This Supreme Court judgment clarifies that central excise duty is leviable only on movable “goods.” The final assembled boiler, being an immovable plant, is not excisable. Consequently, the value of bought-out items delivered directly to the site cannot be included in the assessable value for duty computation. The extended limitation period for the show-cause notice was also held inapplicable.
Facts Of The Case:
The appellant, Lipi Boilers Ltd., entered into a contract to design, procure, manufacture, and supply machinery for a steam generating plant, including a 50 TPH boiler. The boiler was manufactured and cleared from the factory in a Completely Knocked Down (CKD) condition upon payment of central excise duty. Certain essential items, such as feed pumps and fans, were purchased duty-paid from other vendors and supplied directly to the buyer’s site without being brought into the appellant’s factory. The revenue authorities issued a show-cause notice alleging that the value of these “bought-out” items should have been included in the assessable value of the boiler, leading to a short payment of excise duty. They invoked the extended five-year limitation period, alleging wilful suppression of facts. The lower authorities dropped the demand, finding the erected boiler became an immovable property and thus not excisable. However, the CESTAT reversed this, ordering inclusion of the bought-out items’ value. The appellant appealed to the Supreme Court against this order.
Procedural History:
The case originated from a Show Cause Notice issued by the Assistant Commissioner of Central Excise, Aurangabad, in April 2005. The appellant contested the demand. The Assistant Commissioner, vide Order-in-Original dated December 2005, dropped the proceedings, accepting that an erected boiler is immovable property and not excisable. The Revenue’s appeal was dismissed by the Commissioner (Appeals) in July 2007. Dissatisfied, the Revenue appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT, vide impugned order dated September 2010, reversed the lower authorities, allowing the Revenue’s appeal and holding that the value of bought-out items must be included in the boiler’s assessable value. The assessee then filed the present civil appeals before the Supreme Court under Section 35L of the Central Excise Act, 1944, challenging the CESTAT’s order.
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