COMMISSIONER OF CENTRAL EXCISE, INDORE versus MIS. CETHAR VESSELS LTD. AND ORS.

Citation: [2007] 6 S.C.R. 701 · Decided: 15-05-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

COMMISSIONER OF CENTRAL EXCISE, INDORE 
A 
v. 
MIS. CETHAR VESSELS LTD. AND ORS. 
MAY 15, 2007 
[DR. ARIJITPASAYAT ANDS.H. KAPADIA,JJ.) 
B 
Central Excises Act, 1944: 
s.3-Erection/fabrication of Boiler/Membrane Cell Technology/Solvent 
extraction plant by assembling various components and parts-Liability to C 
pay excise duty orr-Held: Issue relating to excisability of plants and machinery 
assembled at site has been clarified in Circular No. 58/J/2002-CX dated 
15th January, 2002-As the factual aspect was not considered by CEGAT, 
matter is remitted to it for fresh consideration in the light of Virdi Brothers 
=~~~~ 
D 
The question for consideration in the present Appeal is whether 
erection/fabrication of Boiler/Membrane Cell Technology/Solvent extraction 
plant at site by assembling various components and parts, brings into existence 
immovable property or whether it amounts to manufacture of new marketing 
commodity liable to excise duty. 
E 
Disposing of the Appeal, the Court 
HELD: 1.1. Circular No.58/1/2002-CX dated 15th January, 2002 has 
been issued by the Government of India, Ministry of Finance (Department of 
Revenue), Central Board of Excise & Customs, New Delhi. The Circular F 
indicates that it was intended to clarify the question of excisability of plant 
and machinery assembled at site. (Para 6] (704-B] 
1.2. The matter is clarified as following: (a) For goods manufactured at 
site to be dutiable they should have a new identity, character and use, distinct 
from the inputs/components that have gone into its production. Further, such G 
resultant goods should be specified in the Central Excise Tariff as excisable 
goods besides being marketable i.e. they can be taken to the market and sold, 
(even if they are not actually sold). The goods should not be immovable. (b) 
Where processing of inputs results in a new products with a distinct 
701 
H 
702 
SUPREME COURT REPORTS 
[2007] 6 S.C.R. 
A commercial name, identity and use (prior to such product being assimilated 
,;.. 
in a structure which would render them as a part of immovable property), 
excise duty would be chargeable on such goods immediately upon their change 
of identity and prior to their assimilation in the structure or other immovable 
property. (c) Where change of identity takes place in the course of construction 
B 
or erection of a structure which is an immovable property, then there would 
be no manufacture of "goods" involved and no levy of excise duty. (d) Integrated 
plantvmachines, as a whole, may or may not be 'goods'. For example, plants 
for transportation of material (such as handling plants) are actually a system 
or a net work of machines. The system comes into being upon assembly of its 
component. In such a situation there is no manufacture of 'goods' as it is 
" 
c 
only a case of assembly of manufactured goods into a system. This cannot be 
.o( 
compared to a fabrication where a group of machines themselves may be 
combined to constitute a new machine which has its own identity/marketability 
and is dutiable. (e) Ifitems assembled or erected at site and attached by 
foundation to earth cannot be dismantled without substantial damage to its 
components and thus cannot be reassembled, then the items would not be 
D considered as moveable and will, therefore, not be excisable goods. 
(Para 6) (705-B-H; 706-A) 
Quality Steel Tubes Pvt. Ltd. v. CCE, (1995) 75 E.L.T. 17 (SC); Mittal 
... 
Engineering Works Pvt. Ltd v. CCE, Meerut, (1996) 88 E.L.T. 622 SC; Sirpur 
Paper Mills Ltd. v. CCE, Hyderabad, (1998) 97 E.L.T. 3 SC; Silica 
E Metallurgical Ltd. v. CCE, Cochin (1999) 106 E.L.T. 439 (Tribunal); Duncan 
Industries Ltd. v. CCE, Mumbai, (2000) 88 ECR 19 SC; Triveni Engineering 
& Industries Ltd_. v. CCE, (2000) 120 E.L.T. 273 SC; CCE, Jaipur v. Man 
Structurals Ltd., (2001) 130 E.L.T. 401 and Commissioner o/Centrai Excise, 
Indore v. Mis Virdi Brothers and Ors.,* (2006) 14 SCALE 115, relied on. 
F 
8. As the basic factual aspects were not considered by the CEGAT. This 
Court deems it proper to remit the matter to it for a fresh consideration in 
the light of the judgment in *Virdi Brothers and Ors. case and Circular. 
., 
(Para 8] (706-G) 
..., 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5391-5393 of 
G 2002. 
From the Final Order No. 100-102/2002 dated 28.01.2002 of the Customs, 
Excise & Gold (Control) Appellate Tribunal, South Zonal Bench, at Chennai 
in Appeal Nos. E/469, 470 & 1047 of2001. 
H 
WITH 
COMMNR OF CENT

Excerpt shown. Read the full judgment & AI analysis in Lexace.