Circular No 623/14/2002-CX.
25-2-2002

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

Subject: Excisblity of Hot Asphalt Mix : A doubt has been raised regarding excisablity of Hot Asphalt Mix used in making roads.

2.            The matter has been examined in consultation with Ministry of Law. Their opinion is that the Bombay High Court in its judgment dated 30-7-1991 in the case of Prakash Construction and Engineering Company v. Union of India has already decided the issue that the process of preparation of Asphalt Hot Mix does not amount to manufacture as contemplated by Section 2 (f) of the Central Excise Act. The order of the Bombay High Court was accepted by the Department.

3.            Ministry of Law has further stated that the principle of strict construction is applicable to taxing statutes. In fiscal legislation the transaction cannot be taxed on any doctrine of the "circumstances of the matter" as distinguished from its legal signification, for a subject is not liable the tax on "spirit of the law" or by'by inference or by analogy'. In view of the above Ministry of Law has opined that the Asphalt Hot Mix does not amount to "manufacture " as contemplated by Section 2(f) of the Central Excise Act,1944.

4.            Board has accepted the opinion of Law Ministry. Accordingly, it is clarified that Hot Asphalt Mix is not an excisable commodity.

5.            The above clarification may be brought to the notice of the lower field formations and trade interests may also be suitably advised.

6.            All pending disputes/assesments on the issue may be settled in the light of the above guidelines. Receipt of this circular may be please acknowledged.

7.            Hindi version will follow.