Site-embedded tanks and reactors are not excisable goods, and composite fabrication work cannot be taxed under the wrong service head.

Tanks and reactors fabricated and installed entirely at site, once embedded to earth, are treated as immovable property and not excisable goods, so central excise duty is not sustainable on that basis. The article also notes that composite site execution involving supply of material and fabrication falls within works contract rather than erection and commissioning services; a demand raised under the wrong taxable head is untenable, especially where the invoices do not evidence service tax recovery from the client.

---

---

Issues: (i) Whether tanks and reactors fabricated and installed at the client's site, after being embedded to earth, were excisable goods liable to central excise duty; (ii) whether the activity of supplying material and executing fabrication at site was taxable under the category of erection and commissioning services.

Issue (i): Whether tanks and reactors fabricated and installed at the client's site, after being embedded to earth, were excisable goods liable to central excise duty.

Analysis: The activity was carried out entirely at site and the completed tanks and reactors became embedded to earth. Once so fixed, they acquired the character of immovable property and could not be removed as such. No finished goods were manufactured in the factory premises, and the cited departmental circular could not sustain a duty demand where the end product was not excisable.

Conclusion: The demand of central excise duty was not sustainable and was set aside.

Issue (ii): Whether the activity of supplying material and executing fabrication at site was taxable under the category of erection and commissioning services.

Analysis: The work was executed along with material, which brought the activity within the ambit of works contract. Since the demand had been raised under erection and commissioning services, and not under works contract service, the classification adopted in the demand was untenable. The invoices also did not show recovery of service tax from the client, and the contrary finding lacked evidentiary support.

Conclusion: The service tax demand under erection and commissioning services was not sustainable and was set aside.

Final Conclusion: The impugned order confirming duty, service tax, and penalties was set aside, and the appeal was allowed with consequential relief.

Ratio Decidendi: A site-erected structure that becomes embedded to earth and thus immovable is not excisable, and a composite site execution contract with material cannot be taxed under a wrong service category when the demand is not raised under the correct taxable head.

---