Mineral Water Plant: Immovable Property Exempt from Excise Duty

The Mineral Water Plant assembled at the customer's site was deemed to be immovable property and not subject to excise duty. The Additional Commissioner and Commissioner (Appeals) both concluded that the system, including various components grouted on a permanent basis, constituted a new product, the Mineral Water Purifying System, which was immovable. The Tribunal upheld the decision that the plant was not excisable goods, leading to the rejection of the appeal.

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Issues: Excisability of Mineral Water Plant assembled at customer's site.

In the present appeal, the issue for determination was the excisability of a Mineral Water Plant assembled at the site of customers. Both the authorities below accepted the contention that the item in question is not excisable goods but immovable property not subject to excise duty. The Additional Commissioner studied the erection and commissioning of the system in-depth and concluded that the Mineral Water Purifying System emerged only at the customer's site, with vessels, tanks, ultraviolet boxes grouted on a permanent basis. The assessees heavily relied on a CBEC order stating that the subject goods did not attract excise levy as they did not meet the definition of 'goods' under the Central Excise Act, 1944. The erection of various components at the customer's site resulted in the emergence of a new product, the Mineral Water Purifying System, which raised the question of whether it was movable or immovable property capable of being bought and sold in the market. The system only emerged at the customer's site after being erected piece by piece, with all components grouted on a permanent basis, indicating immovability. The Explanatory Notes on Filtering or Purifying Machinery and Apparatus for Liquids or Gases were also referred to in this context.

The Commissioner (Appeals) endorsed the adjudication order, which considered how the Mineral Water Plant came into existence and was grouted to the civil foundation on a permanent basis. The Revenue, in the appeal memorandum, relied on the assessees' letter to argue that the system could be installed anywhere by retiring it to the earth using foundation bolts. However, upon reviewing the letter, it was found that such a submission was not present. The Tribunal agreed with the assessees that the system in question was not subject to duty as it was considered immovable property, leading to the upholding of the impugned order and the rejection of the appeal. The judgment was dictated and pronounced in open court by the Vice-President.

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