TaxTMI 
TaxTMI 
TaxTMI 
2010 (4) TMI 15
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....Plant Manufacturers and M/s Solmec Earthmovers Equipment are partnership concerns engaged in the manufacture of parts and components for road and civil construction machinery and equipments like Asphalt Drum/Hot Mix Plants and Asphalt Paver Machine etc. M/s Solex Electronics Equipments is, however, a proprietary concern engaged in the manufacture of Electronic Control Panels Boards. It is not in dispute that the three partnership concerns mentioned above are registered with Central Excise Department nor is it disputed that the proprietary concern is a small scale industrial unit that is availing exemption from payment of duty in terms of the relevant exemption notification. M/s Solidmec Equipments Ltd. (hereinafter referred to as 'Solidmec' for short) the fifth unit with which we are concerned in the present appeals is a marketing company engaged in the manufacture of Asphalt Drum/Hot Mix Plants at the sites provided by the purchasers of such plants. It is common ground that Solidmec advertises its product and undertakes contracts for supplying, erection, commissioning and after sale services relating thereto. It is also admitted that all the five concerns referred to above are clo....
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....ort 'CEGAT') which were partly allowed by the Tribunal by its order dated 19th August, 2002. Relying upon the material on record and the depositions of the partners comprising the concerns, the Tribunal held that Solidmec had supplied all the components at the buyer's site some of which had been manufactured by the manufacturing units of the group while others were purchased from the market. The cost of erection, commissioning etc. was also charged by Solidmec from the buyers. Solidmec was, therefore, engaged in the manufacture of the plants in question declared the Tribunal in the following words: "The sum total of the aforesaid evidence is that M/s Solidmec supplied all the essential components to make a hot mix plant at the buyer's site. Some of the components were manufactured by the manufacturing units and the other components were purchased from the market. These were erected and commissioned by Solidmec and the cost of erection, commissioning, etc., were charged from the buyers. In these circumstances they deserve to be termed as manufacturers." 6. The Tribunal next examined the question whether the plants so manufactured could be termed as "goods". Relying upon the decisi....
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....the order passed by the Commissioner it had specifically pleaded that the entire demand for duty was barred by limitation. The Tribunal accepted that argument and accordingly by its order dated 8th April, 2003 modified its earlier order and deleted the demand of duty as also the penalty in toto. The subsequent order deleting the duty and penalty in toto has been questioned in CA Nos.5461-5462/2003. 8. We have heard Mr. P.P. Malhotra, learned Additional Solicitor General for the appellants and Mr. S.K. Bagaria, learned senior counsel for the respondents at length. Two questions in our opinion arise for our determination: (1) Whether setting up of an Asphalt Drum Mix Plant by using duty paid components tantamounts to manufacture of excisable goods within the meaning of Section 2(d) of the Central Excise Act, 1944? And (2) Whether the respondents engaged in the manufacture of parts and components used for setting up of Asphalt Drum/Hot Mix Plant were entitled to the benefit of Notification No.1/93-CE, dated 28th February, 1993 issued under sub-section (1) of Section 5A of the Central Excise Act, 1944 as amended from time to time? 9. We shall take up the questions ad seriatim. R....
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.... Hyderabad (1998 (1) SCC 400). 13. Mr. Bagaria strenuously argued that even when the setting up of the plant has been held to be tantamount to manufacture of a plant and even when the plant may be machinery covered by Entry 8474 of the First Schedule to the Central Excise Act, the same would not necessarily amount to manufacture of 'exigible goods' keeping in view the fact that such plants have to be permanently embedded in earth. Reliance in support was placed by Mr. Bagaria upon the finding recorded by the Tribunal that the plant is required to be fixed to a foundation that is 1 and ½ ft. deep for the sake of stability of the plant which causes heavy vibrations while in operation. The following passage from the Tribunal's order was in particular relied upon by Mr. Bagaria in support of his submission that the size and nature of the plant was such as made its fixing to the ground essential: "The individual element such as feeder bins, conveyor, rotary mixing drum, asphalt tank, fuel tanks, etc. have to be separately embedded into the earth. This is done on a civil foundation of 1.5 deep. This is because the weight of the material as well as the vibrations caused by the movement....
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....o the earth" has not been defined in the General Clauses Act, 1897. Section 3 of the Transfer of Property Act, however, gives the following meaning to the expression "attached to the earth": "(a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls and buildings; (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached." 19. It is evident from the above that the expression "attached to the earth" has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to tree....
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....ation have been applied as relevant test in this country also. There are cases where machinery installed by monthly tenant was held to be moveable property as in cases where the lease itself contemplated the removal of the machinery by the tenant at the end of the tenancy. The mode of annexation has been similarly given considerable significance by the courts in this country in order to be treated as fixture. Attachment to the earth must be as defined in Section 3 of the Transfer of Property Act. For instance a hut is an immovable property, even if it is sold with the option to pull it down. A mortgage of the super structure of a house though expressed to be exclusive of the land beneath, creates an interest in immovable property, for it is permanently attached to the ground on which it is built. 23. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more b....
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.... of the appellant, that whatever is embedded in earth must be treated as immovable property is basically not sound. For example, a factory owner or a householder may purchase a water pump and fix it on a cement base for operational efficiency and also for security. That will not make the water pump an item of immovable property. Some of the components of the water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper-making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the Company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property." 27. In M/s Narne Tulaman Manufacturers Pvt. Ltd. Hyderabad V. Collector of Central Excise, Hyderabad (1989 (1) SCC 172), this Court was examining whether the assembly of parts of machine by an assessee to bring into existence a weighbridge as a complete machine amounted to manufacture hence liable to duty ev....
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....he earth. 30. Reliance was placed by Mr. Bagaria upon the decision of this Court in Quality Steel Tubes (P) Ltd. V. CCE, U.P. 1995 (75) ELT 17 (SC) and Mittal Engineering Works (P) Ltd. V. CCE, Meerut 1996 (88) ELT 622 (SC). In Quality Steel Tubes case (supra) this Court was examining whether 'the tube mill and welding head' erected and installed by the assessee for manufacture of tubes and pipes out of duty paid raw material was assessable to duty under residuary Tariff Item No.68 of the Schedule being excisable goods. Answering the question in negative this Court held that tube mill and welding head erected and installed in the premises and embedded to earth ceased to be goods within the meaning of Section 3 of the Act as the same no longer remained moveable goods that could be brought to market for being bought and sold. We do not see any comparison between the erection and installation of a tube mill which involved a comprehensive process of installing slitting line, tube rolling plant, welding plant, testing equipment and galvanizing etc., referred to in the decision of this Court with the setting up of a hot mix plant as in this case. As observed by this Court in Triveni Eng....
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....was erected at the site by the assessee on a specially made concrete platform at a level of 25 ft. height. Considering the weight and volume of the machine and the processes involved in its erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same. 33. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer moveable goods. It was in those peculiar circumstances that the installation and erection of machines at site were held to be by this Court, to be immovable property that ceased to remain moveable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or a....