IMPORTANT POINT
Refrigeration plant/Central air conditioning plant etc. assembled at site out of duty paid bought out items would not amount to manufacture of a new marketable commodity and would not be excisable.

JUDGMENT

Dr. Arijit Pasayat, J.—In each of these appeals challenge is to the common final order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short ‘CEGAT’). The basic question in all these appeals is whether refrigeration plant/cold storage plant/Central air-conditioning plant/caustic soda plant can be subjected to duty under Central Excise Act, 1944 (in short the ‘Act’). Stand of the appellant was that the fabrication of such plants out of duty paid bought out amounts to manufacture of a new marketable commodity and therefore, excise duty is payable.

2. The CEGAT held that no excise duty is leviable and thus these plants are not subject to excisability. It accepted stand of the respondents that these plants are basically systems comprising of various components and are thus in the nature of systems and are not machines as a whole. Accordingly, such systems as a whole cannot be considered to be excisable goods.

3. According to learned counsel for the appellant, the view taken by the CEGAT is untenable. The adjudicating authority was justified in holding that fabrication of the plants in question out of duty paid bought out items amounts to manufacture of a new marketable commodity and therefore dutiable.

4. The issue relating to excisability of plants and machinery assembled at site has been determined by this Court in several cases. For example Quality Steel Tubes Pvt. Ltd. v. CCE (1995 (75) E.L.T. 17 (SC); Mittal Engineering Works Pvt. Ltd. v. CCE, Meerut (1996 (88) E.L.T. 622 (SC); Sirpur Paper Mills Ltd. v. CCE, Hyderabad (1998 (97) E.L.T. 3 (SC); Silica Metallurgical Ltd. v. CCE, Cochin (1999 (106) E.L.T. 439 (Tribunal); Duncan Industries Ltd. v. CCE, Mumbai (2000 (88) ECR 19 (SC); Triveni Engineering & Industries Ltd. v. CCE (2000 (120) E.L.T. 273 (SC) and CCE, Jaipur v. Man Structurals Ltd. (2001 (130) E.L.T. 401 (S.C.)

5. As a matter of fact taking into account these decisions Circular No.58/1/2002-CX dated 15th January, 2002 has been issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise & Customs, New Delhi. The Circular indicates that it was intended to clarify the question of excisability of plant and machinery assembled at site. The relevant portion of the Circular reads as follows:

“Government of India

Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi

Sub: Excisability of plant and machinery assembled at site-Regarding

In exercise of the power conferred under Section 37B of the Central Excise Act, 1944, the Central Board of Excise and Custom considers it necessary, for the purpose of uniformity in connection with classification of goods erected and installed at site, to issue the following instructions.

2.Attention is invited to Section 37B Order No.53/2/98-CX, dated 2.4.98 (F.No.154/4/98-CD.4) (1998 (100 E.L.T.T9) regarding the excisability of plant and machinery assembled at site.

3.A number of Apex Court judgments have been delivered on this issue in the recent past. Some of the important ones are mentioned below:

(i)Quality Steel Tubes Pvt. Ltd. v. CCE (1995 (75) E.L.T. 17 (S.C.);

(ii)Mittal Engineering Works Pvt. Ltd. v CCE, Meerut (1996 (88) E.L.T. 622 (S.C.);

(iii)Sirpur Paper Mills Ltd. v. CCE, Hyderabad (1998 (97) E.L.T. 3 (S.C.);

(iv)Silica Metallurgical Ltd. v. CCE, Cochin (1999 (106) E.L.T. 439 (Tribunal) as confirmed by the Supreme Court vide their order dated 22.2.99 (1999 (108) E.L.I. A58 (S.C.);

(v)Duncan Industries Ltd. v. CCE, Mumbai (2000 (88) ECR 19 (S.C.));

(vi)Triveni Engineering & Industries Ltd. v. CCE (2000 (120) E.L.T. 273 (S.C.)

(vii)CCE, Jaipur v. Man Structurals Ltd. (2001 (130) E.L.T. 401 (S.C.)

4. The plethora of such judgments appears to have created some confusion with the assessing officers. The matter has been examined by the Board in consultation with the Solicitor General of India and the matter is clarified as under:-

a.For goods manufactured at site to be dutiab