1994 (12) TMI 75 - SC - Central Excise

Whether the tube mill and welding head erected and installed by the appellant for manufacture of tubes and pipes out of duty paid raw material was assessable to duty under residuary Tariff Item No. 68 of the Schedule being excisable goods within the meaning of Central Excises & Salt Act, 1944? Held that - 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, as explained by this Court, 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. Appeal allowed of assessee. The order passed by the Tribunal is set aside. The question of law raised by the assessee is decided by saying that 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.

Summary

Issues:
1. Whether the tube mill and welding head installed by the appellant for manufacturing tubes and pipes out of duty paid raw material are assessable to duty under residuary Tariff Item No. 68 of the Schedule.
2. Whether the tube mill and welding head, though embedded to earth, qualify as excisable goods under the Central Excises & Salt Act, 1944.

Detailed Analysis:
1. The appellant had set up a plant for manufacturing welded steel pipes and tubes, exempt from duty as they were produced from duty paid raw material. The plant consisted of various machinery and components, including a tube mill and welding head. The dispute arose when the authorities questioned the duty liability on the machinery. The Collector alleged contravention of excise rules for not obtaining a license and not paying appropriate duty. The Tribunal held that since the machinery was marketable and saleable, it qualified as excisable goods, irrespective of being embedded to earth. The appellant argued that as the machinery was immovable and not transportable, it should not be considered excisable goods. The Supreme Court analyzed the definition of excisable goods under the Act, emphasizing that the goods must be marketable to be levied duty. The Court reiterated the test of marketability and held that the machinery, though embedded, was marketable and thus liable for duty.

2. The Court delved into previous judgments establishing the criteria for levying duty under the Excise Act, emphasizing the twin test of the goods being mentioned in the Schedule and being marketable. The Court clarified that goods attached to the earth and immovable do not satisfy the definition of goods under the Act. The appellant contended that considering erection and installation of a plant as excisable goods would broaden the scope to include structures and installations, deviating from the accepted meaning. The Court agreed with the appellant's argument, ruling that the tube mill and welding head, being part of an expansion program and embedded to earth, were not exigible to duty. The appeal was allowed, setting aside the Tribunal's order and deciding in favor of the appellant on the question of law regarding duty liability on the plant of tube mill and welding head.