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Issues: (i) Whether the four fully manufactured ghee settling tanks were liable to entry in R.G. 1 and confiscation, with consequential duty and penalty, and (ii) whether erection and installation charges billed to customers were exigible to central excise duty.
Issue (i): Whether the four fully manufactured ghee settling tanks were liable to entry in R.G. 1 and confiscation, with consequential duty and penalty.
Analysis: The tanks had been completed and the manufacturer had already informed the buyer that they were ready for inspection. The fact that defects were noticed during inspection did not show that the goods were still incomplete. Fully manufactured excisable goods were required to be entered in the statutory stock account when manufactured, and the obligation was not postponed until final customer approval. Failure to account for the tanks in the prescribed records constituted contravention of the excise rules. The seizure and consequential action were therefore supported.
Conclusion: This issue was decided against the assessee and in favour of the Revenue.
Issue (ii): Whether erection and installation charges billed to customers were exigible to central excise duty.
Analysis: Consultancy and trading activities were outside the scope of central excise. As regards erection, installation and assembly at site, the activity involved fixing components into a plant or equipment at the customer's premises, and the resulting installation was not movable property in the nature of goods. The work did not produce a separately marketable excisable commodity. On that basis, the demand raised on erection and installation charges was not sustainable.
Conclusion: This issue was decided in favour of the assessee and against the Revenue.
Final Conclusion: The order sustained confiscation and penalty in relation to the unaccounted manufactured tanks, but set aside the excise demand on erection and installation charges.
Ratio Decidendi: Fully manufactured excisable goods must be brought to account in the prescribed stock records when manufacture is complete, while installation or assembly work at site that does not result in movable goods is not liable to excise duty as such.
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