Marketability test under central excise defeats duty on an integrated plant, while limitation and scrap demands also fail.

Central excise duty was held inapplicable to the cement clinker plant because the integrated assembly of machines, structures and equipment erected on site was not a marketable article capable of being bought and sold as such, so the marketability test was not met. The demands on hoppers, ducts, chutes, cyclone and chimney were held time-barred because the assessee had disclosed manufacture and claimed exemption, defeating invocation of the extended limitation period absent suppression or intent to evade. Scrap from dismantling condemned machinery was not shown to arise from manufacture and was not treated as excisable goods. The electro static precipitator issue was remanded for fresh consideration of exemption and dutiability.

---

---

Issues: (i) Whether the cement clinker plant was excisable goods and liable to central excise duty; (ii) whether the demand on hoppers, ducts, chutes, cyclone, chimney and similar items was barred by limitation; (iii) whether the duty demand on scrap arising from dismantling of condemned machinery was sustainable; and (iv) whether the demand relating to the electro static precipitator required fresh consideration.

Issue (i): Whether the cement clinker plant was excisable goods and liable to central excise duty.

Analysis: The clinker plant was found to be an assembly of several machines, equipment and structures erected over a vast area on RCC foundations, integrated to function as a continuous plant for cement manufacture. Such a plant could not be treated as one marketable article capable of being bought and sold as such. The marketability requirement for levy of excise was therefore not satisfied.

Conclusion: The duty demand on the cement clinker plant was not sustainable and was set aside, along with the connected penalties and interest.

Issue (ii): Whether the demand on hoppers, ducts, chutes, cyclone, chimney and similar items was barred by limitation.

Analysis: The assessee had intimated the department about manufacture of the items and had claimed exemption in the correspondence. In these circumstances, the conditions for invoking the extended period under the proviso to Section 11A were not established, since suppression of material facts or misstatement with intent to evade duty was not shown.

Conclusion: The demand on these items was held to be time-barred and was set aside.

Issue (iii): Whether the duty demand on scrap arising from dismantling of condemned machinery was sustainable.

Analysis: Excise is attracted only on manufacture of new goods. Scrap generated by dismantling condemned machinery was not shown to be manufactured by the assessee, and the record did not provide a reliable factual basis for treating the scrap as excisable goods arising from a manufacturing process.

Conclusion: The duty demand on scrap was not sustainable and was set aside, together with the penalty and interest based on it.

Issue (iv): Whether the demand relating to the electro static precipitator required fresh consideration.

Analysis: The claim of exemption under Notification No. 67/95 was raised, and the question of dutiability and exemption required examination on the factual and legal footing before the adjudicating authority.

Conclusion: The issue relating to the electro static precipitator was remanded for fresh decision.

Final Conclusion: The common order substantially relieved the assessee from the principal duty demands and related penalties, while sending the electro static precipitator issue back for reconsideration.

Ratio Decidendi: For levy of central excise, the subject must be manufactured goods that are marketable as such; an integrated plant assembled at site and not capable of being bought and sold as a single article fails that test, and mere dismantling of condemned machinery does not amount to manufacture of excisable scrap.

---