2010 Supreme(SC) 307

2010 (3) Supreme 143
SUPREME COURT OF INDIA
D.K. JAIN and T.S. THAKUR, JJ.
Commissioner of Central Excise, Ahmedabad — Appellant
versus
Solid & Correct Engineering Works & Ors. — Respondents
Civil Appeal Nos.960-966 of 2003
Decided on : 8-04-2010

IMPORTANT POINT
Once a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as moveable so as to be dutiable under Excise Act.

Headnote:Central Excise Act, 1944 - Section 35L(b) -Appeals against orders passed by Customs Excise and Gold (Control) Appellate Tribunal, whereby Tribunal had set aside the order passed by Commissioner of Customs & Central Excise, confirming the duty demanded from the respondents as also levying penalties upon them under different provisions of Act, 1944- Show cause notice was issued to Solidmec marketing company alleging that it was engaged in the manufacturing of Asphalt Batch Mix, Drum Mix/Hot Mix Plant by assembling and installing the parts and components manufactured by manufacturing units of group- According to the notice the process of assembly of parts and components at the site provided by purchasers of such plants was tantamount to manufacture of such plants as a distinct product with a new name, quality,usage and character emerged out of the said process-Resultantly the end-product; namely, Asphalt Drum/Hot Mix Plants became exigible to Central Excise duty,which duty Solidmec had successfully avoided- Issue that arose for consideration was whether setting up of an Asphalt Drum Mix Plant by using duty paid components tantamounted to manufacture of excisable goods within the meaning of Section 2(d) of Act, 1944? – Held once a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct- The same cannot thereafter be treated as moveable so as to be dutiable under Excise Act-But cases in which there is no assimilation of machine with the structure permanently, would stand on a different footing- In the instant case all that had been said by the assessee was that the machine was 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, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently- Plants in question were neither attached to earth within meaning of Section 3(26) of the General Clauses Act nor was there any intention of permanently fastening the same to anything attached to the earth-Hence held that plants in question were not immovable property so as to be immune from the levy of excise duty-Appeals allowed. (Para 33)

       Central Excise Act, 1944 - Section 5A (1)-Appeals against orders passed by Customs Excise and Gold (Control) Appellate Tribunal, whereby Tribunal had set aside the order passed by Commissioner of Customs & Central Excise, confirming the duty demanded from the respondents as also levying penalties upon them under different provisions of Act, 1944-Issue that arose for consideration was whether 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, issued under sub-section (1) of Section 5A of Act of 1944 as amended from time to Time- Tribunal, had taken the view that respondents-manufacturing units were entitled to the benefit of exemption under Notification No.1/93 as amended from time to time as the use of brand name Solidmec for the plants or the components manufactured by such units did not disentitle said units from claiming benefit of exemption having regard to the fact that the size of the sticker giving the brand name of the manufacturing units was bigger than that of Solidmec, the marketing company-Contention of respondent that reasoning given by Tribunal based on the size of the sticker was not legally sustainable- However it was urged that since the manufacturing units had also raised some other defences including one on the ground of limitation, even if the order passed by the Tribunal was set aside, matter may have to go back to Tribunal to enable it to examine the said alternative contentions-Hence matter remanded back to the Tribunal for passing fresh orders on the subject appropriately –Appeals allowed. (Paras 35, 36)

       Facts of the Case :

       Present Appeals have been filed against orders passed by Customs Excise and Gold (Control) Appellate Tribunal, whereby Tribunal had set aside the order passed by Commissioner of Customs & Central Excise, confirming the duty demanded from the respondents as also levying penalties upon them under different provisions of Act, 1944.A Show cause notice was issued to Solidmec marketing company alleging that it was engaged in the manufacturing of Asphalt Batch Mix, Drum Mix/Hot Mix Plant by assembling and installing the parts and components manufactured by manufacturing units of group. According to the notice the process of assembly of parts and components at the site provided by purchasers of such plants was tantamount to manufacture of such plants as a distinct product with a new name, quality,usage and character emerged out of the said process.Resultantly the end-product; namely, Asphalt Drum/Hot Mix Plants became exigible to Central Excise duty,which duty Solidmec had successfully avoided. Issue that arose for consideration was whether setting up of an Asphalt Drum Mix Plant by using duty paid components tantamounted to manufacture of excisable goods within the meaning of Section 2(d) of Act, 1944?

       Findings of the Court :

       Held once a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as moveable so as to be dutiable under Excise Act-But cases in which there is no assimilation of machine with the structure permanently, would stand on a different footing. In the instant case all that had been said by the assessee was that the machine was 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, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. Plants in question were neither attached to earth within meaning of Section 3(26) of the General Clauses Act nor was there any intention of permanently fastening the same to anything attached to the earth. Hence held that plants in question were not immovable property so as to be immune from the levy of excise duty. Appeals were allowed.