The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in the appeal S.S. Engineer v. Commissioner of Central Excise held that since none of the section of the boiler can be removed, erection and commissioning of a boiler for sugar plant is not excisable under Section 4 of the Central Excise Act, 1944.
Appellant S.S. Engineers are engaged in the sale of goods manufactured by them and also in trading of bought out items which are used in erection, installation and commissioning of Sugar Plant and other goods. They have issued Show Cause Notices (SCN) contending that the value of goods include costs right from the drawing and designing of the goods to its installation and commissioning and also of its bought out parts. That they have not included the value of bought out goods in the invoices for the payment of excise duty and hence there has been an undervaluation of goods under Section 4 of the Central Excise Act, 1944.
The issue before the present tribunal was to determine that whether the goods for which the appellant has entered into a contract were excisable or not.
It was contended on behalf of the revenue that the appellant has manufactured and installed the said excisable goods and since the goods can be dismantled, removed, transported and installed at any other sugar factory, the said good are moveable. Also, that the goods were manufactured at the customer’s premises and were excisable.
The appellant, on the other hand, submitted that the goods were not brought to their factory but were directly cleared at the site of the customer without availing credit. The goods of the sugar plant in question are of huge dimensions in width and height, are installed and erected piece by piece and hence are not moveable and marketable.
After hearing the submissions of both the parties, the Tribunal held since the appellants themselves did not carry out erection or commissioning of the said boiler but only supervised the same (as was contracted between the parties), no duty can be demanded from the appellant. Further, it was held in a number of decisions that since none of the section of the boiler can be removed, it has to be broken up into pieces to be shifted and hence the whole property is immovable. Therefore, the erection and commission of the sugar plant are not excisable.
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