Manufacture of storage tanks from supplied steel sheets attracts excise duty despite later installation and embedding in the earth.

Fabrication of storage tanks from customer-supplied steel sheets in the factory was treated as manufacture because the process brought a distinct product into existence. Excise duty was held chargeable on the manufacture itself, not on the tanks' later installation or end use. The objection that the tanks were embedded in the earth was rejected as irrelevant to duty liability once manufacture occurred before clearance. The non-marketability argument also failed because the tanks were procured under a job-work arrangement, and the department's valuation method was upheld. The duty demand and impugned order were sustained.

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Issues: Whether fabrication of storage tanks from steel sheets supplied by the customer amounted to manufacture attracting central excise duty, and whether the tanks were non-dutiable because they were embedded in the earth and not marketable.

Analysis: The activity carried out in the factory involved converting supplied steel sheets into storage tanks of the required capacity, which resulted in a new /article coming into existence. The duty liability was determined on the basis of manufacture within the factory, and not on the subsequent use or installation of the tanks after clearance. The plea of non-marketability was rejected because the tanks were in fact procured by the customer under the job-work arrangement. The valuation adopted by the department was also supported by the manner in which the fabricated tanks were cleared.

Conclusion: The fabrication activity constituted manufacture and the storage tanks were dutiable; the objections based on embedding in the earth and alleged non-marketability were rejected.

Final Conclusion: The duty demand and the impugned order were sustained, and the appeals failed.

Ratio Decidendi: Where a process carried out in a factory transforms supplied material into a distinct excisable product, excise duty is attracted on the manufacture itself, irrespective of the product's later installation or end use.

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