M/S QUALITY STEEL TUBES (P) LTD. versus COLLECTOR OF CENTRAL EXCISE, U.P.

Citation: [1994] SUPP. 6 S.C.R. 439 · Decided: 09-12-1994 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed

Judgment (excerpt)

MIS QUALITY STEEL TUBES (P) LTD. 
A 
V. 
COLLECTOR OF CENTRAL EXCISE, U.P. 
DECEMBER 9, 1994 
[R. M. SARAI ANDS. B. MAJMUDAR, JJ.] 
B 
Central Excises and Salt Act, 1944: Section 3-Tariffitem no. 68 of the 
Schedule-Exigibility of an article to duty-Twin test to be satisfie~ 
Article must be a good and should be marketable or capable of being 
brought to market-Goods attached to earth and thus become immovable C 
do not satisfy the test and hence not exigible to duty. 
The appellant was engaged in the manufacture of welded steel 
pipes and tubes which were classified before 1.8.1983 under item 28AA 
of the First Schedule to the Central Excises and Salt Act, 1944. Later 
on these items came to fall under tariff item 25 of the Schedule. The 
steel tubes and pipes produced by the appellant were exempt from duty D 
as they were produced out of duty paid raw material. 
In 1976 and 1980, dispute arose about the eligibility of the goods 
produced by the appellant from exemption, but the proceedings were 
dropped. The appellant was informed in 1976 that the Govt. of India by 
its notification no. 31/76 dated 28.3.76 having fully exempted the 'iron E 
and steel products' from the operation of Rule 174 of the Central 
Excise Rules, 1944, the appellant was not required to take any licence. 
However in 1983 the Central Excise authorities wanted to see all 
records to satisfy that the raw material was duly paid. They also visited F 
the premises. Thereafter a show cause notice was issued to the 
appellant for contravention of relevant provisions under the Central 
Excise Rules inasmuch as the appellant had manufactured and installed 
tube mills and welding head falling under tariff item 58 of the First 
Schedule without licence, without payment of duty and without 
observing excise formalities. The explanation sent by the appellant was G 
not accepted and the Collector held that the welding head was 
imported by the appellant from USA and likewise the tube mill 
manufactured by the appellant was transportable, transferable, and 
saleable. Consequently, the two machineries under reference did not 
become a part of immoveable property. It was also held that to become 
good under the Act it was not necessary that it should be actually H 
439 
440 
SUPREME COURT REPORTS 
[1994] SUPP. 6 S.C.R 
A 
bought and sold. Since the unit erected and installed by the appellant 
was marketable or saleable, the appellant was liable to pay duty on it. 
The Tribunal also went in detail on the question whether the machinery 
and tubewell installed by the apppellant were goods even though they 
were embedded to the earth and held that even if it was not a good 
under any Tariff Schedule, but it being a good it was exciseable and the 
B 
immoveablity and moveability of the good had nothing to do with 
exciseability. Hence this appeal. 
c 
D 
E 
F 
G 
Allowing the appeal and setting aside the order of the Tribunal, 
this Court 
HELD : 1. The plant of tube mill and welding head erected by the 
appellant and installed as a part of expansion programme was not 
exigible to duty. (445 F] 
2. Levy and collection of duty is provided by Section 3 of the Act on 
all 'exciseable goods other than salt which are produced or 
manufactured'. The power, therefore, to levy and collect the duty 
under the charging Section arises when exciseable goods are produced 
or manufactured. What is an 'excisable good' is defined by sub-section 
(d) of Section 2 to mean 'goods specified in the Schedule to the Central 
Excise Tariff Act, 1985) as being subject to a duty of excise and 
includes salt'. The words 'exciseable good', therefore have a 
connotation of their own. (444 E to Fl 
3. The basic test of levying duty under the Act is two fold. One, that 
any article must be a good and second, that .it should be marketable or 
capable of being brought to market. Goods which are attached to the 
earth and thus become immoveable do not .satisfy the test of being 
goods within the meaning of the Act nor it can be said to be capable of 
being brought to the market for being bought and sold. Therefore, both 
the tests, were not satisfied in the case of appellant as the tube mill or 
welding head having been erected and installed in the premises and 
embedded to earth, they ceased to be goods within meaning of Section 3 
of the Act. [ 445 B to CJ 
Union of India and Anr. Delhi Cloth and General Mills Co. Ltd, 
(1977) 1 ELT (Jl77) SC=AIR (1963) SC 791; Indian Cable Co. Ltd v. 
Collector 

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