2004 (8) TMI 516 - AT - Central Excise

Summary

Issues:
1. Whether setting up a power plant involving the manufacture of goods is liable to central excise duty.
2. Whether the elements of a power plant, namely Electric Turbo Generating Set, Heat Recovery Steam generator, and DCS Control and Instrumentation, are liable to duty.
3. Whether the items picked up by the Commissioner for levy are immovable property.
4. Whether the Electric Turbo Generating Set is movable property attracting central excise duty.

Analysis:

1. The case involved the setting up of a power plant by the first appellant, who awarded an "erection contract" to the second appellant. The Commissioner issued a show cause notice alleging central excise duty liability of over Rs. 87 crore. The Commissioner accepted that the power plant was immovable property but held that specific elements of the plant were goods liable to duty. The duty demand was confirmed at a lower amount, and penalties were imposed on both appellants. The primary contention was that the power plant involved construction of immovable property not liable to central excise duty as the tax was on goods.

2. The appellants challenged the duty demand on the specific elements of the power plant. They argued that the elements, including the Electric Turbo Generating Set, were immovable property and not liable to duty. They highlighted the weight and installation process of the turbine and generator, emphasizing that they became immovable property after installation. The appellants cited a previous decision by the Apex Court to support their argument that the Electric Turbo Generating Set should not attract central excise duty.

3. The case also addressed whether the items picked by the Commissioner for levy were immovable property. The appellants contended that a closer examination of the items or their layout would show they were immovable property. They provided detailed descriptions of the installation process and characteristics of the elements to support their argument that these items were not movable and should not be subject to central excise duty.

In conclusion, the judgment analyzed the central excise duty liability concerning the setting up of a power plant and specific elements within it. The court considered the immovability of the elements and the previous legal precedent to determine their liability to duty. The detailed arguments presented by the appellants regarding the nature of the elements and their installation process were crucial in challenging the duty demands imposed by the Commissioner.