1983 (3) TMI 272 - AT - Central Excise

Summary

Issues:
- Whether the appellants are liable to pay Central excise duty on a pilot plant or its components manufactured in their factory.

Analysis:
The judgment pertains to three appeals arising from a common Order-in-Appeal concerning the liability of the appellants to pay Central excise duty on a pilot plant and its components. The appellants had a Research & Development Department where they erected a pilot plant for R & D work, manufacturing 70% of the components in-house and purchasing the remaining 30% externally. The central issue was whether duty was payable on the pilot plant or its components. The relevant exemption notification was cited to aid in understanding the matter. The appellants argued that the pilot plant, being a chemical plant fixed to the ground, did not qualify as "goods" subject to excise duty. They contended that the components manufactured by them were not complete machinery and were used solely for research and development purposes, making them exempt under the notification. The Department's representative acknowledged the plant was not machinery but disputed the applicability of the exemption to the components used in assembling the plant.

The Tribunal analyzed the arguments and evidence presented. It determined that the pilot plant, being immovable property, did not constitute goods attracting excise duty. Regarding the components, the Tribunal agreed with the appellants that they were not complete machinery and were not intended for producing goods. The plant was primarily for research and development, with any goods produced being incidental. The Tribunal held that the second proviso of the notification did not apply to the components. Additionally, the Tribunal found merit in the appellants' argument that the use of components for assembling the plant satisfied the condition of "use" under the notification, entitling them to exemption. The nature of the components meant they could only be used in the assembly of the plant, which would produce goods. Therefore, the appellants met the conditions for exemption under the notification.

Consequently, the Tribunal allowed all three appeals, providing consequential relief to the appellants. The judgment clarified the distinction between the pilot plant and its components, determining their non-liability for excise duty based on their nature and intended use for research and development activities.