Fabrication of steel structurals for immovable erection work was held not to create excisable goods, defeating duty and penalty.

Fabrication of steel structurals by cutting, drilling, punching and welding customer-supplied materials at the customer's premises did not constitute manufacture for central excise purposes. The activity produced only intermediate items forming part of immovable erection work, and the items did not acquire an independent marketable identity or a distinct commodity character. As no excisable goods came into existence, the duty demand and penalty were not sustainable, and the excise demand was set aside.

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Issues: Whether fabrication of steel structurals, including cutting, drilling, punching and welding of materials supplied by the customer within the customer's , amounted to manufacture of excisable goods liable to central excise duty.

Analysis: The fabrication activity was carried out on raw materials supplied by the customer and was undertaken as part of the erection of structurals at the customer's premises. The fabricated items were only intermediate products forming part of immovable structurals to be installed and did not acquire an independent marketable identity or a definite shape for use by the general market. The processes of cutting, drilling, punching and welding were treated as intermediate processes and, on the facts, did not bring into existence a new commodity classifiable as excisable goods.

Conclusion: The fabrication did not amount to manufacture of excisable goods, and the duty demand and penalty were not sustainable against the assessee.

Final Conclusion: The excise demand on the fabricated structural items was set aside because the activity was held to be non-manufacturing and the items lacked independent marketability as goods.

Ratio Decidendi: Fabrication of structurals that remain part of immovable erection work and do not acquire independent marketability does not constitute manufacture for central excise purposes.

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