Marketability test bars excise duty on site-assembled central air conditioning plants installed at customers' premises.

Central air conditioning plants erected and commissioned at customers' premises were treated as a site-assembled system rather than movable excisable goods. The test of marketability failed because the plant, as a whole, could not be taken to market and sold in that form, being transportable only after dismantling. A Board clarification under Section 37B also supported the view that an air conditioning system as a whole is not excisable. Accordingly, the plant was held not to attract central excise duty, and the duty demand could not be sustained.

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Issues: Whether central air conditioning plants erected and commissioned at customers' premises are excisable goods liable to central excise duty.

Analysis: The plant was found to be a system assembled and installed at site, capable of being transported only in dismantled form. The test of marketability was not satisfied because the plant, as a whole, could not be taken to the market and sold as such. The Board's clarification under Section 37B also stated that an air conditioning system as a whole cannot be treated as excisable goods.

Conclusion: The central air conditioning plant was not excisable goods and the demand of duty could not be sustained.

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