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Issues: (i) Whether the assembly, erection and commissioning of the Evaporator J Plant at site amounted to manufacture of excisable goods; (ii) Whether the duty demand was barred by limitation.
Issue (i): Whether the assembly, erection and commissioning of the Evaporator J Plant at site amounted to manufacture of excisable goods.
Analysis: The plant was built on a cement concrete foundation by fixing, welding and embedding its components at site over a period of time. It did not come into existence as movable goods prior to installation. The established line of authority on site-erected structures was applied to hold that a permanently embedded plant, which is in the nature of immovable property, does not answer the description of goods for central excise purposes.
Conclusion: The issue was decided in favour of the assessee. The plant was held not to be excisable goods and its erection did not amount to manufacture.
Issue (ii): Whether the duty demand was barred by limitation.
Analysis: The show cause notice did not allege suppression or wilful misstatement, and the department had knowledge of the construction activity through regular visits and the controlled factory regime. In the absence of any positive act showing intent to evade duty, the extended period could not be invoked.
Conclusion: The issue was decided in favour of the assessee. The demand was held to be time-barred.
Final Conclusion: The impugned duty demand and penalty were set aside, and the appeal was allowed with consequential relief.
Ratio Decidendi: A structure assembled and permanently embedded at site, which does not emerge as movable goods before installation, is not excisable goods; and the extended limitation period cannot be invoked without a positive allegation and proof of suppression or intent to evade duty.
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