1998 (5) TMI 155 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Electric Arc Furnace as immovable property.
2. Applicability of Central Excise duty on Electric Arc Furnace.
3. Entitlement to Modvat credit.

Summary:

1. Classification of Electric Arc Furnace as immovable property:
The appellants contended that the Electric Arc Furnace, constructed and installed at their site, became an immovable property and thus did not attract Central Excise duty. They argued that the furnace, weighing about 100 M.T. and constructed brick by brick in a steel shell, could not be moved without causing damage. The Commissioner (Appeals) rejected this plea, stating that the furnace was manufacturing machinery erected on a deep foundation for stability, and thus not immovable property. The Tribunal, however, noted that the construction of the furnace involved embedding it to the earth and that dismantling would only yield scrap, thereby supporting the appellants' claim that it was immovable property.

2. Applicability of Central Excise duty on Electric Arc Furnace:
The department issued a show cause notice proposing to classify the Electric Furnaces u/s 8514.00 and demanded duty, arguing that the furnace was a crucial machinery for manufacturing Ferro Silicon. The appellants argued that the furnace, constructed at the site, did not constitute "goods" as it was not movable. The Tribunal referred to several Supreme Court judgments, including the cases of Quality Steel Tubes (P) Ltd. and Tata Robins Fraser Ltd., which held that structures and machinery embedded to earth are not excisable goods. The Tribunal concluded that the Electric Arc Furnace, being immovable, did not attract Central Excise duty.

3. Entitlement to Modvat credit:
The appellants claimed that even if the furnace was considered goods, they were entitled to Modvat credit u/r 57Q. The Tribunal did not delve deeply into this issue, as the primary conclusion was that the furnace was immovable property and thus not subject to excise duty. However, the Tribunal acknowledged the appellants' reliance on the judgment in the case of Indian Oxygen Ltd., which supported their claim for Modvat credit.

Conclusion:
The Tribunal set aside the impugned orders, ruling that the Electric Arc Furnace, being immovable property, was not subject to Central Excise duty. The appeals were allowed accordingly.