SIRPUR PAPER MILLS LTD.versusCOLLECTOR OF CENTRAL EXCISE, HYDERABAD

                  SIRPUR PAPER MILLS LTD.                                       A
                             v.
          COLLECTOR OF CENTRAL EXCISE, HYDERABAD

                            DECEMBER 11, 1997

                 (SUHAS C. SEN AND K.T. THOMAS, JJ.]                            B

        Central Excises and Salt, 1944 : Section 3.

         Excise duty-Levy of-Paper-making machin~Erected Ill the
  assessee's factory by using duty paid componellts-Such machille pennanent- C
  ly embedded in earth--T1ibunal found that the said machine was attached to
  earth merely for operational efficiency, was not iriimovable, was saleable and
  liable to excise duty-Held : Such findings, being findings of fact wherein no
  matelial fact was overlooked or the decision perverse, upheld-Even otherwise
  such a machine, merely because it was pennanelltly embedded ill ea1th for
  better functioning, cannot become immovable prope1ty-Further, such a D
  machine can be sold by dismantling and reassembling at another site.

        Excise duty-Levy of-Test to dete1mine--Held: Whether the goods cm1
  be sold in the market and not whether they are embedded in earth.
                                                                                E
        Excise duf)r--Manufactur~Paper-making machine erected by using
  valious components-Test to detennine--Held : Whether a new marketable
  commodity has emerged or not

        The appellant-assessee erected a paper-making machine in its fac-
  tory by using duty paid components purchased from the market. The said        F
  machine was embedded in a concrete base and permanently attached to
  the ground. The excise authority imposed duty on the said paper-making
  machine under Section 3 of the Central Excises and Salt Act, 1944.

         Being aggrieved the appellant-assessee filed a petition before the
  Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal           G
  held that the machine was attached to earth for operational efficiency. 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 for safety. The Tribunal further held that the paper-
• making machine was saleable. Accordingly, the Tribunal dismissed the          H
                                      431
    432                   SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A   petition~ Hence this appeal.


         On behalf of the appellant it was contended that the machine was
    permanently attached to the ground and was really immovable; and that
    the machine could not ordinarily be sold in the market.

B           Dismissing the appeal, the Court

           HELD : 1. In view of the finding of fact by the Customs, Excise and
    Gold (Control) Appellate Tribunal that the paper-making machine was
    saleable it is not possible to hold that the machinery assembled and erected
    by the appellant at its factory site was immovable property as something
C   attached to earth like a building or a tree. The Tribunal has pointed out
    that it was for the operatio1ial efficiency of the machine that it was attached
    to earth. If the appellant wanted to sell the paper-making machine it could
    always remove it from its base and sell it. [434-A-C]

D         2. 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, it is not possible to uphold the contention of the appellant that the
    machine must be treatetl as a part of the immovable property of the com-
    pany. Just because plant and machinery are fixed in the earth for better
    functioning, it does not automatically become an immovable property.
E                                                                      [434-D-EJ
          3. What the appellant has erected in its factory is a paper-making
    machine. It may have purchased various components to make the machine
    but nonetheless what has been produced is something quite different from
    the components that had been purchased. A new marketable commodity has
F   emerged as a result of the manufacturing activity of the appellant. [435-A-B]

          4. Marketability being a question of fart, there is no scope for inter-
    ference with the order passed by the Tribunal. It cannot be said that the
    Tribunal has overlooked any material fact or its decision is perverse.
                                                                         [435-C]
G
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 527 of
    1988.

         From the Judgment and Order dated 1.1.87 of the Customs Excise
    and Gold (Control) Appellate Tribunal, New Delhi in Order bearing No.
H   1177 of 1982-BI in (Order No. 57/87-Bl).
              SIRPUR PAPER MILLS LTD. v. C.C. E. [SEN,J.]               433

      Jaideep Gupta and Ms. Gauri for Khaitan and Co. for the Appellant.       A

    M.S. Usgaokar, Additional Solicitor General, Dhruv Mehta and V.K.
Verma for the Respondent.

      The Judgment of the Court was delivered by
                                                                               B
      SEN, J. The dispute in this case is about the leviability of excise duty
on paper making machine which was erected by the appellant-company by
using duty paid components purchased from the market and also by
fabricating certain parts of the machinery in their factory. The duty paid
components purchased from the market worked out to about 90% of the
parts required for the machine. In respect of the parts fabricated inside
                                                                               c
the factory of the appellant, no duty was Jeviable under Notification No.
118/75 dated April 30, 1975 issued by the Government. The case of the
appellant is that the excise authority erroneously imposed duty on the .
paper making machine installed in the factory of the appellant because the
Central Excise Act imposes a duty on "all excisable goods produced or D
manufactured in India". It is well-settled that the "goods" contemplated by
Section 3 which is the charging section of the Act must be movable and
marketable. The case of the appellant is that the various components of
the paper making machine purchased by the appellant had to be put
together at the site where the machine was erected and embedded in the
                                                                               E
ground. Certain components were also to be fabricated at site. This
machine was really immovable property and did not come within the
mischief of the charging section of the Central Excise Act.

       Mr. Jaideep Gupta, appearing on bepalf of the appellant, has con-
tended that the machine was permanently attached to the ground. In fact F
the machine cannot be worked until and unless the same was attached to
the earth as a permanent fixture. It was further argued that the machine
cannot ordinarily be sold in the market. The nature of the machine is such
that it cannot be transferred and offered for sale to any other party. An
argument was also advanced that the machine was erected on turn key basis G
at the very place where the machine was ultimately embedded in a concrete
base to make it a permanent fixture.

       The Tribunal, however, rejected these contentions advanced before
it on the basis of some findings of fact. The Tribunal held that the machine
was attached to earth for operational efficiency. The whole purpose behind     H
    434                   SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A attaching the machine to a concrete base was to prevent wobbling of the
    machine and to secure maximum operational efficiency and also for safety.
    The Tribunal further held that the paper making machine was saleable· and
    observed "if somebody wants to purchase, the whole machinery could be
    dismantled and sold to him in parts".

B          In view of this finding of fact, it is not possible to hold that the
    machinery assembled and erected by the appellant at its factory site was
    immovable property as something attached to earth like a building or a
    tree. The Tribunal has pointed out that it was for the operational efficiency
    of the machine that it was attached to earth. If the appellant wanted to sell
C   the paper making machine it could always remove it from its base and sell
    it.

        Apart from this finding of fact made by the Tribunal, the point
  advanced on behalf of the appellant, that whatever is embedded in earth
  must be treated as immovable property is basically not sound. For example,
D a factory owner or a house-holder may purchase a water pump and fix it
  on a cement base for operational efficiency and also for security. That will
  not make the water pump an item of immovable property. Some of the
  components of water pump may even be assembled on site. That too will
  not make any difference to the principle. The test is whether the paper
E making machine can be sold in the market. The Tribunal has found as a
  fact that it can be sold. In view of that finding, we are unable to uphold
  the contention of the appellant that the machine must be treated as a part
  of the immovable property of the company. Just because a plant and
  machinery are fixed in the earth for better functioning, it does not auto-
  matically become an immovable. property.
F
          A· further argument was made that the entire machinery as it is
    cannot be bought and sold because the machinery will have to be dis-
    mantled before being sold. The Tribunal has pointed out that the appellant
    had himself bought several items and completed the machinery. It had
G   purchased a large number of components and fabricated a few and
    manufactured the paper making machine at site. If it is sold it has to be
    dismantled and reassemble at another site. We do not find any fault with
    the reasoning of the Tribunal on this aspect of the matter.

          Lastly, it was contended that the paper making machine was not
H really manufactured by the appellant. Various components and parts were
                SIRPUR PAPER MILLS LTD. v. C.C. E. [SEN, J.]            435

purchased and a few of the parts were fabricated at the factory and the        A
assessee ultimately assembled various parts of the machine. We are unable
to uphold this argument also because it has to be seen whether a final
product is something distinct and apart from the components that have
gone into its production. What the appellant has erected in its factory is a
paper making machine. It may have purchased various components to
make the machine but nonetheless what has been produced is something
                                                                               B
quite different from the components that had been purchased. A new
marketable commodity has emerged as a result of the manufacturing
activity of the appellant.

      Marketability being a question of fact, we are of the view there is no   C
scope for interference with the order passed by the Tribunal. It cannot be
said that the Tribunal has overlooked any material fact or its decision is
perverse.

         The appeal fails and is dismissed. No order as to costs.
                                                                               D
V.S.S.                                                     Appeal dismissed.