http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10  

CASE NO.: Appeal (civil)  10911 of 1996

PETITIONER: M/s. T.T.G. Industries Ltd., Madras

RESPONDENT: Collector of Central Excise, Raipur

DATE OF JUDGMENT: 07/05/2004

BENCH: RUMA PAL & B.P.SINGH.

JUDGMENT: J U D G M E N T

B.P. Singh, J.

       In this appeal the appellant has impugned the final order of  the Customs, Excise and Gold (Control) Appellate Tribunal (for  short ’CEGAT’) dated 28.12.1995 dismissing its appeal against the  order of the Collector of Central Excise, Raipur, confirming the  demand of duty on Hydraulic Mudguns and Tap Hole Drilling  Machines, and imposing a penalty of Rs.8 lakhs for suppressing  the fact of such manufacture and removal of excisable goods from  the Department of Central Excise, failure to obtain Central Excise  Licence and its failure to maintain statutory records and to file the  required returns.

       The facts of the case are not in dispute. The appellant-  Company pursuant to the acceptance of its tender, entered into an  agreement with M/s SAIL, Bhilai Steel Plant for design, supply,  supervision of erection and commissioning of four sets of  Hydraulic Mudguns and Tap Hole Drilling Machines required for  blast furnace Nos.4 and 6 of the Bhilai Steel Plant.  For this  purpose, it imported several components and also manufactured  some of the components at their factory in Marai Malai Nagar,  Chennai.  These components were transported to the site at Bhilai  where the manufacture and commissioning of the aforesaid  machines took place.  It is undisputed that duty was paid in respect  of the components manufactured at its workshop in Chennai, but  no duty was paid on manufacture of the aforesaid Mudguns and  Drilling Machines which were erected and commissioned on site.

       A show cause notice dated 3.4.1992 was issued to the  appellant demanding Central and Special Excise Duty amounting  to Rs.8961525/- on the total assessable value of the aforesaid  machines of Rs.85347855/-.  The notice also proposed initiation of  penal action against the appellant.  The appellant filed a detailed  reply explaining the processes undertaken by it for the  manufacture/ erection and commissioning of the equipments, the  purpose of the equipments so erected, their size and weight etc.   After considering the plea of the appellant, the Collector of Central  Excise, who was the Adjudicating Authority, concluded that the  processes undertaken by the appellant resulted in the manufacture  of two distinct equipments having there own name, character and  use and which were specifically included in the Central Excise  Tariff, and were therefore excisable goods and had to discharge  duty liability.  It rejected the plea of the appellant that the  Mudguns and Drilling Machines were immovable property and  hence not excisable.  The Adjudicating Authority relied upon the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10  

decision of this Court in Narne Tulaman Manufacturers Pvt. Ltd.  Vs. Controller of Central Excise 1988 (38) ENT 566 (SC); where  the issue related to the manufacture of weigh bridge, and held that  the principles laid down therein squarely applied, particularly  having regard to the similarity of facts.  Accordingly, it confirmed  the demand and imposed a penalty of Rs.8 lakhs by order dated  27.5.1993.

       The appellant preferred an appeal before the CEGAT which  was heard by a bench of two members.  Of the several grounds  urged in the Memorandum of Appeal, only three grounds were  pressed before the CEGAT namely :-          "a) erection of mudgunds and tap hole drilling  machine at the site of the Bhilai Steel Plant would  result in erection of immovable property and not  goods and, therefore, no excise duty is leviable  thereon.

b) the appellants had made a full disclosure even at  the time of dispatch of the goods from their factory  at Marai Malai Nagar, Madras and drilling tap hole  machines at Bhilai Steel Plant in their price list and  thus the demand of duty having been raised  beyond the period of six months is barred by  limitation.

c) for the same reason as in (b), no penalty can be  imposed on the appellants".

                The cross objection filed by the Collector was not pressed.                  The members of the CEGAT differed in their opinions.   While the judicial member was in favour of allowing the appeal,  having found in favour of the appellant on all the three grounds  urged by it, none of the grounds found favour with the technical  member who was of the view that the appeal deserved to be  dismissed.  The matter was, therefore, referred to a third member  who agreed with the technical member and was in favour of  rejection of the appeal.  In the light of the majority opinion, the  appeal was dismissed by order dated 18.12.1995, which is the  order impugned in this appeal.

       Before us also the same three grounds have been pressed by  the appellant.  We shall deal with the submissions urged before us  later in this judgment, but we consider it appropriate to notice at  the threshold, the undisputed facts shorn of unnecessary details.                  As noticed earlier, the appellant had agreed to design,  supply, supervise the erection and commissioning of four sets of  Hydraulic Mudguns and Drilling Machines falling under Chapter  Heading No.8424 and 8465 of the CETA, 1985.  Some of the  components were imported while some others were manufactured  at their factory in Chennai.  These were then brought to the site at  Bhilai.  The appellants thereafter carried out the manufacture and  assembly of these machines at a distance of about 100 metres from  the place of erection whereafter the same were removed for  commissioning to the blast furnace concerned.   

       In their reply to the show cause, the respondents explained  the processes involved, the manner in which the equipments were  assembled and erected as also their specifications in terms of  volume and weight.  It was explained that the function of the  drilling machine is to drill hole in the blast furnace to enable the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10  

molten steel to flow out of the blast furnace for collection  in ladles  for further processing.  After the molten material is taken out of the  blast furnace, the hole in the wall of the furnace has to be closed by  spraying special clay.  This function is performed by the mudgun  which is brought to its position and locked against the wall for  exerting a force of 240 - 300 tons to fill up the hole in the furnace.   The blast furnace in which the inputs are loaded is a massive vessel  of 1719 m cubic metre capacity and the size of its outer diameter is  10.6 metres, and the height 31.25 metres.  Hot air at 1200 degrees  centigrade is fed into the blast furnace at various levels to melt the  raw materials.  With a view to protect the shell against heat, the  blast furnace is lined with refractory brick of one metre thickness.   Thus, the drilling machine has to drill a hole through one metre  thickness of the refractory brick lining.  The drilling machine as  well as the mudgun are erected on a concrete platform described as  the cast house floor which is in the nature of a concrete platform  around the furnace.  The cast house floor is at a height of 25 feet  above the ground level.  On this platform concrete foundation  intended for housing drilling machine and mudgun are erected.   The concrete foundation itself is 5 feet high and it is grouted to  earth by concrete foundation.  The first step is to secure the base  plate on the said concrete platform by means of foundation bolts.   The base plate is 80 mm mild sheet of about 5 feet diameter.  It is  welded to the columns which are similar to huge pillars.  This  fabrication activity takes place in the cast house floor at 25 feet  above ground level.   After welding the columns, the base plate has  to be secured to the concrete platform.  This is achieved by getting  up a trolley way with high beams in an inclined posture so that  base plate could be moved to the concrete platform and secured.   The same trolley helps in the movement of various components to  their determined position.  The various components of the mudgun  and drilling machine are mounted piece by piece on a metal frame,  which is welded to the base plate.  The components are stored in a  store-house away from the blast furnace and are brought to site and  physically lifted by a crane and landed on the cast house floor 25  feet high near the concrete platform where drilling machine and  mudgun has to be erected.  The weight of the mudgun is  approximately 19 tons and the weight of the drilling machine  approximately 11 tons.  The volume of the mudgun is 1.5 x 4.5 x 1  metre and that of the drilling machine 1 x 6.5 x 1 metre.  Having  regard to the volume and weight of these machines there is nothing  like assembling them at ground level and then lifting them to a  height of 25 feet for taking to the cast house floor and then to the  platform over which it is mounted and erected.  These machines  cannot be lifted in an assembled condition.

       So explaining the nature of the processes involved, the  appellant contended that the mudgun and the drilling machine  came into existence as identifiable units only after assembly on the  metal frame, and once assembled they were no longer "goods"  within the meaning of the Central Excise Act.

       The judicial member noticing these facts observed that it is a  physical and engineering impossibility to assemble mudguns or the  drill tap hole machines elsewhere in a fully assembled condition  and thereafter erect or install the same at a height of 25 feet on the  cast floor of the blast furnace.  She found that even the  Adjudicating Authority conceded the fact that the equipments have  to be assembled/ erected on the base frame projection of the  furnace.  She also accepted the submission urged on behalf of the  appellant that if the machines are to be removed from the blast  furnace, they have to be first dismantled into parts and brought  down to the ground only by using cranes and trolley ways  considering the size, and also considering the fact that there is no  space available for moving the machines in assembled condition

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10  

due to their volume and weight.  She considered the authorities on  the subject and came to the conclusion that erection of mudgun and  tap hole drilling machine results in erection of immovable  property.  She noticed the judgment of this Court in Narne  Tulaman Manufacturers Pvt. Ltd. (supra) and also noticed the  judgment of the Tribunal in Gwalior Rayon Silk Manufacturing  (Weaving) Co. Ltd. Vs. CCE \026 1993 (65) ELT 121; which held that  the issue of immovable property was never raised before the  Supreme Court in  Narne Tulaman Manufacturers Pvt. Ltd.  She  found support for her conclusion in the decision of this Court in  Municipal Corporation of Greater Bombay & Ors. Vs. The Indian  Oil Corporation Ltd. (1991) Supp. (2) SCC 18;  and held that the  twin tests laid down by this Court to determine whether assembly/  erection would result in immovable property or not were fully  satisfied in the facts of this case.  She concluded :-                  "The test laid down by the Supreme Court is that if  the chattel is movable to another place as such for  use, it is movable but if it has to be dismantled and  reassembled or re-erected at another place for such  use, such chattel would be immovable.  In the  present appeal, even according to the finding of the  Collector, mudguns and drill tap hole machines  have to be dismantled and disassembled from the  cast floor before being erected or assembled  elsewhere.  We have also arrived at the same  conclusion independently, in para 10 above.   Accordingly applying the test laid down by the  Supreme Court we hold that the erection and  installation of mudguns and drill tap hole machines  result in immovable property.  In the light of the  ratio of the above case law, we hold that the  mudguns and tap hole drilling machines do not  admit of the definition of goods and, therefore,  excise duty is not leviable thereon".

                On the question of limitation, she came to the conclusion  that the appellant could not be held guilty of any suppression.  She  rejected the contention of the respondent that the suppression was  attributable in the face of the non-intimation of erection to the  Indore Collectorate being the Collectorate having jurisdiction over  the Bhilai Steel Plant.  Accordingly, she held that the entire  demand was barred by limitation, as the show cause notice for  recovery of duty for the period from 25.6.1990 to 22.1.1991 was  issued on 3.4.1992/8.4.1992.  For the same reasons, the penalty  imposed was not sustainable.

       The technical member after considering the facts of the case  and the submissions urged before the Tribunal held that the  principle laid down by the Supreme Court in Municipal  Corporation of Greater Bombay & Ors. (P) Ltd. (supra) did not  help the appellant because the catalogue issued by M/s Paul Wurth  SA Luxembourg, an international firm which supplies and erects  tap hole guns and drilling machines for use in steel plants had  offered such equipment for sale and export to different parts of the  world.  He held that even though on account of the immense size  and weight it may be necessary to shift or transport them in parts  for assembly and erection at the site in the steel plants, they have to  be deemed as individual machines having specialised functions.   He also placed considerable reliance on the judgment of this Court  in Narne Tulaman manufacturers Pvt. Ltd. (supra) which related to  manufacture of a weigh bridge and on the basis of the observation  in the aforesaid judgment came to the conclusion that assembly  and erection of Hydraulic Mudgun and Drilling Machine in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10  

question at site amounted to manufacture within the meaning of  Section 2 (f) of the Central Excise and Salt Act attracting Central  Excise duty even though they have necessarily to be attached to  earth for reasons such as large size and weight, proper functioning  etc.  He rejected the contention of the appellant as having no force  that in Narne Tulaman Manufacturers Pvt. Ltd. (supra), the aspect  whether the goods in question were movable or not was not gone  into by this Court.  He, therefore, concluded that the machines in  question were movable and had individual well defined functions  and were therefore classifiable under Chapter 84 of the Central  Excise Tariff.   

He further held that under these circumstances, in respect of  the individual machines in question the tests for determining  whether a property is immovable or movable as laid down by this  Court in Municipal Corporation of Greater Bombay & Ors. (supra)   was not of any assistance to the appellant.  In view of the aforesaid  findings he was of the view that the demand was justified.           

       On the second question, as to whether, the demand was  barred by limitation, he noticed that the appellant had filed  classification list before the Central Excise Authority having  jurisdiction over their factory in Tamil Nadu.  However, on  deciding to undertake the assembly and manufacture of the  machines in question at site in the Bhilai Steel Plant, the appellants  did not file the necessary classification list with the Central Excise  Officers having jurisdiction and did not comply with the prescribed  Central Excise formalities as laid down in the Central Excise  Rules.  He, further, held that the appellant was guilty of  suppressing material facts from the concerned authorities and,  therefore, the demand was not barred by limitation.

       The third member to whom the matter was referred in view  of the differing opinions, agreed with the technical member and  held that the appeal deserved to be dismissed.  The final order  dismissing the appeal is impugned before us.

       We shall first consider the appellants submission that the  demand of duty having been raised beyond the period of six  months is barred by limitation.  The submission proceeds on the  assumption that the appellant had made full and complete  disclosure of all relevant facts to the excise authorities and was  therefore not guilty of suppression of material facts.

       Having considered the reasons recorded in the differing  opinions, we are satisfied that the demand of duty is not barred by  limitation having regard to the provisions of Section 11 A of the  Act.  Learned counsel for the parties took us through the  documentary evidence on record, including the correspondence  exchanged between the appellant and the Collectorate of Excise  authorities having jurisdiction over their factory at Chennai.  We  have noticed earlier that some of the components were  manufactured by the appellant at its factory in Chennai. In the  classification list,  they had sought classification of Hydraulic  Drilling Machines under heading 84.59 and the Mudguns under  heading 84.24.  This description in the classification list was  misleading, because the complete machinery was manufactured  and erected only at Bhilai.  The concerned officers of Central  Excise, namely the Indore Collectorate which had jurisdiction over  Bhilai were never informed about the manufacturing activities of  the appellant at Bhilai where the machines were finally  manufactured.  They neither filed the necessary classification list  with the Central Excise Officers having jurisdiction, nor did they  comply with other necessary Excise formalities as required by the  Excise Rules.  In these circumstances, we find no fault with the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10  

finding of the CEGAT that on account of suppression of facts from  the concerned authorities, Section 11 A came into play, and the  demand notice cannot be held to be barred by limitation invoking  the extended period of limitation.

       The core question that still survives for consideration is  whether the processes undertaken by the appellant at Bhilai for the  erection of mudguns and drilling machines resulted in the  emergence of goods leviable to excise duty or whether it resulted  in erection of immovable property and not "goods".

       Considerable reliance has been placed in the majority  opinions of the tribunal on the principle enunciated in Narne  Tulaman Manufacturers Pvt. Ltd. (supra) which was held  applicable to the facts of the case, and therefore there was no  option but to hold that since a new product known in the market  and known under the excise items came into being, the appellant as  manufacturer thereof was liable to duty.  The judicial member  however held that the question whether the process undertaken  resulted in the emergence of an immovable asset and not "goods"  exigible to excise duty, was neither raised nor decided in that case.   She placed reliance on an earlier decision of the CEGAT in  Gwalior Rayon Silk Manufacturing Co. (supra) which held to this  effect.  Now in view of the authoritative pronouncement of this  Court in Mittal Engineering Works (P) Ltd. Vs. C.C.E., Meerut,  1996 (88) ELT 622 (SC),  the matter stands clarified.  This Court  held :- "Learned counsel for Revenue relied upon the  judgment in Narne Tulaman Manufacturers Pvt.  Ltd.  Hyderabad v. Collector of Central Excise,  Hyderabad, 1988 (38) ELT 566 (SC) = 1988 Supp.  (3) S.C.R. 1.  An indicating system was one of the  three parts of a weighbridge, namely, (1) a  platform, (2) load cells 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 weighbridge.  The question,  therefore, was whether the activity carried out by  the appellant, of assembling the three components  of the weighbridge, brought into being a complete  weighbridge, which had a distinct name, character  or use.  The argument of the appellant was that it  was making only a part of the 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 for a component part and not the  end product was, therefore, rejected.

       Learned counsel for the 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 of 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 ’goods’  within the meaning of the Act was not raised and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10  

no evidence in that behalf was brought on record.   We cannot assume that weighbridges stand on the  same footing as mono vertical crystallisers in that  regard and hold that because weighbridges were  held to be exigible to excise duty so must mono  vertical crystallisers.  A decision cannot be relied  upon in support of a proposition that it did not  decide".                              In view of the above observation, it must be held that  reliance placed by the majority members on the decision in Narne  Tulaman was not justified, as the aforesaid decision did not decide  the question which arises for consideration in the instant case.

       The appellant has placed considerable reliance on the  principles enunciated and the test laid down by this Court in  Municipal Corporation of Greater Bombay (supra) to determine  what is immovable property.  In that case the facts were that the  respondent had taken on lease land over which it had put up, apart  from other structures and buildings, six oil tanks for storage of  petrol and petroleum products.   Each tank rested on a foundation  of sand having a height of 2 feet 6 inches with four inches thick  asphalt layers to retain the sand.  The steel plates were spread on  the asphalt layer and the tank was put on the steel plates which  acted as bottom of the tanks which rested freely on the asphalt  layer.  There were no bolts and nuts for holding the tanks on to the  foundation.  The tanks remained in position by its own weight,  each tank being about 30 feet in height 50 feet in diameter  weighing about 40 tons.  The tanks were connected with pump  house with pipes for pumping petroleum products into the tank and  sending them back to the pump house.  The question arose in the  context of ascertaining the rateable value of the structures under  the Bombay Municipal Corporation Act.  The High Court held that  the tanks are neither structure nor a building nor land under the  Act.   While allowing the appeal this Court observed :-

"The tanks, though, are resting on earth on their  own weight without being fixed with nuts and  bolts, they have permanently been erected without  being shifted from place to place.  Permanency is  the test.  The chattel whether is movable to another  place of use in the same position or liable to be  dismantled and re-erected at the later place?  If the  answer is yes to the former it must be a movable  property and thereby it must be held that it is not  attached to the earth.  If the answer is yes to the  latter it is attached to the earth.  If the answer is  yes to the latter it is attached to the earth".

       Applying the permanency test laid down in the aforesaid  decision, counsel for the appellant contended that having regard to  the facts of this case which are not in dispute, it must be held that  what emerged as a result of the processes undertaken by the  appellant was an immovable property.  It can not be moved from  the place where it is erected as it is, and if it becomes necessary to  move it, it has first to be dismantled and then re-erected at another  place.  This factual position was also accepted by the Adjudicating  Authority.

       The technical member, however, held that the aforesaid  decision was of no help to the appellant inasmuch as a leading  international manufacturing firm had offered such machines for  export to different parts of the world.  He further observed that  though on account of their size and weight, it may be necessary to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10  

shift or transport them in parts for assembly and erection at the site  in the steel plant, they must nevertheless be deemed as individual  machines having specialized functions.  We are not impressed by  this reasoning, because it ignores the evidence brought on record  as to the nature of processes employed in the erection of the  machine, the manner in which it is installed and rendered  functional, and other relevant facts which may lead one to  conclude that what emerged as a result was not merely a machine  but something which is in the nature of being immovable, and if  required to be moved, cannot be moved without first dismantling  it, and then re-erecting it at some other place.  Some of the other  decisions which we shall hereafter notice clarify the position  further.

       In Quality Steel Tubes (P) Ltd. Vs. Collector of Central  Excise, UP 1995 (75) ELT 17 (SC); the facts were that a tube mill  and welding head were erected and installed by the appellant, a  manufacturer of steel pipes and tubes by purchasing certain items  of plant and machinery in market and embedding them to earth and  installing them to form a part of the tube mill and purchasing  certain components from the market and assembling and installing  them on the site to form part of the tube mill which was also  covered in the process of welding facility.  After noticing several  decisions of this Court, the Court observed that the twin tests of  exgibility of an article to duty under the Excise Act are that it must  be a goods mentioned either in the Schedule or under Item 68 and  must be marketable.  The word "goods" applied to those which can  be brought to market for being bought and sold and therefore, it  implied that it applied to such goods as are movable. It noticed the  decisions of this Court laying down the marketability tests.   Thereafter this Court observed :-

"The basic test, therefore, of levying duty under  the Act is two fold.  One, that any article, must be  a goods and second, that it should be marketable or  capable of being brought to market.  Goods which  are attached to the earth and thus become  immoveable 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 to the market for  being bought and sold.  Therefore, both the tests,  as explained by this Court, were not satisfied in the  case of appellant as the tube mill or welding head  having been erected and installed in the premises  and embedded to earth they ceased to be goods  within meaning of Section 3 of the Act".

       In Mittal Engineering Works Pvt. Ltd. Vs. CCE \026 1996 (88)  ELT 622 (SC); this Court was concerned with the exigibility to  duty of mono vertical crystallisers which are used in sugar  factories to exhaust molasses of sugar.  The material on record  described the functions and manufacturing process.  A mono  vertical crystaliser is fixed on a solid RCC slab having a load  bearing capacity of about 30 tons per square meter.  It is assembled  at site in different sections and consists of bottom plates, tanks,  coils, drive frames, supports, plates etc.  The aforesaid parts were  cleared from the premises of the appellants and the mono vertical  crystalliser was assembled and erected at site.  The process  involved welding and gas cutting.  The mono vertical crystalliser is  a tall structure, rather like a tower with a platform at its summit.   This Court noticed that marketability was a decisive test for  dutiability.  It meant that the goods were saleable or suitable for  sale, that is to say, they should be capable of being sold to  consumers in the market, as it is, without anything more.  The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10  

Court then referred to the decision in Quality Steel Tubes (supra)  and distinguished the judgment in Narne Tulaman (supra) holding  that the contention that the weigh bridges were not goods within  the meaning of the Act was neither raised nor decided in that case.    After considering the material placed on the record it was held that  the mono vertical crystalliser has to be assembled, erected 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.  This  Court, therefore, concluded that mono vertical crystallisers are not  "goods" within the meaning of the Act and, therefore, not exigible  to excise duty.  In Triveni Engineering & Indus Ltd. Vs. CCE 2000  (120) ELT 273; a question arose regarding excisability of turbo  alternator.  In the facts of that case, it was held that installation or  erection of turbo alternator on a concrete base specially  constructed on the land cannot be treated as a common base and,  therefore, it follows that installation or erection of turbo alternator  on the platform constructed on the land would be immovable  property, as such it cannot be an excisable goods falling within the  meaning of heading 85.02.  In reaching this conclusion this Court  considered the earlier judgments of this Court in Municipal  Corporation of Greater Bombay, Quality Steel Tubes and Mittal  Engineering Works Pvt. Ltd. (supra) as also the earlier judgment of  this Court in Sirpur PaperMills Ltd. V. Collector of Central Excise,  Hyderabad \026 1998 (97) ELT 3 (SC). This Court observed :-  

"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 require  determination of both the intentions 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".

       It was also held that the decision of this Court in Sirpur  Paper Mills Ltd. must be viewed in the light of the findings  recorded by the CEGAT therein, that the whole purpose behind  attaching the machine to a concrete base was to prevent wobbling  of the machine and to secure maximum operational efficiency and  also safety.  In view of those findings it was 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.

       Keeping in view the principles laid down in the judgments  noticed above, and having regard to the facts of this case, we have  no doubt in our mind that the mudguns and the drilling machines  erected at site by the appellant on a specially made concrete  platform at a level of 25 feet above the ground on a base plate  secured to the concrete platform, brought into existence not  excisable goods but immovable property which could not be  shifted without first dismantling it and then re-erecting it at another  site.  We have earlier noticed the processes involved and the  manner in which the equipments were assembled and erected.  We  have also noticed the volume of the machines concerned and their  weight.  Taking all these facts into consideration and having regard  to the nature of structure erected for basing these machines, we are  satisfied that the judicial member of the CEGAT was right in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10  

reaching the conclusion that what ultimately emerged as a result of  processes undertaken and erections done cannot be described as  "goods" within the meaning of the Excise Act and exigible to  excise duty.  We find considerable similarity of facts of the case in  hand and the facts in Mittal Engineering and Quality Steel Tubes  (supra) and the principles underlying those decisions must apply to  the facts of the case in hand.   It cannot be disputed that such  drilling machines and mudguns are not equipments which are  usually shifted from one place to another, nor it is practicable to  shift them frequently.  Counsel for the appellant submitted before  us that once they are erected and assembled they continue to  operate from where they are positioned till such time as they are  worn out or discarded.  According to him they really become a  component of the plant and machinery because without their aid a  blast furnace cannot operate.  It is not necessary for us to express  any opinion as to whether the mudgun and the drilling machines  are really a component of the plant and machinery of the steel  plant, but we are satisfied that having regard to the manner in  which these machines are erected and installed upon concrete  structures, they do not answer the description of "goods" within  the meaning of the term in the Excise Act.

In the result this appeal is allowed and the order of the  CEGAT dated 28.12.1995 is set aside and it is held that the  appellant is not liable to pay excise duty on the manufacture and  removal of the mudgun and drilling machines in question which  have been installed in the Bhilai Steel Plant.  Consequently, the  order imposing a penalty of Rs.8 lakhs is also quashed.  There will  be no order as to costs.