Permanently embedded conveyor system not excisable goods where it is immovable and not marketable as a movable article.

A conveyor system permanently embedded in the factory floor by grouting driver units, driven units, stands, channels, gear boxes and electric motors into the earth was treated as immovable property from the outset and therefore not excisable goods. The system did not emerge as a movable article capable of being bought and sold, and the test of marketability was not met because it was designed for a specific factory location and lacked commercial identity as marketable goods. On that basis, the article states that no central excise duty was payable and the penalty was unsustainable; limitation was not examined because excisability failed at the threshold.

---

---

Issues: Whether the conveyor system, erected in the factory by embedding the driver units, driven units, stands, channels, gear box and electric motors into the earth, was excisable goods liable to central excise duty.

Analysis: The system was installed by first grouting the permanent units to the earth and then assembling the remaining components on the embedded supports. On these facts, the system acquired the character of immovable property from the outset and was not brought into existence as a movable article capable of being bought and sold in the market. The test of marketability was also not satisfied, because the conveyor system was designed for a specific factory location and had no commercial identity as marketable goods. As the appeal was being allowed on the threshold issue of excisability, it was unnecessary to decide limitation.

Conclusion: The conveyor system was not goods within section 3 of the Central Excise Act, 1944, and no excise duty was payable on it. The penalty was also unsustainable.

Ratio Decidendi: A plant or system erected by permanently embedding it to earth, which does not emerge as a movable and marketable article, is not excisable goods liable to central excise duty.

---