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PETITIONER: SIRPUR PAPER MILLS LTD.

       Vs.

RESPONDENT: THE COLLECTOR OF CENTRAL EXCISE, HYDERABAD

DATE OF JUDGMENT:       11/12/1997

BENCH: SUHAS C. SEN, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T SEN,J.      The dispute  in this  case is  about the leviability of excise duty on paper making machine which was erected by the appellant-company by  using duty  paid components  purchased from the market and also by fabricating certain parts of the machinery  in   their  factory.  The  duty  paid  components purchased from  the market  worked out  to about  90% of the parts required  for the  machine. In  respect of  the  parts fabricated inside  the factory of the appellant, no duty was leviable under  Notification No. 118/75 dated April 30, 1975 issued by  the Government. The case of the appellant is that the excise  authority erroneously  imposed duty on the parer making machine  installed in  the factory  of the  appellant because the  Central Excise  Act  imposes  a  duty  on  "all excisable goods  produced or  manufactured in  India". It is well -  settled that  the "goods"  contemplated by Section 3 which is the charging section of the Act must be movable and marketable. The  case of  the appellant  is that the various components of  the paper  making machine  purchased  by  the appellant had  to be  put together  at the  site  where  the machine was  erected ant  embedded in  the  ground.  Certain components were  also to be fabricated at site. This machine was really  immovable  property  and  did  not  come  within mischief of the charging section of the Central Excise Act.      Mr.  Jaideep   Gupta,  appearing   on  behalf   of  the appellant, has  contended that  the machine  was permanently attached to the ground. In fact the machine cannot be worked until and  unless the  same was  attached to  the earth as a permanent fixture.  It was  further argued  that the machine cannot ordinarily  be sold  in the market. The nature of the machine is  such that  it cannot  be transferred offered for sale to  any other party. An argument was also advanced that the machine  was erected on turn key basis at the very place where the machine was ultimately embedded in a concrete base to make it a permanent fixture.      The  Tribunal,   however,  rejected  these  contentions advanced before  it on  the basis  of some findings of fact. The Tribunal held that the machine was attached to earth for operational efficiency.  The whole  purpose behind attaching

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the machine  to a  concrete base  was to prevent wobbling of the machine and to secure maximum operational efficiency and also for  safety. The  Tribunal further  held that the parer making was  saleable and  observed "if somebody to purchase, the whole  machinery could  be dismantled and sold to him in parts".      In view  of this finding of fact, it is not possible to hold  that  the  machinery  assembled  and  erected  by  the appellant at  its factory  site was  immovable  property  as something attached  to earth  like a building or a tree. The tribunal has  pointed out  that it  was for  the operational efficiency of  the machine that it was attached to earth. If the appellant  wanted to  sell the  paper making  machine it could always remove it from its base and sell it.      Apart from  this finding  of fact made by the Tribunal, the point advanced on behalf 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 house-holder 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 component of 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.      A further  argument was  made that the entire machinery as it  is cannot  be bought  and sold  because the machinery will have  to be  dismantled before being sold. The Tribunal has pointed  out  that  the  appellant  had  himself  bought several items  and completed the machinery. It had purchased a large  number of  components  and  fabricated  a  few  and manufactured the paper making machine at site. If it is sold it has  to be dismantled and reassembled at another site. We do not  find any fault with the reasoning of the Tribunal on this  aspect of the matter.      Lastly, it  was contended that the paper making machine was  not  really  manufactured  by  the  appellant.  Various components and  parts were  purchased and a few of the parts were fabricated  at the  factory and the assesses ultimately assembled various  parts of  the machine.  We are  unable to uphold this  argument also because it has to be seen whether a final  product is  something distinct  and apart  from the components that  have gone  into its  production.  What  the appellant has  erected in  its factory  is  a  paper  making machine. It  may have  purchased various  components to make the machine  but  nonetheless  what  has  been  produced  is something quite  different from the components that had been purchased. A  new marketable  commodity  has  emerged  as  a result of the manufacturing activity of the appellant.      Marketability being  a question  of fact, we are of the view there  is no  scope for  interference  with  the  order passed by  the Tribunal. It cannot be said that the Tribunal has  overlooked   any  material  fact  or  its  decision  is perverse.      The appeal  fails and  is dismissed.  No  order  as  to costs.