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PETITIONER: M/S. MITTAL ENGINEERING WORKS(P) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE,MEERUT

DATE OF JUDGMENT:       19/11/1996

BENCH: S.P. BHARUCHA, K. VENKATASWAMI

ACT:

HEADNOTE:

JUDGMENT:                      J U D U G M E N T BHARUCHA, J.      The order  of the  Customs,  Excise  &  Gold  (Control) Appelate Tribunal  under appeal  Confirms the levy of excise duty on mono vertical crystallisers.      Mono  vertical   crystallisers  are   used   in   sugar factories. Their function is to exhaust molasses of sugar. A general note  placed on  the record  of the  Tribunal by the appellants,   who    have   patented   the   mono   vertical crystalliser,  describes   its  function  and  manufacturing process. The  mono vertical crystalliser is fixed on a solid RCC slab  having a  load bearing capacity of about 30 tonnes per sq.  mt. It  is assembled  at site in different sections shown by  the packing  list  given  to  customers  with  the invoices. This  consists bottom  plates, tanks, 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, wormwheels, shafts, housing, stirrer arms and  support channels, pipes, floats, heaters, ladders, platforms, etc.  The parts  aforestated are cleared from the premises  of   the  appellants   and   the   mono   vertical crystalliser is  assembled and  erected at site. The process involves welding  and gas  cutting. Where  the assembly  and erection is  done by  the appellants welding rods, gases and the like  are procured  from the  stores of the customer and the customer  sends to  the appellants debit notes for their value .  A sketch  and photograph produced by the appellants before  the   authorities  shows   that  the  mono  vertical crystalliser is a tall structure, rather like a tower with a platform at its summit.      The appellants  were required  to show  cause why  they should not  pay excise  duty on  mono vertical crystallisers cleared from  their premises  during 1982-83. The collector, Central  Excise,  Meerut,  confirmd  the  demand.  He  held, relying on  orders placed by sugar factories with appellants and correspondence in that behalf, that the manufacture of a mono vertical  crystalliser was  complete in all respects at the time  of its clearance from the appellants premises; its

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delivery in  transport. It  was clear that the mono vertical crystallizer was  known to  the trade  and capable  of being sold and  purchased in  the market, at the time and place of removal and before erection and commissioning, and should be termed  ‘goods’.   The  mono  vertical  crystallizer  had  a distinct name  and was  meant for  a definite  use.  As  the finished product was the result of the processes of welding, bending, cutting,  drilling, etc.  and had a name, character and use  different from  the raw materials used, the process amounted to  manufacture within  the meaning  of the Central Excises and  Salt Act, 1944 (hereinafter referred to as ‘the Act’). The  test of  marketability and  of being  goods  was satisfied.      The Tribunal,  in the  appeal filed  by the appellants, noted the  debit notes  aforementioned and found that in the case of  on customer  there was  no debit note. The Tribunal concluded, thus  in the  case of  this party  complete Sugar Mill  Machinery   which  the  appellants  describe  as  mono vertical crystallisers  in the  invoice  left  the  factory. Besides it  is also  observed that  while  in  the  case  of Madurantakam Cooperative  Suger Mills  case  the  appellants collected erection  changes  of  Rs.40,000/-  in  some  case erection was left to the customers themselves. This destroys the appellants  argument that  the crystalliser  comes  into existence only after erection at side. "      The  Principle   question  to  which  we  must  address ourselves is  whether mono verticle crystallisers are "goos’ upon which  excise duty  under the provisions of the Act can be levied.      In Union  of India and anr. vs. Delhi Cloth and General Mills Co.  Ltd. AIR  1963 S.C.  791,  a  Constitution  Bench considered the  application to  the provisions of the Act to the hydrogenated oils that are known as "vanaspati’. ’Goods’ were not  defined in  the Act.  The meaning, as found by the Court from  dictionaries, showed "that to become ’goods’ and article must  be something  which can ordinarily come to the market to  be bought  and sold".  In  Bhor  Industries  Ltd. Bombay vs.  Collector of  Central Excise,  Bombay, 1989  (1) S.C.C. 602,  the view  taken in  the case of Delhi Cloth and General Mills  Co. Ltd.  and reiterated in South Bihar Sugar Mills Ltd.  etc. vs.  Union of  India & Ors. 1963 (3) S.C.C. 547, was  applied to  crude PVC films. It was held that they "were not  known in  the market and could not be sold in the market and  was not  capable of being marketable". In Indian Cable Company  Ltd. Calcutta vs. Collector of Central Excise Calcutta  and   Ors.  1994  (6)  S.C.C.    610,  this  Court considered the  question of PVC compounds, and observed that marketability was  a decisive test for dutiability. It meant that the goods were saleable or suitable for sale. They need no in  fact be  marketed. They  should be  capable "Of being sold to  consumers in the market, as it is with out anything more". The  case that  comes closest  to that  which we have before us  is the  case of  Quality Steel Tubes (P) Ltd. vs, Collector of  Central  Excise, U.P. 1995 (2) S.C.C. 372. The issue was  whether "  the tube  mill and  welding  and  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 not it can be said to be capable or being

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brought to  the market  for being  brought and sold." It was also said  that the  "erection and  installations of a plant cannot be  held to  be excisable goods. If such wide meaning is assigned  it  would  result  in  bringing  in  its  ambit structurs, erections  and installations.  That surely  would not be  in consonance  with accepted  meaning  of  excisable goods and its exigitility to duty."      Learned counsel for Revenue relied upon the judgment in Narne  Tulaman   Manufacturers  Pvt.   Ltd.  Hyderabad   vs. Collector of  Central  Excise,  Hyderabad,  1988  Supp.  (3) S.C.R. 1.  An indicating system was one of the thee parts of a weighbridge, namely, (1) a platform, (2) load cell and (3) the Indicating system. The Tribunal found that the appellant brought the  three components  together at  site, fitted and assembled them  so that  they could work as one machine and, as such,  the appellant  manufactured  a  weighbridege.  The question, therefore, was whether the activity carried out by the appellant,  of assembling  the three  components of  the weighbridege, brought  into being  a complete  weighbridege, which had  distinct name,  character or use. The argument of the appellant  was that  it was  making only   a  part of  a weighbridge, that  is, the indicating system, and that alone was dutiable.  It was held that the end product, namely, the weighbridge, was a separate product which came into being as a result of the endeavour and activity of the appellant, and the appellant  must be  held to  have manufactured  it.  The appellant’s case that it was liable only or a component part and not the end product was, therefore, rejected.      Learned counsel  for Revenue  submitted that  if even a weighbridge was  excisable, as  held in  the case  of  Narne Tulaman Manufacturers  Pvt. Ltd.  so  was  a  mono  vertical crystalliser. The  only argument  on behalf  a Narne Tulaman Manufacturers Pvt.  Ltd. was  that it  was liable  to excise duty  in   respect  of   the  indicating   system  that   it manufactured and  not the  whole weighbridge. The contention that weighbridges  were not ’good’ within the meaning of the Act was  not raised  and no  evidence  in  that  behalf  was brought on  record. We  cannot assume that weighbridges sand on the  same footing  as mono vertical crystallisers in that regard and  told that  because withbridges  were held  to be exigible to  excise duty so must mono vertical crystalliser. A decision cannot be relied upon in support of a proposition that it did not decide.      Upon the  material placed  upon record  and referred to above,  we   are  in   no  doubt   that  the  mono  vertical crystalliser has  to be  assembled. created  and attached to the earth  by a foundation at the site of the sugar factory. It is  not capable  of being sold as it is, without anything more. As  was stated  by this  Court in  the case of Quality Steel Tubes  (p) Ltd.,  the erection  and installation  of a plant is  not excisable.  To so  hold would,  impermissible, bring into  the net  of excise duty all manner of plants and installations.      The Tribunal took an unreasonable view of the evidence. It was  the case  of the  appellants, not  disputed  by  the Revenue, that  mono vertical crystallisers were delivered to the customers  in a  knocked down  condition and  had to  be assembled  and  erected  at  the  customers’  factory.  Such assembly and  erection was  done either by the appellants or by the  customer. Where  it  was  done  by  the  appellants, fabrication materials  of the  customer were  used  and  the customer sent  to the  appellants debit  notes in  regard to their value. Where the assembly and erection was done by the customer, there  was no  occasion for  it  to  send  to  the appellants a  debit note.  The fact  that there was no debit

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note in  respect of  one customer  could not reasonable have led the  Tribunal   to conclude  that in  the  case  of  the customer a  complete mono vertical crystalliser had left the appellants  factory   and  that,  therefore,  mono  vertical crystallisers were  marketable. The  Tribunal ought  to have remembered  that   the  record  showed  that  mono  vartical crystallisers had,  apart from  assembly, to  be erected and attached by  foundations to  the earth  and therefore,  were not, in any event, marketable as they were.      Having regard to the material on record, we come to the conclusion that  mono vertical  crystallisers are not ’good’ within the  meaning of  the Act and, therefore, not exigible to excise duty.      The appeal  is allowed.  The judgement  and order under appeal is set aside. There shall be no order as to coast.