Case: Sirpur Paper Mills Ltd Vs. The Collector Of Central Excise, Hyderabad

The dispute in this case is about the leviability of excise duty on paper making machine which was erected by theby 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 the factory of the appellant, no duty was, leviable 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 manufactured in India". It isthat the "goods" contemplated by Section 3 which is the charging 7 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 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.

Court's reasoning:
4. 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 the paper making machine it could always remove it from its base and sellview 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 automatically become an immovableWe 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 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.8. Marketability being a question of fact, we are of the view there is no 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.