Plant and machinery valuation turns on functional role: civil storage tanks excluded, titanium anodes included, transformer issue remitted.

For exemption notifications that cap eligibility by reference to the value of plant and machinery installed, permanent civil structures such as brick, concrete and cement storage tanks are not to be treated as installed plant and machinery and are excluded. A transformer and related electrical installations may be includible where they serve in-process manufacturing requirements, but the record here required fresh factual examination on their actual function, so that issue was remitted. Titanium metal anodes fitted to electrolytic cells were held includible because the cells were incomplete without them and the non-consumable anodes formed part of the equipment used in manufacture.

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Issues: (i) Whether the value of process storage tanks constructed with bricks, concrete and cement was includible in the value of plant and machinery installed for the notification limit; (ii) whether the value of the transformer and related electrical installations was includible in the value of plant and machinery installed; (iii) whether the value of titanium metal anodes fitted to electrolytic cells was includible in the value of plant and machinery installed.

Issue (i): Whether the value of process storage tanks constructed with bricks, concrete and cement was includible in the value of plant and machinery installed for the notification limit.

Analysis: The relevant notification limited the exemption to units whose capital investment on plant and machinery installed did not exceed the prescribed ceiling. The storage tanks, though used in the manufacturing process, were masonry structures built at a site and were not items that could properly be described as installed in the sense of being placed in position for service or use. Treating such civil structures as plant and machinery would enlarge the expression so as to include buildings, foundations and similar structures, which would defeat the working of the notification.

Conclusion: The value of the process storage tanks was not includible.

Issue (ii): Whether the value of the transformer and related electrical installations was includible in the value of plant and machinery installed.

Analysis: A transformer installed only to obtain stepped-down electricity supply from the mains for general power supply purposes would not necessarily form part of the plant and machinery installed for the manufacturing unit, but if it was used for in-process requirements of the unit its value could be included. The record did not contain a finding on the actual function of the transformer, and the nature of the electrical installations was also not clearly examined. The matter therefore required factual re-appreciation on these aspects.

Conclusion: The question of inclusion of the transformer and the related electrical installations was remitted for fresh decision.

Issue (iii): Whether the value of titanium metal anodes fitted to electrolytic cells was includible in the value of plant and machinery installed.

Analysis: The electrolytic cells were not complete without the anodes fitted thereto. Since the anodes were found to be non-consumable, their value formed part of the equipment actually used in the manufacturing process and was properly attributable to the plant and machinery installed.

Conclusion: The value of the titanium metal anodes was includible.

Final Conclusion: The matter required fresh adjudication on the transformer and electrical installation component, while the storage tanks were excluded and the anodes were held includible in computing the plant and machinery value.

Ratio Decidendi: For exemption notifications limiting eligibility by reference to the value of plant and machinery installed, permanent civil structures are not to be treated as installed plant and machinery, whereas equipment integral to the manufacturing process and actually forming part of the unit may be included according to its functional role.

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