Site-erected water treatment plant held non-excisable where assembly created an immovable structure, not manufactured goods.

A reverse osmosis water treatment plant designed for each site, assembled from bought-out components and erected on a civil foundation at the customer's premises, was held not to be "goods" under Section 2(f) of the Central Excise Act, 1944. Because the plant came into existence only progressively at site and, after erection, assumed the character of an immovable structure, its site assembly did not amount to manufacture for central excise purposes. Prior Tribunal and High Court authorities supporting the non-excisable nature of such site-erected plants were followed. The central excise duty, interest and penalty demand was therefore not sustainable.

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Issues: Whether the reverse osmosis water treatment plant erected and commissioned at site constituted goods manufactured within the meaning of Section 2(f) of the Central Excise Act, 1944 so as to attract central excise duty.

Analysis: The plant was designed for each site, assembled from bought-out components, and erected on civil foundation at the customer's premises. The Court found that the plant came into existence only at site in a progressive manner and, after erection, assumed the character of an immovable structure. The possibility that some components could be dismantled did not change the essential nature of the complete plant. The Court also relied on prior Tribunal decisions holding that site-erected water treatment plants do not amount to excisable goods, and noted similar support from High Court authority.

Conclusion: The plant was not "goods" and the activity did not amount to manufacture liable to central excise duty; the finding was in favour of the assessee.

Final Conclusion: The demand of central excise duty, interest, and penalty could not be sustained, and the appeal succeeded with consequential relief.

Ratio Decidendi: A plant brought into existence only by assembly and erection at site on a civil foundation, and which is in substance an immovable structure, is not excisable goods and its site erection does not constitute manufacture for central excise purposes.

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