Central Excise Act 1944 - The Legal Chamber

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-...

This Supreme Court judgment clarifies that an activity amounts to 'manufacture' under the Central Excise Act, 1944, only if it satisfies a two-fold test: it must bring about a transformation resulting in a distinct product with a new identity, character, or use, and this new product must be commercially marketable. The court emphasized that both prongs of this test must be cumulatively satisfied. Facts Of The Case: The appellant, M/s Quippo Energy Ltd., was engaged in the business of leasing "Power Packs," which were containerized gas generating sets (Gensets). It imported fully assembled Gensets, which were assessed by Customs as electric generating sets. To facilitate leasing and transportation between customer sites, the appellant placed these imported Gensets into steel containers. S...

Tag: Central Excise Act 1944

Supreme Court: Immovable Plant Not ‘Goods’, Excise Duty Not Levied on Bought-Out Parts

Supreme Court Rules: Containerizing Generators is “Manufacture” for Excise Duty