining the approval given by the Assistant Collector for 2 Classification Lists filed in 1988 by Excon Company. It was followed by the Collector (Appeals) in Order-in-Appeal No. AND/29/91-BIII dated 18-4-1991 in a similar case of the appellant also. The appellant in the present case has admitted that the goods in question are similar to Excon Company's product and has claimed support from the above Orders-in-Appeal. They have even taken the plea of res judicata (in their written submissions) with reference to Order-in-Appeal dated 18-4-1991 ibid. But the findings of the Collector (Appeals) were disapproved by the Supreme Court which noted that it was the specific case of the department that the blocks and slabs manufactured by Excon were not used in prefabricated buildings or (in other words) they were not components or intermediates of prefabricated buildings. The Supreme Court approved the department's view and held thus : "........... it is only such blocks as are intermediates or components of prefabricated build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry in Notification No. 36/94-C.E. is pari materia with S. No. 3 of Notification No. 64/88-C.E. The Tribunal's decision in Aeon's case was also upheld by the Supreme Court vide 2005 (184) E.L.T. 120 (S.C.). (vi) Having found that the apex court's decision on the relevant point in Excon and Aeon's cases is squarely applicable to the present case and that the cement concrete blocks in Question were not used in prefabricated buildings, we hold that the benefit of concessional rate of duty under Notification No. 64/88 (S. No. 3) or under the corresponding provisions of successor-Notifications cannot be extended to the blocks cleared during the relevant period. (b) From April 1997 to September, 2001 (i) This period is covered by the ten show-cause notices (SCNs) described below :- Sl. No. Date of SCN Period for which SCN issued Basis of demand of differential duty 1. 26-9-1997 3/1997 to 6/1997 Denial of benefit of Notification 5/97-C.E. dated 1-3-1997 [Entry No. 117(2)] 2. 2-2-1998 7/1997 to 11/1997 -- do -- 3. 2-7-1998 12/1997 to 3/1998 -- do -- 4. 29-10-1998 4/1998 to 9/1998 Classification under SH 6807.90 5. 13-4-1999 10/1998 to 3/1999 -- do -- 6. 22- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or of SH 6807.20, as the case may be. They contended that there was no requirement, whether under the Notification or under the Tariff entry, of their blocks having to be of a kind used in prefabricated buildings of heading 94.06. The same contentions have been raised in the present appeal also. The assessee, in their written submissions dated 27-2-2002 filed with the Commissioner, went a step further to state thus : "3.2 We respectfully submit that nowhere in the world any of the blocks falling within chapter sub-heading No. 68.07 are used for making prefabricated buildings which are either finished in the factory or put up as elements cleared together to be assembled at the site. We further submit that no evidence had also been adduced in the show-cause notices to the effect that there is a different type of concrete block which is capable of being used in prefabricated buildings satisfying the requirements as provided under heading 94.06" (underlining supplied by us) In their pamphlet on "HOLLOW & SOLID CONCRETE BLOCKS" vide excerpts in an earlier part of this order, the assessee has not claimed that these blocks are meant for, or capable of being used in, prefabricated bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce that the concrete blocks manufactured by him are of a kind used in prefabricated buildings so as to have the goods classified under SH 6807.20 and claim the benefit of Notification No. 5/97-C.E. [Sl. No. 117(2)] was affirmed by the Apex Court in Aeon's case vide para (4) of the court's judgment, quoted below : "The Commissioner as well the Tribunal have both held that no evidence have been led by the party to show that blocks manufactured by them or that the kind of blocks manufactured by them are used in a pre-fabricated building. Nothing could be shown to us that these findings are incorrect. Reference was made by Mr. A.K. Ganguli, learned Senior Counsel appearing on behalf of the Appellants, upon a lot of material which deals with what is a pre-fabricated building and what are pre-fabricated blocks. But nothing could be shown to us to indicate that blocks of the kind manufactured by the Appellants are used in pre-fabricated building. As there is no material on record it is clear that the blocks manufactured by the Appellants cannot fall under Tariff Item 6807.20. It must necessarily fall under Tariff Item 6807.90." (underlining supplied) Though the above judgment of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject goods. 15. It appears from SCN dated 27-6-1990 that the appellant was allowed to enjoy SSI benefit under Notification No. 175/86-C.E. dated 1-3-1986 (as amended) from 1-4-1989 till their aggregate value of clearances for the fiscal year reached the prescribed limit of Rs. 75 lacs. The limit was crossed on 26-12-1989 and, therefore, the SCN demanded duty for the remaining part of the fiscal year. Any SSI benefit was not availed or claimed by the assessee for any period barring 1989-90. Before the adjudicating authority, they submitted that the benefit was not availed because, they thought, they were entitled to the benefit of Notification No. 64/88. They also pleaded for SSI benefit as an alternative to the benefit of Notification 64/88. Though the learned Commissioner noted these submissions of the party, he did not consider the same. He should have considered their plea. 16. The impugned order does not indicate that, before the Commissioner, the assessee claimed MODVAT/CENVAT credit on inputs as an alternative relief, nor does it show that they prayed for abatement of duty from the sale price of the goods to arrive at the assessable value. These reliefs have been claimed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "constituting components of pre-fabricated building falling under heading No. 94.06". All the three CLs were approved by the Assistant Collector and these approvals were effective from the respective dates viz. 1-4-1988, 23-6-1988 and 30-8-1988 covering the period, June to September, 1988. The clearances of the goods during this period should, therefore, be considered to have been made in terms of approved classification lists. This apart, it is also pertinent to note that, when the appellant stated/declared any particulars of their goods in their classification list under Rule 173B, they were doing so with the awareness that the competent authority, whose burden it was to safeguard the revenue, would conduct enquiry under the said Rule to ascertain the correctness of such particulars. Therefore, as rightly submitted by the learned counsel, the appellant cannot be said to have wilfully misstated, deliberately suppressed or falsely declared anything before the department with intent to evade payment of duty. The subsequent reversal, by the Collector (Appeals), of the Assistant Collector's decision or even the ultimate disapproval, by the apex court, of the appellate Collector's view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom demanding duty short-levied, short-paid, etc., from an assessee for the normal period of limitation prescribed under the main part of sub-section (1) of Section 11A. It did not, in any way, affect the department's burden of proof under the proviso to the sub-section for invoking the extended period of limitation. We have already found that this burden was not successfully discharged in this case. (vi) "Protective demand notices" like the ones under consideration must be issued within the normal period prescribed under the main part of sub-section (1) of Section 11A. The learned JCDR has not offered any explanation as to why the proviso to the sub-section was pressed into service by the show-cause notices in this case. (vii) In the result, we hold that all demands of duty beyond the normal period of limitation, in this case, are time-barred. 18. As the grounds for invoking the extended period of limitation do not exist in this case, there can be no levy of interest on duty under Section 11AB nor any penalty under Section 11AC (even for the period from 28-9-1996) inasmuch as these provisions also worked on the same grounds during the material period. However, penal liability u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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