2019 (1) TMI 816 - AT - Central Excise

Excisability/marketability - Process amounting to manufacture - fabrication of structures from steel pipes, plates, angles, channels, beams etc. - Held that - It is not the case of the Revenue that the structures have been fabricated by MSEB at some other site and supplied to BHEL for setting up and erection of the thermal power station. Evidences that have been brought on record and accepted by the adjudicating Commissioner reveal that the structures came into existence at site itself after fabrication of the angles, channels, beams and embedded to earth, which are used for setting up of the thermal power plant and part and Parcel of the said thermal plant and do not have separate existence as such, so that it could be removed and used elsewhere as structurals - Besides, as per entry 7308.50, all goods fabricated at site of work for use in construction work at site attracts nil rate of duty. Thus, Revenue could not establish through evidences that the structures which came into existence at the site of thermal power station, are movable in nature or could be dismantled and hence marketable - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against orders-in-original regarding duty recovery on fabricated structures for thermal power plant.

Analysis:
1. Issue of Excisability of Fabricated Structures:
The dispute revolves around whether structures fabricated on-site using steel materials for a thermal power plant are excisable goods under Chapter Heading 73.08. The Revenue argues that since structures emerged from steel materials are classified under Chapter Heading 73.08, duty is payable. They rely on the Mahindra & Mahindra Ltd. case to support their stance. On the other hand, the respondent contends that the structures fabricated at the site are immovable and do not satisfy the criteria of marketability, hence not excisable. They refer to various judgments and a circular by the Board to support their argument.

2. Interpretation of Manufacture and Excisability:
The learned Commissioner analyzed the process undertaken by the respondent at the site and concluded that the fabricated structures, being embedded to earth and immovable, do not meet the marketability criteria, thus not excisable. The judgment emphasizes that the structures were fabricated on-site, forming an integral part of the thermal power plant, and were not separately marketable. Additionally, the judgment notes that all goods fabricated at the site for construction work attract a nil rate of duty under entry 7308.50.

3. Movability and Marketability Test:
The decision highlights that the Revenue failed to establish through evidence that the structures fabricated at the thermal power station site were movable or marketable. Since the structures were integral to the plant and could not be dismantled or used elsewhere, they did not pass the test of movability and marketability. Therefore, charging duty on these structures was deemed unsustainable, leading to the dismissal of the Revenue's appeals.

In conclusion, the appellate tribunal upheld the impugned order, dismissing the Revenue's appeals against the duty recovery on the fabricated structures for the thermal power plant.