1997 (10) TMI 264 - AT - Central Excise

Summary

Issues:
Interpretation of excise duty liability on machinery items manufactured at site for project execution.

Analysis:
The case involved three appeals concerning a common issue related to the excise duty liability on machinery items manufactured at site for project execution. The appellants, a manufacturing company, undertook construction projects involving civil and structural work, machinery supply, erection, and installation. The machinery and equipment required for these projects were partly manufactured in their own factory and partly procured from the market. The dispute arose when the department contended that goods cleared in a knocked-down condition for assembly at the site were assessable to duty based on the value of the fully assembled articles. The adjudicating authority observed that duty liability for goods manufactured at the site needed to be determined independently of duty paid on components, regardless of their source. The appellants argued that a previous Tribunal decision and a subsequent Supreme Court ruling had established that a project, being immovable property, was not liable to excise duty. They pointed to show cause notices similar to those previously addressed in the upheld case.

The learned advocate for the appellants referenced a prior Tribunal decision and a Supreme Court ruling that had favored the appellants' position, asserting that the assembly of various components at the project site did not constitute the manufacture of the entire project. The Revenue representative acknowledged that the issue had been settled by the previous decisions in favor of the appellants. Upon careful consideration, the Tribunal noted that the previous rulings had established that a project, as immovable property, did not fall under the definition of 'goods' for excise duty purposes. Consequently, the Tribunal accepted the appellants' contentions and allowed all three appeals with any consequential relief.

In conclusion, the Tribunal's decision in this case reiterated the legal principle that a project, being immovable property, is not subject to excise duty as it does not qualify as 'goods.' The judgment was based on the precedent set by previous Tribunal and Supreme Court decisions, which had already addressed and resolved the issue in favor of the appellants. As a result, the appeals were allowed, providing relief to the appellants in this matter.