Marketability of site-erected telecom equipment defeated excise duty and consequential penalties where installed systems were user-specific.

Site-erected BTS/BSC equipment used for telecom services was held not to be marketable goods capable of being bought and sold in the market in installed form, because the systems were user-specific and site-specific even if dismantling and reassembly was possible. On that basis, the Tribunal treated the activity as service-oriented installation and commissioning rather than manufacture of excisable goods. Since the equipment was not excisable under section 3, the central excise duty demand failed, and the consequential penalties on the assessee and individuals also could not survive. The appeals were therefore allowed in favour of the assessee.

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Issues: Whether BTS/BSC assembled and installed at site for telecom services were movable, marketable goods exigible to central excise duty, and whether the penalties imposed on the assessee and individuals could survive.

Analysis: The Tribunal followed its earlier decision on identical BTS/BSC equipment and held that the site-erected systems were not marketable goods. Though such systems could be dismantled and re-assembled in some cases, they did not become goods capable of being bought and sold in the market as installed sites were user-specific and site-specific. The activity was treated as service-oriented installation and commissioning, not manufacture of excisable goods. Once the systems were found not to be excisable under section 3, the duty demand failed and the consequential questions of penalty did not survive.

Conclusion: The demand of duty and the penalties were held not sustainable, and the issue was decided in favour of the assessee.

Final Conclusion: Following the earlier binding view on identical facts, the appeals succeeded because the installed BTS/BSC systems were not treated as excisable marketable goods.

Ratio Decidendi: Site-erected equipment that is not marketable as installed and is only capable of use in a user-specific and site-specific form does not constitute excisable goods, and no duty or consequential penalty can be imposed absent manufacture of goods.

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