1. These appeals raise common issues : levy of Central Excise Duty on buildings, industrial plants and structurals. The question involved in individual appeals is given hereunder :- 1-2. Appeal Nos. E/1885/91-B1 and E/2691/91-B1 of Elecon Engineering Co. Ltd. The demand in these appeals relates to erection of coal handling plant.
3-5. Appeal Nos. E/1039 to 1041/90-B1. In these appeals of M/s. R.K. Khade Patil and others duty demand is on construction of new factory building, general stores and sugar godowns.
6-7. Appeal Nos. E/138/90-B1 and E/2145/90-B1 of M/s. Gannon Dunkerley and Co. Ltd. relate to duty demand on civil contracts for the construction of captive power plant at Bhatinda for the National Fertilisers Ltd. and construction work for Associated Bearing Co.
Ltd. 8. Appeal Nos. E/62/92-B1 of M/s. Man Structures Ltd. The duty demand is on preparation of parts of Electricity Towers and Latis Mast.
9-10. Appeal Nos. E/485/91-B1 and E/1923/91-B1. In these appeals of M/s. Jai Parabolic Springs Ltd., and Shri Kewal Singh, the demand of duty is on the setting up of factory shed.
11. E/4514/91-B1. In this appeal of M/s. Punjab Chemi-Plants Ltd., the work involved was the civil work for Rail Coach Factory.
12. Appeal No. E/883/91-B1. This appeal of M/s. Deccan Mechanical and Chemical Industries arises from duty demand on Trestles fabricated for civil construction.
13. Appeal No. E/1244/92-B1. In this appeal of M/s. Elecon Engineering Co. Ltd. the demand is in respect of factory shed constructed at the appellants' premises by Civil Contractor.
14. Appeal No. E/722/91-B1. In this appeal of M/s. Simplex Concrete Piles (India) Pvt. Ltd. the demand is with reference to structures made for construction of captive power plant at Bhatinda for National Fertilisers Ltd. 15. Appeal No. E/2095/91-B1. This appeal of M/s. Bnal Industrial Corporation relates to demand in respect of steel structures such as columns, purlins and trusses fabricated in the course of erection of sheds.
16. Appeal No. E/2176/92-B1 of M/s. Amar Singh & Co. The demand in this appeal relates to fabrication of steel structures like columns, purlins and trusses, etc.
17. Appeal No. E/4309/91-B1. The issue involved in this appeal is the dutiabiliry on (i) Sulphur Furnace (ii) Carbon-di-sulphide Plant (iii) Double Catalyst Double Absorption Plant and Conveyor System manufactured/fabricated for the capacity expansion of the appellants' factory.
2. The appellants have explained that the work involved in these cases is civil constructions (which are immovable property) or the processing of iron and steel, steel structural items like plates and angles for use within immovable structures. The structural items perform architectural functions of beams, girders, trusses, etc, in the manufacture of factory building, power plant, etc. The processes carried out are basically cleaning, cutting to sizes, trimming, drilling holes, welding, bolting, etc. so that these structural items are made to the specifications indicated in the architectural drawings.
3. The appellants have resisted the levy of duty on plant and buildings on the ground that these are immovable properties and are not 'goods' to attract Central Excise Duty. With regard to structural items, they have submitted that no manufacturing of new goods takes place ; instead they are only carrying out certain processes to make them ready for use in construction. They received structural items of iron and carried out the aforesaid processes so that they are ready for use/fitment in buildings and other structures. Structural iron or steel like plates and angles have already paid duty and the processes did not transform them into any new goods. The appellants have also submitted that these have no identity as columns, beams, girders, trusses, grills, block, hollows, etc. and are not bought and sold in the market by these names.
They assume these identities only on their being placed in the building to perform architectural functions of beams, girders, purlins, etc. And once they are placed in the building and structures, they have become part of such buildings and structures which are immovable properties, and ceases to have an identity of their own. The levy has also been resisted on the ground that these items are not brought to the market (to be goods) as girders, purlins, etc. for sale and cannot be so brought also.
4. The appellants have also submitted that the excisability of plants and structures to duty had come up for consideration in several cases before the Supreme Court, High Court and Tribunal and it has been held that immovable structures, plants and structural items are not liable to Central Excise Duty. They have placed reliance mainly on the following judgments :-Quality Steel Tubes Pvt. Ltd. v. C.C.E., U.P. 4. 1998 (98) E.L.T. 334 (Kar.) - Tungabhadra Steel Products Ltd. v. Union of IndiaSouth India Structural Corpn.
Ltd. v. A.C.C.E., MadrasTansi Engg. Works v. CCE, Coimbatore 7. 1997 (95) L.T. 398 (Trib.) - Orissa Construction v. CCE, BhubaneswarArum Industries v. CCE 12. 1990 (48) E.L.T. 599 (Trib.) - Pratap Steel Rolling Mills v, CCE, IndoreSilica Metallurgic Ltd. and Anr. v. CCE, CochinJosts Engineering Co. Ltd. and Ors. v. CCE, Mumbai III 5. The Revenue has maintained that identifiable new goods come into existence warranting levy of Central Excise duty and that Tariff Heading 7308 specifically covers structures and parts of structures of iron or steel. They have also submitted that once goods are specified in the Central Excise Tariff as liable to Central Excise duty, no argument could be raised as to whether manufacture is involved and they have relied on the judgment of the Supreme Court in the Hemraj Covardhandas v. H.M. Dave AC, 1978 (2) E.L.T. J350 wherein Apex Court has observed that it is well established that in taxing statute, there is no room for any intendment and regard must be had to the clear meaning of the words. They have also relied on the following judgments in support of their submissions that interpretation of statute should be consistent with arid should be designed to achieve the object underlying the provisions ;- 1. Hem Raj Goverdhandas v. H.M. Dave AC -1978 (2) E.L.T. (J 350) (S.C.) "It is well established that in taxing statute, there is no room for any intendment and regard must be had to the clear meaning of the words".Union of India v. Sampat Raj Dugar "Interpretation of statute should be consistent with and should be designed to achieve the object underlying the provision."Bansal Industries Gases v. Collector of Central Excise - 1988 (37) E.L.T. 347 (Cal.) 6. It was also submitted that since these products are specifically mentioned in the Tariff and such products come into existence only with some human labour and skill, manufacture has to be presumed. The decision is not to be based on whether the manufacture process was simple or complex. In support of this proposition, they have relied on the following judgments of the Supreme Court :-Collector of Central Exicse, Bombay v. S.D. Fine Chemicals Pvt.
Ltd.Collector of Central Excise v. Pratap Steel Rolling Mills -1997 (94) E.L.T. 458 (S.C.)Brake India Ltd. v. Spt. Central Excise -1998 (101) E.L.T. 141 (S.C.) 6. Decorative Laminates India (P) Ltd. -1996 (88) E.L.T. 3 (S.C.) (sic)Sirpur Paper Mills v. CCE, Hyderabad 7. It is also submitted by the Revenue that the structural goods, like tresses, beams, etc. come into existence as intermediate products and there is no ground for non-levy of duty on them.
8. We have perused the records of the cases and have considered the submissions made by both sides. Central Excise Duty demands in these cases vary from erection of industrial factory buildings and electricity transmission towers to preparation of structural materials like plates, angles, channels, etc. for use as structural components in buildings, plants, etc. In some instances, duty demand has been made on the entire contract value of the plant, factory building, etc. and in some other cases the demand is limited to the value of the processed structural materials. The demand is being resisted by the appellants mainly on the grounds that power plant, factory buildings, Railway Coach Factory, etc. being civil constructions which are permanent structures, they cannot be subjected to Central Excise Duty as goods.
They contend that Central Excise Duty is on goods and permanent civil constructions like factory building which are immovable property cannot be brought under the category of goods, as immovable properties do not possess the attributes of goods. With regard to processing of structural materials for use as building elements such as beams, girders etc., they submit that no manufacturing as such takes place during this activity. What is involved is only the processing of structural materials like cleaning, cutting to sizes, trimming, drilling holes, welding, bolting, etc. They submit that these processes do not bring into existence any new goods to warrant levy of duty. We also find that on the legal issues raised as well as the items in question there are several pronouncements of the Apex Court, the High Courts and the Tribunal settling the questions of dutiability.
9. We find that the dispute relating to the dutiability of immovable structures, plants and installations remains settled against the Revenue in view of the decisions of the Apex Court in Mittal Engineering Works Pvt. Ltd. v. Collector of Central Excise, Meerut, 1996 (88) E.L.T. 622 (S.C.) when the Court re-affirmed its decision in Quality Steel. The relevant portion is reproduced below :- "6. ...The issue was whether "the tube mill and welding head erected and installed by the appellant for manufacture of tubes and pipes out of duty-paid raw material" was assessable to excise duty. The Court observed, having regard to the earlier decisions aforementioned, "The basic test, therefore, of levying duty under the Act is two-fold. One, that any article must be goods and second, that it should be marketable or capable of being brought to the market. Goods which are attached to the earth and thus become immovable and do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought and sold." It was also said that the erection and installation of a plant cannot be held to be excisable goods. If such wide meaning is assigned it would result in bringing in its ambit structures, erections and installation. That surely would not be in consonance with accepted meaning of excisable goods and its exigibility to duty." 10. The attributes essential to goods have been the subject matter of several judicial pronouncements. The apex court also pronounced on whether mention of an item in the Schedule to the Central Excise Tariff is sufficient for levying Central Excise Duty on the item and the apex court held in Bhor Industries Ltd. v. Collector of Central Excise, 1989 (40) E.L.T. 280 (S.C.) as under :- "7. It is necessary in this connection to reiterate the basic fundamental principles of excise. The Judical Committee of the Privy Council in Governor General in Council v. Province of Madras - 1945 FCR 179, this Court observed at page 1287 of the report that excise duty was primarily a duty on the production or manufacture of goods produced or manufactured within the country. This Court again in Re The Bill to Amend S. 20 of the Sea Customs Act, 1878, and Section 3 of the Central Excises and Salt Act, 1944 1964 (3) SCR 787 at page 822 of the report referring to the aforesaid observations of the Judicial Committee reiterated that taxable event in the case of duties of excises is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. Therefore, the essential ingredient is that there should be manufacture of goods.
The goods being articles which are known to those who are dealing in the market having their identity as such. Section 3 of the Act enjoins that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or 'manufactured' in India. "Excisable goods" under Section 2(d) of the Act means goods specified in the Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. Therefore, it is necessary, in a case like this, to find out whether there are goods, that is to say, articles as known in the market as separate distinct identifiable commodities and whether the tariff duty levied would be as specified in the Schedule. Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not "goods" known to the market. Marketability, therefore, is an essential ingredient in order to be dutiable under the Schedule to Central Excise Tariff Act, 1985.
Even in respect of specified goods it could be established that it was not marketable or capable of being marketed, therefore, no duty was leviable on it. The same view was reiterated by the Supreme Court in Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad, 1975 (76) E.L.T. 241 (S.C.) when it observed as under :- "7. The duty of excise being on production and manufacture which means bringing out a new commodity, it is implicit that such goods must be usable, movable, saleable and marketable. The duty is on manufacture or production but the production or manufacture is carried on for taking such goods to the market for sale. The obvious rationale for levying excise duty linking it with production or manufacture is that the goods so produced must be a distinct commodity known as such in common parlance or to the commercial community for purposes of buying and selling. Since the solution that was produced could not be used as such without any further processing or application of heat or pressure, it could not be considered as goods on which any excise duty could be levied." "8. But the learned Additional Solicitor General urged that resin or solution which was produced by the appellant was technically known as resols. Reliance was placed on its meaning in the dictionary. The learned Counsel submitted that the tariff schedule has divided the items into specific and general. Resols being one of the items mentioned under Item 15A it was a specific item, therefore, once it was found that the intermediate goods produced by the appellants were resols then it was excisable to duty and it could not further be required to satisfy the common parlance test specially because this was a chemical and not a product which is commonly bought and sold in the market. The learned Counsel urged that once it was found that it was manufactured or produced then it should be deemed to have satisfied the test of marketability and consequently it was excisable goods within meaning of the Act and the Tribunal was justified in levying duty on it. The learned Counsel submitted that marketing capability depends on nature of goods. The test of marketability and capable of being marketed could not be applied to such goods as resol and, therefore, the submission of the learned Counsel for appellants that the resin or resol could be subjected to duty only if it was found that from raw materials some new substance was brought out and it was known as such was not correct as once the intermediate goods produced by the appellants was found to be resols and it having been mentioned in Item No. 15A the burden of the Department stood discharged." "9. Although the duty of excise is on manufacture or production of the goods, but the entire concept of bringing out new commodity etc., is linked with marketability. An article does not become goods in the common parlance unless by production or manufacture something new and different is brought out which can be bought and sold. In Union of India & Am. v. Delhi Cloth and General Mills. Co. Ltd., AIR 1963 S.C. 791, a Constitution Bench of this Court while construing the word "goods" held as under :- "These definitions make it clear that to become "goods" an article must be something which can ordinarily come to the market to be bought and sold." Therefore, any goods to attract excise duty must satisfy the test of marketability. The tariff schedule by placing the goods in specific and general category does not alter the basic character of leviability. The duty is atracted not because an article is covered in any of the items or it falls in residuary category but it must further have been produced or manufactured and it is capable of being bought and sold. In South Bihar Sugar Mills Ltd. and Anr. v. U.O.I. and Anr., AIR 1968 S.C. 922 it was held by this court: "The Act charges duty on manufacture of goods. The word 'manufacture' implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The duty is levied on goods. As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. That would be such an article which would attract the Act was brought out in Union of India v. Delhi Cloth and General Mills Ltd., 1963 Supp.
(1) SCR 586 : AIR 1963 S.C. 791".In A.P. State Electricity Board v. Collector of Central Excise, Hyderabad, 1994 (2) SCC 428 this Court reiterated the same principle and observed that marketability was must irrespective of whether it was marketed or not. Reference has already been made to Indian Cable (supra). Thus any goods mentioned in the tariff schedule does not attract duty unless it is marketable or capable of being marketed.
The test of marketability was relaxed in Union Carbide India Ltd. v. Union of India and Ors., 1986 (24) E.L.T. 169 and it was held that, "in order to attract excise duty the article manufactured must be capable of sale to a consumer".
"The question that arose was whether aluminium cans produced by the appellants for the flashlights manufactured by it were goods. It was held : "The question here is whether the aluminium cans manufactured by the appellant are capable of sale to a consumer. It appears on the facts before us that there are only two manufacturers of flashlights in India, the appellant being one of them. It appears also that the aluminium cans prepared by the appellant are employed entirely by it in the manufacture of flashlights, and are not sold as aluminium cans in the market. The record discloses that the aluminium cans, at the point at which excise duty has been levied, exist in a crude and elementary form incapable of being employed at that stage as a component in a flashlight. The cans have sharp uneven edges and in order to use them as a component in making flashlight cases the cans have to undergo various processes such as trimmed, threading and redrawing. After the cans are trimmed, threaded and redrawn they are reeded, beaded and anodised or painted. It is at that point only that they become a distinct and complete component capable of being used as a flashlight case for housing battery cells and having a bulb fitted to the case. We find it difficult to believe that the elementary and unfinished form in which they exist immediately after extresion (sic) suffices to attract a market."Hindustan Polymers v. Collector of C.E., 1989 (43) E.L.T. 165.
Excise duty, as has been reiterated and explained, is a duty on the act of manufacture. Manufacture under the excise law is the process or activity which brings into being articles which are known in the market as goods, and to be goods these must be different, identifiable and distinct articles known to the market as such. It is then and then only that manufacture takes place attracting duty.
In order to be goods, it was essential that as a result of the activity, goods must come into existence. For articles to be goods, these must be known in the market as such and these must be capable of being sold or being sold in the market as such." The submission of learned Counsel for the Department, therefore, that merely because the intermediate product manufactured by the appellants was resols and it is one of the items mentioned under Item 15A it was exigible to duty ignores the basic and primary test for exigibility of duty. The precise argument advanced by the learned Solicitor General of India was rejected in Bhor Industries (supra) and the order of the Tribunal in that case was set aside as "the test of marketability or capable of being marketed", was not applied by the Tribunal." 11. From the aforesaid judgments of the Supreme Court, it is clear that there is no authority in law for levying duty on immovable structures like factory building, power plant, etc. We also find that with regard to specific question of levying Central Excise Duty on structurals, the Madhya Pradesh High Court has held in Union of India v. Bajaj Tempo Ltd., 1995 (80) E.L.T. 774 (M.P.) that erection of sheds at site with the help of various articles of iron and steel is only a fabrication activity and does not amount to manufacture and no new or distinct article comes into existence. This order was passed by the High Court taking into account several earlier judgments of courts and Tribunal.
With particular reference to steel structurals/items fabricated at the premises of customers who had supplied raw materials, the CEGAT in Orissa Construction Corporation Ltd. v. Collector of Central Excise, Bhubaneshwar, 1997 (95) E.L.T. 398 (Tribunal) held that fabricated items constitute parts of immovable structurals and do not assume shape of any specific item and are, therefore, not liable to duty. The Tribunal also observed that the fabrication of steel structurals by cutting to size, drilling holes and welding or remelting of materials does not amount to manufacture and that these processes undertaken were in the nature of intermediate processes. The Tribunal in the instant case was dealing with the preparation of beams, columns, staircases, platforms, etc. The Tribunal was following several previous judgments of the Supreme Court while rendering this decision. We also find that the Tribunal has held, with specific reference to preparation of parts of electricity towers, in its decision in Tansi Engineering Works v.Commissioner of Central Excise, Coimbatore, 1996 (88) E.L.T. 407 (Tribunal) that this activity does not amount to manufacture.
12. As against the aforesaid decisions in favour of the appellants, the Revenue has placed reliance in particular on the judgment of the Supreme Court in Sirpur Paper Mills case reported in 1998 (97) E.L.T. 3 (S.C.). In this judgment, the Apex Court held that assembly of paper-making machine from bought out items as well as a few parts fabricated at the factory amounted to manufacture as it was found that the paper-making machine can be sold in the market. The Court also held that just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property. However, we find that in the appeals relating to coal handling plant, etc. it has been specifically submitted that these plants cannot be brought and sold in the market. Coal handling plant was a large assembly of machinery, buildings and structures spread over a vast area comprising mainly of wagon tripplers, conveyors, staker reclaimer, electric and manually operated hoists with trolleys, vibrators, built wares, switch gears, H.T. cables, transformers, etc.
It has been explained along with photographs of the plant that it cannot be brought and sold in the market. We observe from the photographs produced during hearings that the plant consists of large civil structures, lengthy conveyor belts and civil structures to support such conveyor belts, called feeders, etc. spread over several hectares of land. It is not a case of machinery and plant being fixed to earth merely for vibration free functioning. They are immovable property. Same is the case with regard to factory buildings and other civil structures involved in the present appeals. The test laid down in the Sirpur Paper judgment was whether the machine can be sold in the market. The coal handling plant cannot be brought and sold in the market and, therefore, is not covered by this decision of the Supreme Court. We also observe that the Tribunal has held in Ludhiana Bottling v. Collector of Central Excise, Chandigarh, 1997 (19) RLT 68 that conveyor system for transmission of crates of aerated water was not excisable as the system was embedded to earth and, therefore was immovable property and not marketable as goods. The coal handling plant and other plants involved in these appeals have lots more civil, electrical and other structures making it even more embedded to earth and incapable of marketing. Similarly, the Tribunal has held in Tata Robins Fraser Ltd. v. Collector of Central Excise, 1990 (46) E.L.T. 562 (Tribunal) that project by itself being immovable property it is not 'goods' and is not liable to excise duty.
13. In view of the foregoing discussions, we are of the view that in the aforesaid appeals manufacture of goods does not take place in the light of the aforesaid decisions of the Apex Court, the High Court and the CEGAT; notwithstanding the fact that some of the items are specified in Central Excise Tariff Heading 7308. The appeals are, accordingly, allowed with consequential relief to the appellants.
Individual appeals also raise several incidental issues like the demands being time barred. We are not going into those submissions as the appeals are being allowed on merits.