MADHUMILAN SYNTEX LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) In this appeal, filed by M/s. Madhumilan Syntex Ltd., the issues involved are whether the machineries and equipments manufactured at site are eligible to excise duty and whether the Appellants are manufacturers of those machineries and equipments.

(2.) Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants in 1991 -92, for the purpose of setting up of a Solvent Extraction Plant, entered into contracts with various independent contractors for the fabrication, erection and commissioning of the various plants and equipments; that they supplied the raw materials and other items necessary for the manufacture of these machineries and equipments and the contractors undertook installation and commissioning of these machineries; that the Commissioner, under the impugned order, has confirmed the demand of duty and imposed penalty holding that the machinery and parts manufactured by them are goods and dutiable. The learned Advocate, further, submitted that the items in question, on which duty demand has been confirmed, have come into existence as immovable property and as such are not excisable; that all the machines were fabricated at the site of the appellants and on brick by brick basis; that it is not as if the entire machine was purchased from outside and the same was simply placed on the concrete foundation; that thus machines have been brought into existence as part of immovable property which cannot be bought and sold as such; that if these machines have to be taken to another place, they have to be necessarily dismantled and what would emerge is only scrap or parts, components that went into making of these machineries; that in view of the test laid down by the Supreme Court in Triveni Engineering and Indus. Ltd. v. CCE, 2000 (120) E.L.T. 273 (S.C.) and Board's Circular dated 15 -1 -2002, no excise duty is chargeable on these items; that photographs of the various items and the process of brick by brick fabrication show that these machineries cannot be treated as goods which is capable of being bought and sold as such. The learned Advocate also mentions that photograph of conveyors conclusively establish that these have become part of the immovable property; that in the following decisions, it has been held that no duty can be demanded in respect of conveyors which have been fabricated and erected at site on brick by brick basis -

(3.) The learned Advocate, further, contended that the Appellants are not the manufacturers since these machineries have been brought into existence by the fabrication undertaken by the individual contractors; that the fact that they supplied raw materials and other utilities would not make them as manufacturers when the contracts between the Appellants and the contractors are on principal to principal basis. Finally, he submitted that if the machineries are held to be dutiable, they would be entitled to Modvat credit of the duty paid on the inputs; that imposition of penalty of Rs. 2 crores is highly unjustified and may be set aside.