1997 (3) TMI 119 - HC - Central Excise

Summary

Issues Involved:
1. Whether the parts fabricated by the petitioner are "goods" u/s 2(d) of the Central Excises and Salt Act, 1944.
2. Whether the place of fabrication is a "Factory" u/s 2(f) of the Act.
3. Impact of the amendment to the definition of goods by Act 5 of 1986.
4. Applicability of Rule 2(a) of the Central Excise Tariff Act, 1985.
5. Marketability and dutiability of the intermediate parts and final products.

Summary:

1. Whether the parts fabricated by the petitioner are "goods" u/s 2(d) of the Central Excises and Salt Act, 1944:
The petitioner contended that the parts fabricated are not "goods" u/s 2(d) as they are not sold in the market but are specifically made for certain projects and become immovable upon installation. The Division Bench agreed, holding that the parts are not "goods" as they cannot be sold in the market and become immovable when installed. This view was confirmed by the Supreme Court in Civil Appeal Nos. 4961 to 4964 of 1989.

2. Whether the place of fabrication is a "Factory" u/s 2(f) of the Act:
The Division Bench held that the project site where the parts are assembled and installed cannot be deemed a "Factory" u/s 2(f). The process of welding and fixing parts at the site does not constitute "manufacture" attracting duty under the Act.

3. Impact of the amendment to the definition of goods by Act 5 of 1986:
The amendment changed the definition of "excisable goods" to those specified in the Schedule to the Central Excise Tariff Act, 1985. Despite this, the Court found no significant difference affecting the petitioner's case, as both before and after the amendment, the products fell under the residuary category.

4. Applicability of Rule 2(a) of the Central Excise Tariff Act, 1985:
The Department argued that the intermediate parts should be classified as "goods" u/s Rule 2(a) as they have the essential character of the finished products. However, the Court rejected this, stating that the parts are not marketable as they are custom-made for specific projects and become immovable upon installation.

5. Marketability and dutiability of the intermediate parts and final products:
The Court emphasized that for an article to be "goods" and thus dutiable, it must be marketable. Citing Supreme Court judgments, the Court reiterated that marketability is essential for dutiability. The parts and final products in question are not marketable as they are custom-made and become immovable upon installation. Therefore, they are not liable for excise duty.

Conclusion:
The writ petition was allowed, quashing the orders imposing duty and directing the refund of any duty collected. The judgment emphasized that the fabricated parts and final products are not "goods" under the Act due to their lack of marketability and immovable nature upon installation.