2005 (11) TMI 103 - AT - Central Excise

Excisability - Manufactures fabricated steel structures and parts - Exemption to the goods manufactured otherwise than in a "factory" as defined in Section 2(m) of the Factories Act - test of Marketability - whether structures or parts of structures and other articles made of iron or steel for use in structures were classifiable under Heading 73.08 of the Central Excise Tariff - HELD THAT:- The liability to pay duty, that had arisen at the time when they were manufactured as parts of structures had, however, crystalised, and it was possible to ascertain the same even after they got fixed by referring to the quantities of the raw material that went into making them for the purpose of ascertaining their value. Therefore, any enquiry into the raw material used was only for the purpose of ascertaining the value of the parts of the structures which were already fabricated at the site, and was not an enquiry for imposing excise duty on the raw material, i.e. members such as angles, plates, etc. It was an enquiry to ascertain the value of the parts of the structures which were fabricated such as trusses, ladders, doors, windows, columns, beams, rafters, glazing frames, crane girders, hoppers, bracings, gable runners, platform, hand-rails, gratings rails, walk-ways, stairs, gutter supports, ladders, railings, etc. We have already noted the contractual terms and the relevant statements which clearly indicate that the parts of the structure were first fabricated on the ground and thereafter they were used for erecting the designed structures.

In our opinion, all these parts of structures which were fabricated were distinct marketable commodities the existence of which was brought about by the process of manufacture as defined in section 2(f) of the Act. These were not simply members such as angles, etc., with holes or cut to a different size, but the process was undertaken to bring them into a particular commercially known shapes and assemble them for that purpose as per the designs and having fabricated them, to use them for permanently fixing them in the structures which were to be erected as per the design under the works contracts.

Commodities whose marketability is restricted to a small number of persons, whose area of sale is limited, which can be preserved only for a short time, which can be brought to market only in strictly limited quantities at anyone time, or whose price are subject to fluctuations, etc., may all retain some degree of marketability within certain limits, but they are not capable of circulating freely. Moreover, commodities that must be specially fitted to the need of the consumer to the usable at all, are not saleable in equal degree in the hands of every owner. Thus, the concept of marketability in the context of marketability of parts of steel structures of the above nature falling under Heading 73.08 cannot be viewed through a hawker's eye. Hawking in its traditional sense, where the hawker moves with the goods screaming for the attention of potential customers, cannot be applied to the marketability of such structures or parts of structures, unless the concept of hawking itself is widened to include "E-hawking".

The customer in the context of such product is the person who places the order for fabrication of such parts of structure to be raised by entrusting the contract to the manufacturer of such structurals or by itself engages workers on job basis to get them manufactured. Such customers provide adequate marketability to the movable structures and parts of structures falling under heading 73.08 which remain excisable goods until they are permanently fixed to become part of some immovable structure. Therefore, in our opinion all the above items fall under Heading 73.08 are marketable commodities.

When a part of structure is prepared and disassembled, the members thereof will be angles, rods etc., prepared for use in such structure. These are not angles, or plates merely cut or drilled without reference to a particular structure. The later part of Heading 73.08 would apply to the members such as plates, rods, angles, etc., that are prepared for use in structures or their parts in their pre-assembled or disassembled state of an identifiable article of the types of the parts of structures covered under Heading 73.08.

We are unable to accept any of the contentions raised on behalf of the appellants and we answer the question referred to us as under:- (i) The immovable iron and steel structures not being goods will not fall under Heading 73.08 of the Excise Tariff.

(ii) The structures or parts thereof mentioned in the parenthesis of Heading 73.08 illustrating parts of structures namely, bridges and bridges-sections, lock-gates, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns as well as parts of structures such as, trusses, purlins, columns, beams, rafters, glazing frames, crane girders, hoppers, bracings, gable runners, platforms, hand-rails, grating rails, walk-ways, stairs, gutters supports, ladders, gantries, railings, portals, pushings, round surged, inserts, drop-boxes, windties, framework partitions, north light glazing, sliding frames and the like articles in their movable state will be subject to excise duty under Heading 73.08, notwithstanding their getting permanently fixed in the structures.

(iii) The plates, rods, angles, shapes, sections, tubes, and the like prepared for use in structures of the types covered under the Heading 73.08, as aforesaid, will also be excisable goods subject to duty in their pre-assembled or disassembled state.

The reference stands disposed of accordingly. The appeals will now be placed before the appropriate Division Bench for disposal.