Excisability of site-assembled plant turns on movability and manufacture tests; matter remanded for fresh consideration.

Assembled and installed plant and machinery is taxable only if it satisfies the governing tests of manufacture, movability and excisability; where those criteria are not applied to the relevant facts, the adjudication cannot stand. The order treating a food processing line as a marketable excisable product was set aside because it did not apply Circular No. 58/1/2002-CX, which lays down the applicable test for whether a site-assembled plant is movable and therefore excisable, or immovable and not exigible. The matter was remanded for de novo consideration after applying the circular and allowing the parties to place the necessary material on record.

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Issues: Whether the demand and penalty order required to be set aside and the matter remanded for fresh consideration in the light of Circular No. 58/1/2002-CX. governing the test of manufacture, movability and excisability of plant and machinery assembled at site.

Analysis: The dispute turned on whether the activity of assembling and installing the food processing line amounted to manufacture of excisable goods. The order under challenge proceeded on the basis that the installed system became a marketable and excisable product, but it did not apply the later Board circular laying down the governing tests for determining whether an assembled site plant is movable and therefore excisable, or immovable and not exigible. Since the circular introduced the relevant criteria and the factual material needed to apply those criteria was not examined on that footing, a fresh factual inquiry was considered necessary.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for de novo decision after applying the Board circular and permitting the parties to place the necessary material on record.

Final Conclusion: The appeals succeeded to the extent that the existing adjudication was annulled and the controversy was sent back for fresh determination, leaving all substantive questions open.

Ratio Decidendi: Where the correct legal test for determining manufacture and excisability of an assembled site plant has not been applied to the relevant facts, the proper course is to set aside the adjudication and remand the matter for fresh consideration under the governing guidelines.

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