Excise duty on embedded machinery upheld, while input credit remained available despite procedural lapse.

Machinery assembled at a customer's site and embedded to a concrete base was treated as dutiable excisable goods where the evidence, including the director's statement, showed manufacture and sale by the appellants. The plea that embedding made the machines immovable property was rejected, as fixation for stable operation does not by itself remove excise liability. On input credit, the appellants were held entitled to credit in accordance with law, because substantive eligibility could not be denied merely for procedural non-compliance where the legal entitlement otherwise existed.

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Issues: (i) Whether the 13 machines were manufactured by the appellants and were liable to central excise duty notwithstanding the plea that they were assembled at the customer's site and embedded to earth; (ii) whether the appellants were entitled to credit on inputs used in the manufacture of the machines.

Issue (i): Whether the 13 machines were manufactured by the appellants and were liable to central excise duty notwithstanding the plea that they were assembled at the customer's site and embedded to earth.

Analysis: The statement of the Director recorded under Section 14 of the Central Excise Act, 1944 admitted manufacture and sale of the machines, and did not support the later plea that they were assembled at the customer's site. The reliance on the plea that the machines were embedded to earth was rejected in view of the principle that embedding on a concrete base for wobble-free operation does not by itself make the machinery immovable property or take it outside duty liability.

Conclusion: The duty demand and the impugned order were sustained, and this issue was decided against the appellants.

Issue (ii): Whether the appellants were entitled to credit on inputs used in the manufacture of the machines.

Analysis: The appellants were held entitled to the benefit of credit in accordance with law on the inputs used in the manufacture of the machines, following the principle that credit cannot be denied merely because the procedural requirements for taking credit were not followed, where the entitlement otherwise exists.

Conclusion: The appellants succeeded on this issue and were held entitled to credit in accordance with law.

Final Conclusion: The demand of duty and related findings were upheld, but the appellants were granted input credit relief as admissible under law.

Ratio Decidendi: Machinery embedded to a concrete base for operational stability is not necessarily immovable property and remains liable to excise duty if it is manufactured and marketable; however, substantive entitlement to input credit is not lost merely due to procedural lapse where the law otherwise permits such credit.

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