Supreme Court of India

M/S. T.T.G. INDUSTRIES LTD., MADRASversusCOLLECTOR OF CENTRAL EXCISE, RAIPUR

Citation: 2004 INSC 379
Decided: 7 May 2004
Disposal: Appeal(s) allowed
Bench: RUMA PAL

Holding

The machines, once erected on a concrete platform, are immovable property and not goods within the meaning of the Central Excise Act, so no excise duty is payable, and the demand is not barred by limitation because Section 11‑A applies.

Summary

T.T.G. Industries Ltd. entered into a contract with Bhilai Steel Plant to design, supply, and erect hydraulic mudguns and tap‑hole drilling machines. Components were imported and some were manufactured at its Chennai factory, then shipped to the steel plant where they were assembled on a concrete platform 25 feet above ground, weighing 19 tons and 11 tons respectively. The company paid excise duty on the components but not on the assembled machines, failed to inform the Collector of the steel plant’s jurisdiction, and did not file a classification list, leading to a demand for central and special excise duty and a penalty of Rs 8 lakhs. The Central Excise Tribunal and the CEGAT upheld the demand, but the Supreme Court held that the erected machines constitute immovable property, not "goods" within the meaning of the Central Excise Act, and therefore are not liable to duty; moreover, the demand is not barred by limitation because Section 11‑A applies due to suppression of facts. The appeal was allowed, the CEGAT order set aside, and the penalty quashed.

Issues considered

The assembled mudguns and drilling machines are "excisable goods" or immovable property under the Central Excise Act, 1944.
Whether the demand for excise duty is barred by the six‑month limitation period or Section 11‑A applies due to alleged suppression of facts.
Whether a penalty can be imposed for the alleged suppression of material facts.

Legislation cited

Central Excise Act, 1944s. 11-A, s. 2(d), s. 3
Central Excise Tariff Act, 1944s. Heading 84.24, s. Heading 84.59
General Clauses Act, 1897s. 3(25)
Transfer of Property Act, 1882s. 3

Subjects

central exciseimmovable propertyexcisable goodsSection 11-Alimitation periodpenaltymudgundrilling machineclassification listerectionSupreme Court

Judgment

MIS. T.T.G. INDUSTRIES LTD., MADRAS A
v.
COLLECTOR OF CENTRAL EXCISE, RAIPUR

MAY 7, 2004
B
[RUMA PAL AND B.P. SINGH, JJ.]

Central Excise Act, 1944 :

Sections 2(d) and 3-Erection and installation of Mudguns and
Drilling Machines by assessee at the site of the Steel Plant-Several C
components imported and also manufactured by assessee in factory and
thereafter transported at the site for manufacturing and commissioning of
machines-Process, nature of-If erection of 'immovable property' or
emergence of 'good '-Excise duty-Levy of-Held: Mudguns and Drilling
Machines were erected at the site on specially made concrete platform at D
a level of 25 feet above the ground on a base plate secured to concrete
platform-It cannot be shifted without first dismantling it and then re-
erecting it at another site-Hence, taking into account the volume and
weight ofthe machine, the process undertaken and erection done, machines
cannot be described as 'excisable goods' within the meaning of the Act but E
'immovable property '-As such assessee not liable to pay excise duty on
manufacture and removal of Mudgun and Drilling Machines and also not
liable to pay penalty imposed-Central Excise Tariff Act, 1944-Heading
84.59 and 84.24-Transfer of Property Act, 1882-Section 3-General
Clauses Act, 1897-Section 3(25).
F
Section I IA-Extended period oflimitation-Invocation of-Assessee
manufacturing and erecting Hydraulic Mudguns and Tap Hole Drilling
Machines at the site ofthe Steel Plant out of imported components and also
components manufactured in assessee 's factory-Steel Plant under
jurisdiction of one Collectorate and factory under the jurisdiction of other G
Collectorate-Assessee paying duty with regard to components
manufactured at his factory and seeking classification ofDrilling Machines
under heading 84.59 and Mudguns under heading 84.24-However, non-
ihtimation ofmanufacturing and erecting activities at the site to Collectorate
having jurisdiction over Steel Plant and also did not file necessmy H
659
660 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A classification list nor complied with necessary excise formalities-Held:
On account of suppression of facts from the authorities, extended period
of limitation attracted and demand of duty not barred by limitation-'-
Central Excise Tariff Act, 1944-Heading 84.59 and 84.24.

B The appell~nt company-assessee entered into an agreement with
the Steel Plant for design, supply, supervision of erection and
commissioning of sets of Hydraulic Mudguns and Tap Hole Drilling
Machines required for blast furnace of the Steel Plant. The appellant
imported several components of the machines and also manufactured
C some of the components of the machines at their factory. Thereafter,
these components were transported to the site of the Steel Plant where
the manufacturing and commissioning of the machines took place. The
appellant paid excise duty in respect of the components manufactured
at its factory. It also filed classification list seeking classification of
Hydraulic Drilling Machines under heading 84.59 and Mudguns under
D heading 84.24 of the Central Exicise Tariff Act, before the Central
Excise Authority having jurisdiction over their factory. However, the
appellant did not pay excise duty on manufacture of Mudguns and
Drilling Machines which were erected and commissioned at site and
also did not inform the Collector having jurisdiction over the Steel
E Plant with regard to the assembly and manufacture of machines at the
site and also did not file the classification list nor complied with the
Central formalities under the Rules. The Department issued notice to
the appellant demanding Central and Special Excise Duty on the
machineries erected by him and also imposed penalty. The Collector
F upheld the demand of duty on Hydraulic Mudguns and Tap Hole
Drilling Machines and imposed penalty for suppression of the fact of
such manufacture and removal of excisable goods from the Department
without payment of duty. The Tribunal dismissed the appeal filed by
the appellant. Hence the present appeal.

G The appellant-assessee contended that the erection of Mudguns
and Drilling Machines at the site of the Steel Plant results in erection
of immovable property and not goods and as such excise duty is not
leviable; that it cannot 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
H and then re-erected at another place; and that the demand of duty
T.T.G. INDUS. LTD. v. C.C.E. 661

having been raised beyond the period of six months is barred by A
limitation since the appellant had made full and complete disclosure
of all rele~·ant facts to the excise authorities and as such no penalty can
be imposed.

Allowing the appeal, and Court
B
HELD : I.I. The Hydraulic Mudguns and Tap Hole 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 is not excisable goods
but immovable property which could not be shifted without first C
"dismantling it and then re-erecting it at another site. 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.
Therefore, having regard to the processes undertaken, the manner in
which these machines are assembled and erected, their volume and D
weight and the nature of structure erected for basing these machines,
what ultimately emerged as a result of processes undertaken and
erections done cannot be described &s 'goods' within the meaning of
the Central Excise Act and exigible to excise duty. Hence, the appellant
is not liable to pay excise duty on the manufacture and removal of the E
mudgun and drilling machines installed in the Steel Plant and the order
imposing penalty is set aside. [675-D-H; 676-A-B)

Narne Tulaman Manufacturers Pvt. Ltd. v. Controller of Central
Excise, (1988) 38 ELT 566 SC, distinguished. F

Mittal Engineering Works Pvt. Ltd. v. CCE, (1996) 88 ELT 622 SC
and Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, U.P.,
(1995) 75 ELT 17 SC, relied on.

Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. v. CCE, G
(1993) 65 ELT 121; Municipal Corporation of Greater Bombay and Ors.
v. The Indian Oil Corporation Ltd., [1991) Supp. 2 SCC 18; Triveni
Engineering and Indus Ltd. v. CCE, (2000) 120 ELT 273 and Sirpur
Paper Mills Ltd. v. Collector of Central Excise, Hyderabad, (1998) 97
ELT 3 SC, referred to. H
662 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 1.2. Having regard to the provisions of Section 11-A of the Central
Excise Act, 1944 the demand of duty is not barred by limitation. Some
of the components were manufactured by the appellant at its factory.
In the classification list, they bad sought classification of Hydraulic
Drilling Machines under beading 84.59 and the Mudguns under
B heading 84.24 of the Central Excise Tariff Act. This description in the
classification list was misleading because the complete machinery was
manufactured and erected only at the site of the Steel Plant. The
concerned officers of Central Excise, which had jurisdiction over the
site of the Steel Plant, were never informed about the manufacturing
C activities of the appellant at the Steel Plant where the machines were
finally manufactured. They neither filed the necessary classification list
with the Central Excise Officers having jurisdiction, not did they
comply with other necessary Excise formalities required by the Excise
Rules. Therefore, there is no fault in the finding of the Tribunal that
on account of suppression of facts from the concerned authorities,
D Section 11-A came into play, and the demand notice cannot i>e held to
be barred by limitation invoking the extended period of limitation.
[669-E-H; 670-A)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. !0911 of
E 1996.

From the Judgment and Order dated 18.12.95 of the Central Excise,
Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O. No.
E/529/95-8 in A. No. E/2299/93-81 with E/Cross. 71/94-81.

F A.R. Madhav Rao, Vishwanath Shukla and V. 8alachandran for the
Appellant.

Ms. Nisha 8agchi, Ms. Rekha Pandey, P. Manish and 8.K. Prasad,
for the Respondent.
G
The Judgment of the Court was delivered by

B.P. SINGH, J. : In this appeal the appellant has impugned the final
order of the Customs, Excise and Gold (Control) Appellate Tribunal (for
H short 'CEGA T') dated 28.12.1995 dismissing its appeal against the order
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.] 663

of the Collector of Central Excise, Raipur, confirming the demand of duty A
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.
B
The facts of the case are not in dispute. The appellant-Company
pursuant to the acceptance of its tender, entered into an agreement with
Mis SAIL, Bhilai Steel Plant for design, supply, supervision of erection and
1 commissioning of four sets of Hydraulic Mudguns and Tap Hole Drilling C
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 D
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 E
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 F
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 their own name, character and use and which were specifically
included in the Central Excise Tariff, and were therefore excisable goods G
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 decision of this
Court in Narne Tulaman Manufacturers Pvt. Ltd. v. Controller of Central
Excise, (1988) (38) ELT 566 (SC); where the issue related to the H
664 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 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
B
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
c 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
D 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.

E 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.

F 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
G 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
H appellant. We s~all deal with the submissions urged before us later in this
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.] 665

judgment, but we consider it appropriate to notice at the threshold, the A
undisputed facts shorn of unnecessary details.

As noticed earlier, the appellant had agreed to de~ign, supply,
sup'l'!rvise the erection and commissioning of four sets of Hydraulic
Mudguns and Drilling Machines falling under Chapter Heading No. 8444 B
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
I 00 metres from the place of erection whereafter the same were removed
for commissioning to the blast furnace concerned. c
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
J was explained that the function of the drilling machine is to drill hole in D
the blast furnace to enable the 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 E
exerting a force of240-300 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 F
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 G
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

-
- 't'
\
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 H
666 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 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
B 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 aear the
C 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 I 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
D 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.

E 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.

F 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 of25 feet on the cast floor of the blast furnace.
She found that even the Adjudicating Authority conceded the fact that the
G 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
H considering the fact that there is no space available for moving the
-
.
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.]

machines in assembled condition due to' their volume and weight. She A
667

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 Name
Tulaman Manufacturers Pvt. Ltd. (supra) and also noticed the judgment
of the Tribunal in Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. B
v. CCE, (1993) (65) ELT 121; which held that the issue of immovable
property was never raised before the Supreme Court in Name Tulaman
Manufacturers Pvt. Ltd. She found support for her conclusion in the
decision of this Court in Municipal Corporation ofGreater Bombay & Ors.
v. 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/ C
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 p.Iace as such for use, it is movable but if D
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
disa5sembled from the cast floor before being erected or assembled E
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, F
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 G
1 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 H
668 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A issued on 3.4.1992/8.4.1992. For the same reasons, the penalty imposed
was not sustainable.
-
I

The technical member after considering the facts of the case and the
submissions urged before the Tribunal held that the principle laid down
B by the Supreme Court in Municipal Corporation of Greater Bombay &
Ors. (P) Ltd. (supra) did not help the appellant because the catalogue issued
by Mis 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.
C 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 place·! considerable reliance
on the judgment of this Court in Name Tulaman Manufacturers Pvt. Ltd.
(supra) which related to manufacture of a weigh bridge and on the basis
D of the observation in the aforesaid judgment came to the conclusion that
assembly and erection of Hydraulic Mudgun and Drilling Machine in
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
E large size and weight, proper functioning etc. He rejected the contention
of the appellant as having no force that in Name 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 r!efined
F 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
G 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
H limitation, he noticed that the appellant had filed classification list before
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.] 669

the Central Excise Authority having jurisdiction over their factory in Tamil A
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 B
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 C
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 D
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 E
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 F
sought classification of Hydraulic Drilling Machines under heading 84.59
and the Mud guns 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 G
never informed about the manufacturing activities of the appellant at Bhilai
where the machines were finally manufactured. They neither filed the
necessary clas;;ification 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 H
670 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

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

B The core question that still survives for consideration is whether the
processes undertaken by the appellant at Bhilai for the erection of mud guns
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".

c Considerable reliance has been placed in the majority opinions of the
tribunal on the principle enunciated in Name 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
D 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 CEGA T in Gwalior Rayon Silk Manufacturing Co. (supra)
E which held to this effect. Now in view of the authoritative pronouncement
of this Court in Mittal Engineering Works (P) Ltd. v. C. C.E., Meerut,
( 1996) 88 EL T 622 SC, the matter stands clarified. This Court held :-

"Learned counsel for Revenue relied upon the judgment in Name
Tulaman Manufacturers Pvt Ltd. Hyderabad v. Collector of
F Central Excise, Hyderabad, 1988 (38) ELT 566 (SC)= [1988]
Supp. 3 S.C.R. I. An indicating system was one of the three parts
of a weighbridge, namely, (!) 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
G 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
H use. The argument of the appellant was that it was making only
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.] 671

a part of the weighbridge, that is, the indicating system, and that A
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 B
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 C
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 no evidence in that behalf was
brought on r'ecord. We cannot assume that weighbridges stand on D
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".
E
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
F
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 G
foundation of sand having a height of2 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 H
672 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 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
B 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
c 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
D to the earth. 1f 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
E 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
F Adjudicating Authority.

The technical member, however, held that the aforesaid decision was
ofno 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
G be necessary to 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
H in which it is installed and rendered functional, and other relevant facts
T.T.G. INDUS. LTD. v. C.C.E. [B.P. SINGH, J.] 673

which may lead one to conclude that what emerged as a result was not A
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.

B
In Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, UP
(1995) 75 ELT 17 SC; the facts were that a tube mill and welding head
Wt!re 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 C
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 D
"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 :-
E
"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 F
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". G

In Milla/ Engineering Works Pvt. Ltd. v. CCE, (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. H
674 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 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
B 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 swrimit.1fhis Court noticed that marketability was a decisive
test for dutiability. It meai'rt 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 Court then referred to the
C 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
D 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. v. CCE, (2000) (120) ELT 273; a question arose
E 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
F 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 Paper Mills Ltd. v. Collector
of Central Excise, Hyderabad, (1998) (97) ELT 3 (SC). This Court
G 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'
}I in Section 3 of the Transfer of Property Act, Section 3(25) of the
T.T.G .. INDUS. LTD. v: C.C.E. [B.P. SINGH, J.] 675

General Clauses Act, it is evident that in an immovable property A
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 B
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 attachjng the machine to a concrete C
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.
D
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 of25 feet above
the ground on a base plate secured to the concrete platform, brought into E
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 F
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 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 G
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 H
676 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A 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
B 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 tenn in the Excise Act.

c In the result this appeal is allowed and the order of the CEGAT date:!
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.
D There will be no order as to costs.

N.J. Appeals allowed.

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