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M/s. Larsen & Toubro Ltd. & Anr. (ECC Construction Group) v. Commissioner of Central Excise, Hyderabad

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 6930-6931 of 2005)Decided 6 Oct 2015
Civil Appeal Nos. 6930-6931 of 2005
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

L&T built its own cement plant and made concrete on site, using batching plants and transit mixers, and consumed it there. It claimed the concrete was "Concrete Mix", which was exempt from excise duty when made at a construction site for use there, whereas the department treated it as dutiable "Ready Mix Concrete" (RMC) and raised a demand with interest and penalties. The Tribunal upheld the duty but reduced the penalties.

Decision Breakdown

The Supreme Court dismissed L&T's appeals. It held that RMC and Concrete Mix are different products, since the legislature has treated them separately in the tariff and in the exemption notifications, and that the mixing process decides which one is produced. The Court found that L&T's own records and earlier submissions had described the product as RMC, and it applied the rule that exemption notifications are read strictly, with any doubt resolved in favour of the revenue. In the connected appeal filed by the department (Civil Appeal No. 6138 of 2008), the Court rejected the High Court's view that the product was exempt and remitted the matter to the adjudicating authority to examine how the concrete was actually mixed, asking the Tribunal to decide within a year.

Lesson Learnt

The name a product is given matters less than how it is actually produced. Before claiming an exemption for goods made at a site, companies should check how the tax law and the industry classify those goods and how they are made, because exemptions are read narrowly.

Official source (sci.gov.in)View Judgment (PDF)

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