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2019 (6) TMI 560 - AT - Central ExciseProcess amounting to manufacture or not - supply and setting up of RO Water Treatment Plant - whether the activity of assembly and erection of the bought out items to form RO Water Treatment Plant, can be construed as manufacture under Section 2 (f) of the Act? - HELD THAT - After considering both the Certificates issued by the Executive Engineers, Zilla Parishad as well as processes of setting up of Water Treatment Plant, we are of the view that Water Treatment Plant erected at the site, cannot be considered as goods . The Plant has come into existence only at the site in a progressive manner on a civil construction plat form. After conclusion of such erection, it is clearly in the form of immovable structure. The fact that about 60% of the Plant can be dismantled without damage thereof, cannot be a reason to reject the conclusion as above. The excisability of such Water Treatment Plants, has come up before the Tribunal in several cases. The appellant places reliance on the Three Member Bench decision of the Chennai Bench of the Tribunal in the case of ION EXCHANGE (INDIA) LTD. VERSUS COMMISSIONER OF C. EX., COIMBATORE 2002 (7) TMI 801 - CESTAT CHENNAI . The Tribunal has taken the view that the process of erection at site, does not bring into existence goods and hence not liable to duty. The process of assembly does not bring into existence any excisable goods - there is no justification to charge excise duty on the Water Treatment Plant - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the assembly and erection of RO Water Treatment Plant constitutes "manufacture" under Section 2(f) of the Central Excise Act, 1944. 2. Whether the RO Water Treatment Plant can be considered "goods" and thus liable for Central Excise duty. 3. Whether the demand for Central Excise duty is time-barred. Issue-wise Detailed Analysis: 1. Whether the assembly and erection of RO Water Treatment Plant constitutes "manufacture" under Section 2(f) of the Central Excise Act, 1944: The appellant argued that the activities of assembly and erection of bought-out items to form an RO Water Treatment Plant do not constitute "manufacture" under Section 2(f) of the Central Excise Act, 1944. They emphasized that the entire plant, once erected, cannot be described as "goods" since it is a civil structure that cannot be dismantled without damage. The Tribunal noted that the RO Water Treatment Plant is designed for a specific site, and various components are procured and assembled at the location. The plant is erected on a civil foundation and interconnected through piping. The Tribunal concluded that the process of assembly and erection at the site does not bring into existence any excisable goods, aligning with previous decisions such as ION Exchange (India) Ltd. Vs. CCEx., Coimbatore. 2. Whether the RO Water Treatment Plant can be considered "goods" and thus liable for Central Excise duty: The appellant contended that the RO Water Treatment Plant becomes immovable property after erection and cannot be described as "goods" liable for Central Excise duty. They argued that approximately 60% of the plant components would be damaged if dismantled and that it might not be possible to reinstall it at another location due to different requirements. The Tribunal considered certificates from the Executive Engineers, Zilla Parishad, which provided conflicting views on whether the plant is shiftable. Ultimately, the Tribunal concluded that the RO Water Treatment Plant, erected at the site, cannot be considered "goods" as it comes into existence progressively on a civil construction platform and becomes an immovable structure. 3. Whether the demand for Central Excise duty is time-barred: The appellant argued that the demand raised is time-barred, noting that the same assessee had been issued a previous show-cause notice for identical goods. The Tribunal did not find justification to charge excise duty on the Water Treatment Plant and did not explicitly address the time-barred argument in detail, as the primary conclusion was that the plant does not constitute "goods" subject to excise duty. Conclusion: The Tribunal set aside the impugned order, concluding that the RO Water Treatment Plant, being an immovable property, does not constitute "goods" and is not liable for Central Excise duty. The appeal was allowed with consequential relief.
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