TMI Blog2010 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty. – the activity is amount to manufacture – on the second issue of availing benefit of exemption notification, matter remanded back to tribunal - 960-966 OF 2003 - - - Dated:- 8-4-2010 - CIVIL APPEAL NOS.960-966 OF 2003 (With C.A. Nos. 5461-5462 of 2003) JUDGMENT T.S. THAKUR, J. 1. These appeals under Section 35L(b) of the Central Excise Act, 1944 arise out of orders dated 19th August, 2002 and 8th April, 2003 passed by the Customs Excise and Gold (Control) Appellate Tribunal, West Regional Bench, Mumbai, whereby the Tribunal has set aside the order passed by the Commissioner of Customs Central Excise, Ahmedabad, confirming the duty demanded from the respondents as also levying penalties upon them under different provisions of the Central Excise Act, 1944. The controversy in the appeals lies in narrow compass, but before we formulate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the plants had availed benefit of exemption wrongly and in breach of the provisions of Rules 9(1) and 173F and other rules regulating the grant of such benefit. 4. In so far as Solidmec marketing company was concerned, the show cause notice alleged that Solidmec was engaged in the manufacturing of Asphalt Batch Mix, Drum Mix/Hot Mix Plant by assembling and installing the parts and components manufactured by the manufacturing units of the group. According to the notice the process of assembly of the parts and components at the site provided by the purchasers of such plants was tantamount to manufacture of such plants as a distinct product with a new name, quality, usage and character emerged out of the said process. Resultantly the end-product; namely, Asphalt Drum/Hot Mix Plants became exigible to Central Excise duty, which duty Solidmec had successfully avoided. The notice also proposed to levy penalties upon all the five concerns under appropriate provisions of the Central Excise Act. 5. The respondents filed their responses to the show cause notice, which were duly considered by the Commissioner who confirmed the duty demanded in the show cause notice and levied suita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its to the benefit of exemption having regard to the fact that the size of the stickers giving the brand name of the manufacturing units was bigger than that of Solidmec the marketing company. The plea of limitation raised by the respondents was, however, left undecided by the Tribunal keeping in view the fact that the erection of plants by Solidmec did not in the opinion of the Tribunal amount to manufacture of exigible goods. In the ultimate analysis the Tribunal upheld the demand of Rs.1,97,875/- against M/s Solmec Earthmovers Equipments and Rs.2,16,347/- against M/s Solid and Correct Engineering Works but reduced the penalty levied upon them to Rs.2 lakhs each. The penalty levied upon the partners was, however, remitted. The order of confiscation of the plant, land and building was in consequence of the findings recorded by the Tribunal set aside. 7. An application seeking rectification of the above order was then filed before the Tribunal by the respondents. It was argued that the Tribunal had upheld the duty and penalties levied upon the respondents-applicants on the premise that the respondents had not contested the classification of the products under Sub-heading 8474.90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merated in that Entry which reads: "Machinery for sorting, screening, separating, washing, crushing, grinding, mixing or kneading earth, stone, ores or other mineral substances, in solid (including powder or paste) form; machinery for agglomerating, shaping or moulding solid mineral fuels, ceramic paste, unhardened cements, plastering materials or other mineral products in powder or paste form; machines for forming foundry moulds of sand." 12. It is evident from the above that any machinery which is used for mixing is dutiable. That Asphalt Drum/Hot Mix Plant is a machinery meant for mixing etc. was not disputed before us. It was fairly conceded by Mr. Bagaria that assembling, installation and commissioning of Asphalt Drum/Hot Mix Plants amounted to manufacture inasmuch as the plant that eventually came into existence was a new product with a distinct name, character and use different from what went into its manufacture. Super added to the above is the fact that Section 2(f) of the Central Excise Act does not define the term "manufacture" exhaustively. The definition is inclusive in nature and has been understood to mean bringing into existence a new product with a distinct nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would depend upon whether the same are immovable property. That is because anything that is not immovable property is by this very definition extracted above "moveable" in nature. 17. Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression "immovable property". It simply provides that unless there is something repugnant in the subject or context 'immovable property' under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. Section 3(26) of the General Clauses Act, 1897, similarly does not provide an exhaustive definition of the said expression. It reads: "Section 3(26): "immovable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth." 18. It is not the case of the respondents that plants in question are per se immoveable property. What is argued is that they become immovable as they are permanently imbedded in earth in as much as they are fixed to a foundation imbedded in earth no matter only 1½ feet deep. That argument needs to be tested on the touch stone of the provisions referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is that what is annexed to the freehold becomes part of the realty under the maxim quidcquid plantatur solo, solo cedit. This maxim, however, has no application in India. Even so, the question whether a chattel is imbedded in the earth so as to become immovable property is decided on the same principles as those which determine what constitutes an annexation to the land in English law. The English law has evolved the twin tests of degree or mode of annexation and the object of annexation. In Wake V. Halt (1883) 8 App Cas 195 Lord Blackburn speaking for the Court of Appeal observed: "The degree and nature of annexation is an important element for consideration; for where a chattel is so annexed that it cannot be removed without great damage to the land, it affords a strong ground for thinking that it was intended to be annexed in perpetuity to the land." 22. The English law attaches greater importance to the object of annexation which is determined by the circumstances of each case. One of the important considerations is founded on the interest in the land wherein the person who causes the annexation possesses articles that may be removed without structural damage and even art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the earth" within the meaning of that expression as defined in Section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 25. We may, at this stage, refer to the decisions of this Court which were relied upon by learned counsel for the parties in support of their respective cases. 26. In Sirpur Paper Mills Ltd. (supra) this Court was dealing with a near similar situation as in the present case. The question there was whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immovable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention this Court held that just becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y come into existence in the said process. The machine so manufactured was, however, erected on a platform specially constructed for that purpose which made the machine immovable in character. The Court declared that while determining whether an article is permanently fastened to anything attached to the earth both the intention as well as the factum of fastening has to be ascertained from the facts and circumstances of each case. The following passage is apposite in this regard: "There can be no doubt that if an article is an immovable property, it cannot be termed as "excisable goods" for purposes of the Act. From a combined reading of the definition of "immovable property" in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the excise law. Whether an article is permanently fastened to anything attached to the earth requires determination of both the intention as well as the factum of fastening to anything attached to the earth. And this has to be ascertained from the facts and circumstances of each case." (emphasis supplied) 29. Apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , worm wheels, shafts, housing, stirrer arms and support channels, pipes, floats, heaters, ladders, platforms, etc. The Court noted that the mono vertical crystallisers have to be assembled, erected and attached to the earth on a foundation at the site of the sugar factory and are incapable of being sold to consumers in the market as it is without anything more. Relying upon the decision of this Court in Quality Steel Tubes case (supra), the erection and installation of mono vertical crystallisers was held not dutiable under the Excise Act. This Court observed that the Tribunal ought to have remembered that mono vertical crystallisers had, apart from assembly, to be erected and attached by foundation to the earth and, therefore, were not, in any event marketable as they were. This decision also, in our opinion, does not lend any support to the case of the assessee in these appeals as we are not dealing with the case of a machine like mono vertical crystallisers which is permanently embedded in the structure of a sugar factory as was the position in the Mittal Engineering Works case (supra). The plants with which we are dealing are entirely over ground and are not assimilated in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to be immune from the levy of excise duty. 34. Our answer to question no.1 is accordingly in the affirmative. Re: Question No.2 35. The Tribunal, as noticed in the earlier part of this order, has taken the view that the respondents-manufacturing units were entitled to the benefit of exemption under Notification No.1/93 as amended from time to time as the use of brand name Solidmec for the plants or the components manufactured by such units did not disentitle the said units from claiming the benefit of the exemption having regard to the fact that the size of the sticker giving the brand name of the manufacturing units was bigger than that of Solidmec, the marketing company. Mr. Bagaria learned senior counsel for the respondent fairly conceded that the reasoning given by the Tribunal based on the size of the sticker was not legally sustainable. He, however, urged that since the manufacturing units had also raised some other defences including one on the ground of limitation, even if the order passed by the Tribunal was set aside, the matter may have to go back to the Tribunal to enable it to examine the said alternative contentions. Mr. Malhotra did not have any seriou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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