Embedded machinery and exemption valuation: immovable plant, excluded clearances and non-capital costs could not defeat notification relief.

Machinery permanently embedded to the earth, including furnace, kettle, chimney and processing unit, was treated as immovable and not marketable, so it did not qualify as excisable goods. On that basis, its value could not be added for computing the clearance turnover or exemption limit under the relevant notifications. The kettle, chimney and processing unit were also regarded as parts of the plant rather than separate complete machinery, and exempt clearances under another notification were excluded from the computation. Transportation charges for bringing goods to the factory and electrical installation charges were also excluded, as they were not shown to form part of the relevant value or to fall within the show cause notice basis.

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Issues: Whether the value of galvanising machinery embedded to the earth could be included as excisable goods for computing the exemption limit, and whether the values of kettle, chimney, processing unit and transportation or installation charges could be added while determining eligibility for exemption under the relevant notifications.

Analysis: The machinery in question, comprising furnace, kettle, chimney and processing unit, was held to be squarely fastened to the earth and not movable. Applying the settled test of marketability, such plant and machinery did not constitute goods under excise law. The kettle, chimney and processing unit were also treated as parts of machinery rather than complete machinery by themselves, and therefore their value was not liable to be included in the clearance turnover where exempt clearances under another notification had to be excluded. For the later year, transportation charges incurred for bringing goods to the factory could not be added to the cost of plant and machinery, and electrical installation charges were also excluded for want of supporting material and because they were not covered by the show cause notice basis.

Conclusion: The assessee was entitled to the exemption benefits for all the years in question, and the additions made by the department were unsustainable.

Final Conclusion: The demand and denial of exemption were set aside, and the assessee's entitlement to the notifications was upheld for the relevant periods.

Ratio Decidendi: Machinery permanently embedded to the earth and lacking marketability is not excisable goods, and exempt clearances or non-capital costs cannot be added to defeat eligibility under exemption notifications.

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