2010 (4) TMI 15 - SC - Central Excise

Classification wrong classification to evade duty (1) Whether setting up of an Asphalt Drum Mix Plant by using duty paid components tantamounts to manufacture of excisable goods within the meaning of Section 2(d) of the Central Excise Act, 1944? And (2) Whether the respondents engaged in the manufacture of parts and components used for setting up of Asphalt Drum/Hot Mix Plant were entitled to the benefit of Notification No.1/93-CE, dated 28th February, 1993 issued under sub-section (1) of Section 5A of the Central Excise Act, 1944 as amended from time to time? held that - In the instant case all that has been said by the assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty. the activity is amount to manufacture on the second issue of availing benefit of exemption notification, matter remanded back to tribunal

Issues Involved:
1. Whether setting up of an Asphalt Drum Mix Plant by using duty-paid components tantamounts to manufacture of excisable goods within the meaning of Section 2(d) of the Central Excise Act, 1944.
2. Whether the respondents engaged in the manufacture of parts and components used for setting up of Asphalt Drum/Hot Mix Plant were entitled to the benefit of Notification No.1/93-CE, dated 28th February, 1993 issued under sub-section (1) of Section 5A of the Central Excise Act, 1944 as amended from time to time.

Issue-wise Detailed Analysis:

Re: Question No.1
1. Legal Framework: Section 3 of the Central Excise Act, 1944, imposes central excise duty on "excisable goods" produced or manufactured in India. "Excisable goods" are defined under Section 2(d) as goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, and include any article capable of being bought and sold.

2. Tribunal's Findings: The Tribunal held that assembling, installation, and commissioning of Asphalt Drum/Hot Mix Plants amounted to manufacture since the plant that came into existence was a new product with a distinct name, character, and use. The Tribunal, however, ruled that the plants were not "goods" as they were substantially large, embedded in the earth, and could not be dismantled and reassembled without civil works.

3. Supreme Court's Analysis:
- Moveability and Marketability: The Court emphasized that the attachment of the plant to the foundation with nuts and bolts for stability does not make it immovable property. The plant can be moved after the project is completed, indicating its moveability.
- Relevant Case Law: The Court referred to several cases, including *Sirpur Paper Mills Ltd.*, *Narne Tulaman Manufacturers Pvt. Ltd.*, and *Triveni Engineering & Industries Ltd.*, to support the view that machinery fixed for operational efficiency does not become immovable property.
- Conclusion: The Supreme Court concluded that the plants do not constitute immovable property and are, therefore, exigible to excise duty. The answer to question no.1 is in the affirmative.

Re: Question No.2
1. Tribunal's Findings: The Tribunal granted the benefit of exemption under Notification No.1/93 to the manufacturing units, reasoning that the use of the brand name "Solidmec" did not disentitle them from the exemption due to the size of the stickers indicating the brand names.

2. Supreme Court's Analysis:
- Legal Sustainability: The Court found the Tribunal's reasoning based on the size of the stickers to be legally unsustainable.
- Alternative Contentions: The respondents had raised other defenses, including one on the ground of limitation, which the Tribunal had not examined.
- Remand for Fresh Consideration: The Supreme Court remanded the matter back to the Tribunal to consider these alternative contentions.

3. Conclusion: The answer to question no.2 is in the negative. The Tribunal's orders dated 19th August 2002 and 8th April 2003 were set aside, and the matter was remanded for fresh consideration.

Final Order:
The Supreme Court allowed the appeals, set aside the Tribunal's orders, and remanded the matter back to the Tribunal for fresh orders, taking into account the alternative contentions of the respondents. The appellants were awarded costs assessed at Rs.25,000/-.

This summary comprehensively covers the issues involved, the Tribunal's findings, the Supreme Court's detailed analysis, and the final order, preserving the original legal terminology and significant phrases from the judgment.

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