Excisable goods in site-fabricated steel structurals remain dutiable before erection, despite later assimilation into immovable property.

Steel structurals fabricated at site for a power project were treated as excisable goods because the cutting, drilling, welding and fabrication produced identifiable movable components such as trusses, purlins, bracings, girders and towers with distinct commercial identity and marketability before erection. The fact that the items were later fixed to the earth did not remove the levy where manufacture had already occurred. The Board circular noted that while a turnkey project as a whole is not excisable, its separately manufactured components remain dutiable in the normal course. On that basis, duty and penalty were held leviable and the order dropping the proceedings was unsustainable.

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Issues: Whether the steel structurals fabricated at site and erected for a power project were excisable goods classifiable under Heading 7308.90, and whether duty and penalty were leviable on the clearances.

Analysis: The contract and the recorded statements showed that raw steel materials were cut, drilled, welded and fabricated into identifiable parts such as trusses, purlins, bracings, girders and towers before being transported to the project site for erection. The fabricated items had distinct commercial identity in their movable stage and were capable of being marketed, even though they were ultimately fixed to the earth in the course of the project. The Board circular clarified that where processing of inputs results in a new product with a distinct commercial name, identity and use, excise duty is chargeable before assimilation into immovable property, while turnkey projects as a whole are not treated as excisable goods but their components remain dutiable in the normal course.

Conclusion: The fabricated structurals were manufacture of excisable goods and were liable to duty; the order dropping the proceedings was unsustainable.

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