1 abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 326 IF 1991 M/s Larsen & Toubro Limited .. Petitioner V/s Union of India & Ors. .. Respondents Mr. Prakash Shah with Mr. Jas Sanghvi i/b PDS Legal for the Petitioner. Mr. A.S. Rao with Mr. Rohit Pardeshi for the respondents. CORAM : FERDINO I. REBELLO & D.G. KARNIK, JJ. DATE : 13TH AUGUST 2009 JUDGMENT : (Per D.G. Karnik, J.) 1. By this petition, the petitioner challenges the notice dated 26th June 1990 issued to it to show cause why excise duty should not be levied and action be not taken against it for non-payment of excise duty for fabrication/manufacture of waste water treatment plant. 2. The petitioner is engaged, amongst others, in the business of 2 fabrication and erection of structures of various types on contract basis. On 13th September 1988, the petitioner entered into a turn key contract with Bharat Petroleum Corporation Ltd. (for short “BPCL”) for fabrication, assembly and erection of waste water treatment plant. The activities involved in the contract were procurement, supply, fabrication, transportation of various components, making of civil construction and erection of waste water treatment plant and commissioning it. By that plant, water polluted with oil, bacteria and chemicals and deficient in oxygen was required to be treated to remove oil, neutralize bacteria and harmful chemicals and supply oxygen to the water and and treat it before it was discharged in the pipeline. On 26th June 1990, the Superintendent of Central Excise (the respondent no.4 herein) issued a notice to the petitioner alleging contravention of provisions of Rule 9(i) read with Rules 52-A, 173-B, 173-C, 173-F, 173- G of the Central Excise Rules. In the notice, it was alleged that the petitioner had fabricated/manufactured the waste water treatment plant in the premises of BPCL valued at Rs.5,32,37,123/- without payment of central excise duty thereon. The notice further alleged that the waste water treatment plant fell under chapter heading no.8419.00 on which excise duty was payable. The notice further alleged the plant came into existence in unassembled form as per the drawings and designs approved by the BPCL before the same was installed and 3 assembled to the ground with civil work. According to the notice, the excise duty was payable on the value of the plant excluding the value of the civil work. That notice is impugned in this petition. 3. In the petition, the petitioner has explained in detail the procedure for erection of the waste water treatment plant. According to the petitioner, carbon steel tanks, various platforms, walkways and ladders are fabricated at site by process of rolling, welding, grinding etc. of duty paid steel plates, flats, angles, channels and beams. This fabrication is done at site. Civil work is also done at site and various parts are put together by embedding in the civil work and are affixed to the ground. Pressure testing is then carried out. The plant cannot function as such until it is wholly built including the civil construction. 4. In the affidavit in reply filed by Mr. Sunil Kumar Singh, Deputy Commissioner of Central Excise, the procedure given by the petitioner in the petition for erection and commissioning of the waste water treatment plant is not denied. Learned counsel for the respondents, however, contended that the waste water treatment plant came into existence in an unassembled form as per the drawings and designs approved by BPCL before the same was installed, erected and assembled and embedded in the civil work and, therefore, the excise 4 duty is payable on it. 5. It need not be stated that the excise duty is not payable in respect of an immovable property. The plant when erected by embedding in the civil work becomes an immovable property and would not therefore attract any excise duty. The contention of the respondents, however, is that the plant came into existence in an unassembled form at site and became operational after it was embedded in the civil work. Though the civil work did not attract excise duty, excise duty was payable on the plant in an unassembled form. The relevant wording in the show cause notice in that regard is quoted below:- “The plant already came into existence in an unerected form as per drawing and designs approved by M/s B.P.C.L. before the same was installed erected and affixed to the ground with civil work. The civil work did not attract duty being immovable property.” (Underlining s upplied) In our view, mere bringing of the duty paid parts in an unassembled form at one place, i.e. at the site does not amount to manufacture of a plant. Section 2(f) of the Central Excise and SALT Act, 1944 (for short “the Act”) defines the word “manufacture” to include any process 5 incidental or ancillary to the completion of a manufactured product. Any process by which an object becomes a new commercial goods would be included in the definition of “manufacture”. However, simply collecting together at site the various parts would not amount to manufacture unless an excisable movable product (say a plant) comes into existence by assembly of such parts. In the present case, as the petitioner has stated that the waste water treatment plant does not come into existence unless all the parts are put together and embedded in the civil work. Waste water treatment plant does not become a plant until the process which includes the civil work, is completed. In our view, therefore, no commercial movable property came into existence until the assembling was completed by embedding different parts in the civil works. 6. Learned counsel for the respondents strongly relied upon a decision of the Supreme Court in Narne Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise, 1988 (38) ELT 566 (SC), and submitted that the Court has held that assembly of duty paid component of weigh bridge amounts to manufacture when both parts and final products are separately and specifically dutiable. In that case, by assembling various parts, a weigh bridge which is a new and 6 marketable product came into existence. The end product was separately marketable than the components of which it was made. There was no finding of fact recorded that the weigh bridge was an immovable property. In that view, the Supreme Court held that excise duty was payable on weigh bridge. The decision nowhere shows that the weigh bridge was not a movable property. In the present case, as we have held that the waste water treatment plant was an immovable property and came into existence only on assembly of parts in the civil work. In the circumstances, the decision in the case of Narne Tulaman Manufacturers Pvt. Ltd. (supra) is of no assistance to the respondents. In view of the fact that waste water treatment plant is not a separate movable marketable goods and comes into existence only on assembly of parts in the civil work, there is no question of levying excise duty on it. 7. It is true that normally in a writ jurisdiction, a Writ Court would not ordinarily interfere only on issuance of a show cause notice. However, the matter has been admitted in the year 1991. Eighteen years have passed after the petition was entertained and, in our view, it would not be appropriate at this stage to deny the relief to the petitioner on the ground that the petition is directed against the show cause notice especially when factually there is no dispute that the waste 7 water treatment plant when totally assembled becomes an immovable property. The very show cause notice also says that plant in an unassembled form was installed and affixed to the civil works. This shows that the plant on erection and installation becomes an immovable property which is not excisable to tax. 8. For these reasons, we quash the show cause notice dated 26th June 1990 annexed at Exhibit-A to the petition. Rule is made absolute in terms of prayer (a). There shall be no order as to costs. (D.G. KARNIK, J.) (FERDINO I. REBELLO, J.)