Movable machinery and suppression tests determined excisability and extended limitation for site-installed steel plant equipment.

Erection and installation of hydraulic mudguns and tap hole drilling machines at a steel plant were analysed under the test of permanency and movability. The majority view was that specialised machinery assembled for its own operational use does not become immovable property merely because it is fixed to the floor, if it remains capable of dismantling and reinstallation; on that basis, the equipment continued to be goods liable to central excise duty. On limitation, the majority held that incomplete and misleading declarations, coupled with non-disclosure to the proper site officers, amounted to suppression of material facts, so the extended period applied. A dissenting view treated the machinery as immovable property and the demand as time barred.

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Issues: (i) Whether erection and installation of hydraulic mudguns and tap hole drilling machines at the steel plant resulted in immovable property and not goods chargeable to central excise duty; (ii) whether the duty demand was barred by limitation on account of disclosure to the department.

Issue (i): Whether erection and installation of hydraulic mudguns and tap hole drilling machines at the steel plant resulted in immovable property and not goods chargeable to central excise duty.

Analysis: The machines were supplied and assembled as identifiable specialised equipment having distinct functions. The majority applied the test of permanency and held that an article is immovable if it must be dismantled and re-erected for use elsewhere, whereas a movable machine installed for its own beneficial use remains goods. The record showed that the equipment was manufactured as commercial machinery, capable of being dismantled and reinstalled, and that fixing it to the cast house floor was only for operational use.

Conclusion: The machinery did not become immovable property and was goods liable to central excise duty; the finding was in favour of Revenue.

Issue (ii): Whether the duty demand was barred by limitation on account of disclosure to the department.

Analysis: The majority held that the appellants did not make full disclosure to the proper central excise officers at the site where the machines were finally assembled and installed. The declarations at Madras described the goods in a manner that was misleading about the place and manner of manufacture, and the conduct amounted to suppression of material facts, justifying the extended period.

Conclusion: The demand was not barred by limitation and the extended period was rightly invoked; the finding was in favour of Revenue.

Final Conclusion: The majority upheld excisability and limitation against the appellants and rejected the appeal. A dissenting view held that the machines resulted in immovable property and that the demand was time barred.

Dissenting Opinion: One Member held that the erection of the machines at the site resulted in immovable property, not goods, and that the duty demand was barred by limitation because there was no suppression warranting extended limitation.

Ratio Decidendi: Equipment assembled at site is dutiable only if it results in a movable marketable product; if the article must be dismantled and reassembled to be used elsewhere, it is immovable property, but on the facts here the machinery remained goods and suppression justified extended limitation.

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