Marketability test for excise duty: an embedded electric arc furnace was treated as immovable and not excisable goods.

An electric arc furnace erected and installed at site, embedded in the earth and incapable of removal without destruction, was held not to be excisable goods. Applying the settled test of marketability, the reasoning was that the furnace was not manufactured as a movable finished article in a factory and brought to site for assembly; instead, it became an integral part of the premises through foundation, bolting and construction work. Because the structure was immovable and could not be marketed as such, erection and installation of the plant did not amount to manufacture of goods liable to central excise duty. The appeals were allowed.

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Issues: Whether an electric arc furnace erected and installed at site, embedded in the earth and incapable of being marketed or dismantled without destruction, constitutes excisable goods liable to central excise duty.

Analysis: The furnace was not manufactured as a finished, movable article in a factory and brought to site in assembled form. Its construction took place simultaneously with civil work, with a deep foundation, bolting arrangements, rails, wheels and a brick-lined steel shell rammed with carbon paste. The material on record showed that the structure became an integral part of the premises and, on dismantling, only scrap or a few parts could be recovered. Applying the settled test that an article must be goods and must also be marketable or capable of being brought to the market, the furnace did not satisfy either requirement. Erection and installation of a plant which becomes attached to earth cannot be treated as manufacture of excisable goods.

Conclusion: The electric arc furnace was not excisable goods and was not liable to central excise duty; the appeals were allowed.

Ratio Decidendi: A plant or machinery erected and embedded at site, which becomes immovable and is not capable of being marketed as such, is not goods within the meaning of excise law and cannot be subjected to duty merely because it is assembled from duty-paid components.

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