IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICITION

CIVIL APPEAL NOS.960-966 OF 2003

Commissioner of Central Excise, Ahmedabad …Appellant

Versus

Solid & Correct Engineering Works & Ors. …Respondents

(With C.A. Nos. 5461-5462 of 2003)

J U D G M E N T

T.S. THAKUR, J.

1. These  appeals  under  Section  35L(b)  of  the  Central  

Excise Act, 1944 arise out of orders dated 19th August, 2002  

and 8th April, 2003 passed by the Customs Excise and Gold  

(Control) Appellate Tribunal, West Regional Bench, Mumbai,  

whereby the Tribunal has set aside the order passed by the

Commissioner  of  Customs  &  Central  Excise,  Ahmedabad,  

confirming the duty demanded from the respondents as also  

levying penalties upon them under different provisions of the  

Central Excise Act, 1944. The controversy in the appeals lies  

in  narrow  compass,  but before  we  formulate  the  precise  

questions that fall for our determination, it is necessary to  

briefly set out the factual backdrop in which the same arises.

2. M/s  Solid  and  Correct  Engineering  Works,  M/s  Solid  

Steel  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  

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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  

closely  held  by  Shri  Hasmukhbhai  his  brothers  and  the  

members of their families.

3. An inspection of the factories of the respondents by a  

team  of  officers  from  Central  Excise,  Preventing  Wing,  

Headquarters, Ahmedabad, led to the issue of a notice dated  

30th November 1999 to the four manufacturing units as well  

as to Solidmec calling upon them to show cause why the  

amounts mentioned in the said notice be not recovered from  

them towards central excise duty.  The notice accused the  

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four  manufacturing  units  of  having  wrongly  declared  and  

classified  parts  and  components  being  manufactured  by  

them  as  complete  plants/systems,  even  when  they  were  

merely parts and components and not machines or plants  

functional  by themselves.  The erroneous classification and  

declaration was, according to the notice, intended to avoid  

payment of higher rate of duty applicable to parts of such  

plants  and  machinery  at  the  material  point  of  time. The  

notice also pointed out that the units manufacturing parts  

and  components  of  the  plants  had  availed  benefit  of  

exemption wrongly and in breach of the provisions of Rules  

9(1) and 173F and other rules regulating the grant of such  

benefit.   

4. In  so  far  as  Solidmec  marketing  company  was  

concerned, the show cause notice alleged that Solidmec was  

engaged in the manufacturing of Asphalt Batch Mix, Drum  

Mix/Hot Mix Plant by assembling and installing the parts and  

components manufactured by the manufacturing units of the  

group.  According to the notice the process of assembly of  

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the  parts  and  components  at  the  site  provided  by  the  

purchasers of such plants was tantamount to manufacture of  

such plants as a distinct product with a new name, quality,  

usage  and  character  emerged  out  of  the  said  

process. Resultantly  the  end-product;  namely,  Asphalt  

Drum/Hot Mix Plants became exigible to Central Excise duty,  

which  duty  Solidmec  had  successfully  avoided. The  notice  

also proposed to levy penalties upon all  the five concerns  

under appropriate provisions of the Central Excise Act.   

5. The  respondents  filed  their  responses  to  the  show  

cause  notice,  which  were  duly  considered  by  the  

Commissioner  who  confirmed  the  duty  demanded  in  the  

show cause notice and levied suitable penalties upon each  

one  of  the  units.  Aggrieved  by  the  order  passed  by  the  

Commissioner the respondents preferred appeals before the  

Customs, Excise and Gold (Control) Appellate Tribunal (for  

short ‘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  

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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 decision of this Court in  Triveni Engineering &  

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Industries  Ltd.  &  Anr. V. Commissioner  of  Central  

Excise 2000 (120) ELT 273 (SC) the Tribunal held that  

since  the  dimensions  of  the  plant  were  substantial  

comprising  three  main  components  namely,  4  bin  feeder,  

the conveyor and dryer unit and since the said components  

had to be separately embedded in earth on a foundation 1.5  

feet deep what was manufactured could not be said to be  

“goods” especially when the same could not be dismantled  

and  re-assembled  without  undertaking  the  necessary  civil  

works. The  duty  demand  raised  against  Solidmec  was  on  

that basis set aside leaving open certain other related issues  

including  the  question  of  jurisdiction  of  the  

Commissioner. The  Tribunal  further  held  that  the  

manufacturing  units  were  entitled  to  the  benefit  of  

exemption under Notification 1/93. The use of brand name  

“Solidmec” for the plants or their components manufactured  

by the sister  concerns did  not,  according to the Tribunal,  

disentitle the said units to the benefit of exemption having  

regard to the fact  that the size of  the stickers giving the  

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brand name of the manufacturing units was bigger than that  

of Solidmec the marketing company. The plea of limitation  

raised by the respondents was, however, left undecided by  

the Tribunal  keeping in view the fact  that the erection of  

plants  by Solidmec did  not  in the opinion of  the Tribunal  

amount to manufacture of exigible goods. In the ultimate  

analysis  the Tribunal  upheld the demand of Rs.1,97,875/-  

against  M/s  Solmec  Earthmovers  Equipments  and  

Rs.2,16,347/-  against  M/s  Solid  and  Correct  Engineering  

Works but reduced the penalty levied upon them to Rs.2  

lakhs  each.  The  penalty  levied  upon  the  partners  was,  

however, remitted.  The order of confiscation of the plant,  

land  and  building  was  in  consequence  of  the  findings  

recorded by the Tribunal set aside.  

7. An application seeking rectification of the above order  

was then filed before the Tribunal  by the respondents.  It  

was  argued  that  the  Tribunal  had  upheld  the  duty  and  

penalties  levied  upon  the  respondents-applicants  on  the  

premise  that  the  respondents  had  not  contested  the  

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classification of the products under Sub-heading 8474.90 as  

parts  and  components  in  place  of  Sub-heading  8474.10  

applicable to complete machines. It was urged that although  

the  applicants  had  not  questioned  the  classification  

determined by the Department in 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  

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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.

Re: Question No.1

10. Section 3 of  the Central  Excise Act,  1944, inter alia,  

sanctions what was during the relevant period called ‘central  

excise  duty’  on  all  “excisable  goods” produced  or  

manufactured in India at the rates set forth in First Schedule  

to the Central Excise Tariff Act, 1985.  The term “excisable  

goods”  appearing  in  Section  3  has  been  defined  under  

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Section 2(d) of the said Central Excise Act which reads as  

under:

“2(d):  “excisable  goods”  means  goods  specified  in  the  First  Schedule  and  the  Second Schedule to the Central Excise Tariff  Act, 1985 as being subject to a duty of excise  and includes salt.

Explanation: For the purposes of this clause,  “goods”  includes  any  article,  material  or  substance which is capable of being bought  and sold for a consideration and such goods  shall be deemed to be marketable.”

11. Entry 8474 in the First Schedule to the Central Excise  

and Tariff Act, 1985 stipulates the rate at which excise was  

payable on machinery of the kind enumerated in that Entry  

which reads:  

“Machinery for sorting, screening, separating,  washing,  crushing,  grinding,  mixing  or  kneading earth, stone, ores or other mineral  substances,  in  solid  (including  powder  or  paste)  form;  machinery  for  agglomerating,  shaping  or  moulding  solid  mineral  fuels,  ceramic  paste,  unhardened  cements,  plastering  materials  or  other  mineral  products in powder or paste form; machines  for forming foundry moulds of sand.”

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12. It is evident from the above that any machinery which  

is  used for  mixing is  dutiable. That Asphalt  Drum/Hot Mix  

Plant is a machinery meant for mixing etc. was not disputed  

before  us.  It  was  fairly  conceded  by  Mr.  Bagaria  that  

assembling,  installation  and  commissioning  of  Asphalt  

Drum/Hot Mix Plants amounted to manufacture inasmuch as  

the plant  that  eventually  came into  existence  was a  new  

product  with  a  distinct  name,  character  and use  different  

from what went into its manufacture.  Super added to the  

above is the fact that Section 2(f) of the Central Excise Act  

does not  define the  term “manufacture”  exhaustively. The  

definition is inclusive in nature and has been understood to  

mean bringing into existence a new product with a distinct  

name, character and use.  (See (i) Union of India V. Delhi  

Cloth and General Mills Co. Ltd. (1977) 1 ELT 199, (ii)  

BPL India Ltd.  V. CCE (2002) 5 SCC 167,  (iii) Sirpur  

Paper  Mills  Ltd.  V. Collector  of  Central  Excise,  

Hyderabad (1998 (1) SCC 400).  

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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  

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the  weight  of  the  material  as  well  as  the  vibrations caused by the movement thereof  is  very  substantial.   The  drier  at  one  time  holds 40MT of raw material.”

14. Relying  upon  certain  decisions  of  this  Court,  Mr.  

Bagaria argued that the plants in question did not satisfy the  

test  of  marketability  and  moveability.  According  to  Mr.  

Bagaria, the setting up of the plant was no more than an  

accretion/annexation to immovable property which was far  

from manufacture of goods exigible to excise duty.  We shall  

presently refer to the decisions relied upon by Mr. Bagaria,  

but before we do so we may briefly  refer to the relevant  

statutory  provisions  to  examine,  what  would  constitute  

moveable or immoveable property.  

15. The expression “moveable property” has been defined  

in Section 3(36) of the General Clauses Act, 1897 as under:

“Section  3(36)  :  “movable  property”  shall  mean property  of  every  description,  except  immovable property.”

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16. From the above it is manifest that the answer to the  

question  whether  the  plants  in  question  are  movable  

property,  would  depend  upon  whether  the  same  are  

immovable property.  That is  because anything that is  not  

immovable  property  is  by  this  very  definition  extracted  

above “moveable” in nature.   

   17. Section 3 of the Transfer of Property Act, 1882 does  

not  spell  out  an  exhaustive  definition  of  the  expression  

“immovable property”.  It simply provides that unless there  

is something repugnant in the subject or context ‘immovable  

property’ under the Transfer of Property Act, 1882 does not  

include  standing  timber,  growing  crops  or  grass.  Section  

3(26) of the General Clauses Act, 1897, similarly does not  

provide an exhaustive definition of the said expression.  It  

reads:

“Section 3(26) : “immovable property” shall  include  land,  benefits  to  arise  out  of  land,  and  things  attached  to  the  earth,  or  permanently  fastened  to  anything  attached  to the earth.”   

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18. It  is  not  the  case  of  the  respondents  that  plants  in  

question are per se immoveable property.  What is argued is  

that  they  become  immovable  as  they  are  permanently  

imbedded  in  earth  in  as  much  as  they  are  fixed  to  a  

foundation imbedded in earth no matter only 1½ feet deep.  

That argument needs to be tested on the touch stone of the  

provisions referred to above. Section 3(26) of the General  

Clauses  Act  includes  within  the  definition  of  the  term  

“immovable  property”  things  attached  to  the  earth  or  

permanently  fastened  to  anything  attached  to  the  earth.  

The term “attached to 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;

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(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 trees and shrubs rooted in earth. It is also  

not synonymous to imbedding in earth of the plant as in the  

case of walls and buildings, for the obvious reason that a  

building imbedded in the earth is permanent and cannot be  

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detached  without  demolition.  Imbedding  of  a  wall  in  the  

earth is also in no way comparable to attachment of a plant  

to a foundation meant only to provide stability to the plant  

especially  because  the  attachment  is  not  permanent  and  

what  is  attached  can  be  easily  detached  from  the  

foundation.  So  also  the  attachment  of  the  plant  to  the  

foundation  at  which  it  rests  does  not  fall  in  the  third  

category, for an attachment to fall in that category it must  

be for permanent beneficial enjoyment of that to which the  

plant is attached.  

20. It is nobody’s case that the attachment of the plant to  

the foundation is meant for permanent beneficial enjoyment  

of either the foundation or the land in which the same is  

imbedded.   

21. In English law the general rule is that what is annexed  

to the freehold becomes part of the realty under the maxim  

quidcquid plantatur solo, solo cedit. This maxim, however,  

has no application in India.  Even so, the question whether a  

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chattel is imbedded in the earth so as to become immovable  

property is decided on the same principles as those which  

determine  what  constitutes  an  annexation  to  the  land  in  

English law. The English law has evolved the twin tests of  

degree or mode of annexation and the object of annexation.  

In  Wake  V. Halt (1883) 8 App Cas 195 Lord Blackburn  

speaking for the Court of Appeal observed:

“The degree and nature of annexation is an  important  element  for  consideration;  for  where a chattel is so annexed that it cannot  be  removed  without  great  damage  to  the  land, it affords a strong ground for thinking  that  it  was  intended  to  be  annexed  in  perpetuity to the land.”

22. The  English  law  attaches  greater  importance  to  the  

object  of  annexation  which  is  determined  by  the  

circumstances  of  each  case.  One  of  the  important  

considerations is founded on the interest in the land wherein  

the  person  who  causes  the  annexation  possesses  articles  

that may be removed without structural damage and even  

articles merely resting on their own weight are fixtures only  

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if  they  are  attached  with  the  intention  of  permanently  

improving the premises. The Indian law has developed on  

similar  lines  and  the  mode  of  annexation  and  object  of  

annexation  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  

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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  

beneficial  enjoyment  of  either  the  soil  or  concrete.  

Attachment in order to qualify  the expression attached to  

the earth, must be for the beneficial attachment of that to  

which it is attached. Doors, windows and shutters of a house  

are attached to the house, which is imbedded in the earth.  

They are attached to the house which is imbedded in the  

earth for the beneficial enjoyment of the house. They have  

no separate existence from the house. Articles attached that  

do not form part of the house such as window blinds, and  

sashes,  and  ornamental  articles  such  as  glasses  and  

tapestry fixed by tenant, are not affixtures.  

24. Applying the above tests to the case at hand, we have  

no difficulty in holding that the manufacture of the plants in  

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question  do  not  constitute  annexation  hence  cannot  be  

termed as immovable property for the following reasons:

(i)  The  plants  in  question  are  not  per  se  immovable property.

(ii)  Such  plants  cannot  be  said  to  be  “attached to the earth” within the meaning of  that expression as defined in Section 3 of the  Transfer of Property Act.

(iii) The fixing of the plants to a foundation is  meant only to give stability to the plant and  keep its operation vibration free.

(iv) The setting up of the plant itself is not  intended to be permanent at a given place.  The plant can be moved and is indeed moved  after the road construction or repair project  for which it is set up is completed.  

25. We may, at this  stage,  refer  to the decisions of  this  

Court  which  were  relied  upon  by  learned  counsel  for  the  

parties in support of their respective cases.  

26. In  Sirpur  Paper  Mills  Ltd.  (supra) this  Court  was  

dealing with a near similar situation as in the present case.  

The  question  there  was  whether  the  paper  machine  

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assembled  at  site  mainly  with  the  help  of  components  

bought  from  the  market  was  dutiable  under  the  Central  

Excise Act, 1944.  The argument advanced on behalf of the  

assessee was that since the machine was embedded in a  

concrete base the same was immovable property even when  

the embedding  was meant  only  to  provide  a wobble  free  

operation  of  the  machine.  Repelling  that  contention  this  

Court held that just because the machine was attached to  

earth for a more efficient working and operation the same  

did  not  per  se  become  immovable  property.  The  Court  

observed:     

“5.  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  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  

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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 even when its  

parts are separately taxable.  Answering the question in the  

affirmative  this  Court  held  that  the  assembling  of  the  

components  of  the  weighbridge  brought  into  existence  a  

complete  weighbridge  which  had  a  distinctive  name,  

character and use hence exigible to duty. The fact that the  

assessee  was himself  manufacturing  only  one part  of  the  

component  used in  the erection of  a  weighbridge did not  

mean  that  the  complete  machine  once  the  same  was  

assembled  by  using  duty  paid  parts  was  not  exigible  to  

excise duty.

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28. In  Triveni Engineering’s  case (supra),  the question  

that  fell  for  consideration  was whether  a turbo  alternator  

comprising  two  components  (i)  steam  turbine  and  (ii)  

complete  alternator  and  fixing  the  same  on  a  platform  

brought about a new dutiable product. The Court held that  

the process of fixing the same on a platform and aligning  

them in a specified manner that turbine was nothing but a  

manufacturing  process  and  a  new  commodity  come  into  

existence in the said process. The machine so manufactured  

was, however, erected on a platform specially constructed  

for  that  purpose  which  made  the  machine  immovable  in  

character.  The  Court  declared  that  while  determining  

whether  an  article  is  permanently  fastened  to  anything  

attached  to  the  earth  both  the  intention  as  well  as  the  

factum of fastening has to be ascertained from the facts and  

circumstances  of  each  case.  The  following  passage  is  

apposite in this regard:

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“There can be no doubt that if an article is an  immovable property, it cannot be termed as  “excisable  goods”  for  purposes  of  the  Act.  From a combined reading of the definition of  “immovable  property”  in  Section  3  of  the  Transfer of Property Act, Section 3(25) of the  General Clauses Act, it is evident that in an  immovable property there is neither mobility  nor marketability as understood in the excise  law.  Whether  an  article  is  permanently  fastened  to  anything  attached to  the  earth  requires determination of both the intention  as well as the factum of fastening to anything  attached  to  the  earth. And  this  has  to  be  ascertained from the facts and circumstances  of each case.”

(emphasis supplied)  

29. Applying the above test to the case at hand, the plants  

in  question  were  neither  attached  to  earth  within  the  

meaning of  Section 3(26) of  the General  Clauses Act  nor  

was there any intention of permanently fastening the same  

to anything attached to the 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  

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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 Engineering & Industries case  

(supra), the facts and circumstances of each case shall have  

to  be  examined  for  determining  not  only  the  factum  of  

fastening/attachment  to  the  earth  but  also  the  intention  

behind the same.   

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31. In Mittal Engineering Works case (supra), this Court  

was  examining  whether  the  mono  vertical  crystallisers  

erected and attached by a foundation to the earth on the  

site of the sugar factory could be treated as goods within the  

meaning of  Central  Excise  Act,  1944.  This  Court  on facts  

noted that mono vertical  crystallisers are fixed on a solid  

RCC slab having a load bearing capacity of about 30 tonnes  

per sq. mt. and are assembled at site with bottom plates,  

tank coils, drive frames, supports, plates, distance places,  

cutters,  cutter  supports,  tank  ribs,  distance  plate  angles,  

water  tanks,  coil  extension  pipes,  loose  bend angles,  coil  

supports, railing stands, intermediate platforms, drive frame  

railings and flats, oil trough, worm wheels, shafts, housing,  

stirrer  arms  and  support  channels,  pipes,  floats,  heaters,  

ladders,  platforms,  etc.   The  Court  noted  that  the  mono  

vertical  crystallisers  have  to  be  assembled,  erected  and  

attached to the earth on a foundation at the site of the sugar  

factory and are incapable of being sold to consumers in the  

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market as it  is without anything more.  Relying upon the  

decision of this Court in Quality Steel Tubes case (supra),  

the  erection  and  installation  of  mono  vertical  crystallisers  

was  held  not  dutiable  under  the  Excise  Act.  This  Court  

observed that the Tribunal ought to have remembered that  

mono vertical crystallisers had, apart from assembly, to be  

erected  and  attached  by  foundation  to  the  earth  and,  

therefore, were not, in any event marketable as they were.  

This decision also, in our opinion, does not lend any support  

to the case of the assessee in these appeals as we are not  

dealing  with  the  case  of  a  machine  like  mono  vertical  

crystallisers which is permanently embedded in the structure  

of  a  sugar  factory  as  was  the  position  in  the  Mittal  

Engineering Works case (supra).  The plants with which  

we  are  dealing  are  entirely  over  ground  and  are  not  

assimilated in any structure. They are simply fixed to the  

foundation with the help of nuts and bolts in order to provide  

stability from vibrations during the operation.   

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32. So  also  in  T.T.G.  Industries  Ltd.  V.  CCE,  Raipur  

2004 (167) ELT 501 (SC), the machinery 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  

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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  

assimilated in a permanent structure, the movable character  

of the machine becomes extinct. The same cannot thereafter  

be  treated  as  moveable  so  as  to  be  dutiable  under  the  

Excise Act.  But cases in which there is no assimilation of the  

machine with the structure permanently, would stand on a  

different footing.  In the instant case all that has been said  

by the assessee is  that the machine is fixed by nuts and  

bolts  to  a  foundation  not  because  the  intention  was  to  

permanently attach it to the earth but because a foundation  

was  necessary  to  provide  a  wobble  free  operation  to  the  

machine. An attachment of this kind without the necessary  

intent  of  making  the  same  permanent  cannot,  in  our  

opinion,  constitute  permanent  fixing,  embedding  or  

attachment  in  the sense that  would  make the machine a  

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part and parcel of the earth permanently. In that view of the  

matter  we  see  no  difficulty  in  holding  that  the  plants  in  

question were not immovable property so as to be immune  

from the levy of excise duty.     

34. Our  answer  to  question  no.1  is  accordingly  in  the  

affirmative.

Re: Question No.2

35. The Tribunal, as noticed in the earlier part of this order,  

has  taken  the  view  that  the  respondents-manufacturing  

units  were  entitled  to  the  benefit  of  exemption  under  

Notification No.1/93 as amended from time to time as the  

use  of  brand  name  Solidmec  for  the  plants  or  the  

components manufactured by such units did not disentitle  

the said units from claiming the benefit  of the exemption  

having regard to the fact that the size of the sticker giving  

the brand name of the manufacturing units was bigger than  

that  of  Solidmec,  the  marketing  company.   Mr.  Bagaria  

learned senior  counsel  for  the  respondent  fairly  conceded  

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that the reasoning given by the Tribunal based on the size of  

the sticker was not legally sustainable. He, however, urged  

that  since  the  manufacturing  units  had  also  raised  some  

other  defences  including  one on the ground of  limitation,  

even if the order passed by the Tribunal was set aside, the  

matter may have to go back to the Tribunal to enable it to  

examine the said alternative contentions. Mr. Malhotra did  

not have any serious objection to this course being followed.  

He  urged  and,  in  our  opinion  rightly  so,  that  since  the  

Tribunal’s  view  on  the  question  of  exemption  was  

unsustainable the order passed by the Tribunal has to be set  

aside and the matter remitted back for a fresh disposal qua  

the said units by reference to the other contentions urged on  

behalf of the units which the Tribunal has not examined.  In  

that view of the matter our answer to question No.2 is in the  

negative.   

36. In the result we allow these appeals, set aside orders  

dated 19th August  2002 and 8th April  2003 passed by the  

Tribunal  and remand the  matter  back to  the  Tribunal  for  

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passing  fresh  orders  on  the  subject  appropriately  dealing  

with the alternative contentions which the respondents may  

urge keeping in view the observations made hereinabove.  

The  appellants  shall  also  be  entitled  to  one  set  of  costs  

assessed at Rs.25,000/- only.    

…………………………….…J. (D.K. JAIN)

…………………………….…J. (T.S. THAKUR)

New Delhi: April 8, 2010

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