LIPI BOILERS LTD. versus THE COMMISSIONER OF CENTRAL EXCISE, AURANGABAD

Citation: [2025] 11 S.C.R. 578 · Decided: 10-11-2025 · Supreme Court of India · Bench: J.B. PARDIWALA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2025] 11 S.C.R. 578 : 2025 INSC 1297
Lipi Boilers Ltd. 
v. 
The Commissioner of Central Excise, Aurangabad
(Civil Appeal No(s). 856-857 of 2011)
10 November 2025
[J.B. Pardiwala* and Sandeep Mehta, JJ.]
Issue for Consideration
Issue arose whether the value of the duty paid bought out items 
delivered directly at the buyer’s site is liable to be included in the 
value of the boiler cleared by the assessee from its factory in 
completely knocked down (CKD) condition, for the assessment of 
the excise duty; and whether the show cause notice is legal and 
valid under the extended limitation period as provided under the 
proviso to s.11A(1) of the Central Excise Act, 1944.
Headnotes†
Central Excise Act, 1944 – ss.4, 11A – Excise Duty – 
Assessment – Invocation of the extended period of limitation 
u/s.11A – Assessee-manufacture of boiler and boiler parts, 
cleared boiler from its factory in completely knocked down 
(CKD) condition – Assessment of excise duty – Value of the 
duty paid bought out items delivered directly at the buyer’s 
site, if liable to be included in the value of the said boiler – 
Show cause notice issued, if legal and valid under the extended 
limitation period as provided under the proviso to s.11A(1):
Held: Value of the duty paid bought out items which were delivered 
directly at the buyer’s site is not liable to be included in the value 
of the boiler cleared by the assessee from its factory in CKD 
condition, for the purpose of assessment of excise duty – Object 
of the contract was about erection and installation of immovable 
plant-steam generating plant – Final product that emerges as a 
result of performing the obligations under the contract, does not 
constitute excisable goods under the Act – Consequently, the base 
value of the boiler on which excise duty is to be levied, cannot 
be equated with the total contract price, thus, the price of the 
bought out parts cannot be included in the value of the boiler for 
the purpose of computing excise duty under the Act – CESTAT 
* Author
[2025] 11 S.C.R. 
579
Lipi Boilers Ltd. v.  
The Commissioner of Central Excise, Aurangabad
erred while declining to consider the immovability plea by the 
assessee – There was erroneous reliance on tariff classification – 
Revenue appears to have been swayed by the fact that ‘boilers’ 
and ‘boiler parts’ are listed under Chapter 84 of the Tariff Act, 1985, 
and thus, seem to have proceeded on the erroneous assumption 
that all boilers, irrespective of form or configuration, attract central 
excise duty – However, the revenue should have kept in mind that 
the mere presence of a product in the Tariff Schedule does not 
determine its excisability – Final product-steam generating plant, 
emerges in the form of an immovable product in the course of 
integrating the CKD parts with the bought out items – Thus, the 
resultant product of the contract not being excisable goods, it is 
wholly inconsequential whether or not the bought out items are 
parts or accessories of it – Excess collection of excise duty from 
buyer is no proof of excisability on the final product which emerges 
as an immovable property – Liability of the assessee to pay duty 
must be determined strictly in accordance with the charging 
provisions under the law and not on the basis of any purported 
recovery from the buyer – As regards the show cause notice, in 
the absence of any deliberate act on the part of the assessee 
with an intention to evade being established by the revenue, the 
essential precondition of wilful suppression with intent to evade 
duty not satisfied, thus, the invocation of the extended period of 
limitation under the proviso to s.11A(1) not tenable in law – Show 
cause notice issued under the proviso to s.11A(1) not legal and 
hence invalid – Thus, the proceedings leading up to the instant 
appeal to be quashed, and the impugned order set aside – Central 
Excise Tariff Act, 1985. [Paras 59-83]
Case Law Cited
Commissioner of Central Excise, Pondicherry v. Acer India Ltd. 
[2004] Supp. 4 SCR 676 : (2004) 8 SCC 173; Commissioner of 
Central Excise, Lucknow, U.P. v. Chhata Sugar Co. Ltd. [2004] 2 
SCR 790 : (2004) 3 SCC 466; M/s. Thermax Babcock & Wilcox 
Ltd. v. Commnr. of Central Excise, Pune, Civil Appeal No(s). 
3042-3043/2005; M/s. Quippo Energy Ltd. v. Commissioner of 
Central Excise, Ahmedabad-II, 2025 INSC 1130; Union of India 
and Others v. Bombay Tyre International Ltd. and Others [1984] 
1 SCR 347 : (1984) 1 SCC 467; D.

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