Full Judgment
2. The respondent is engaged in the execution of the turnkey projects, viz. cement, sugar and material handling plants falling under Chapter 84 of the schedule to the Central Excise Tariff Act, 1985. The department issued several show cause notices to the respondent assessee alleging that they have not discharged the correct duty liability on the bought-out items and sub-contracted items which vary from 25 to 65% of the full contract price and also had not paid duty on erection and commissioning charges. It was alleged that in terms of Section 2(f) of the Central Excise Act, the manufacture includes any process incidental or ancillary to the completion of the manufactured product. The department alleges that in terms of the judgment of the Supreme Court in the case of Narne Tulaman Mfg. Pvt. Ltd. 1988 (38) ELT 566 wherein it was held that the assembly of duty paid components would amount to manufacture, if it brings to existence a new product. The department also alleges that, in terms of the Square Court judgment in Sirpur Paper Mills Ltd. v. CCE 1998 (97) ELT 3, the goods under question just because that the machine assembled and erected at the customer's site was immovable property as something attached to earth like a building or a tree. The Assistant Commissioner by his order dated 24.7.1997 held that the turnkey projects normally involve substantial civil work to be erected, excavation, building of supporting structures/girders of steel or reinforced steel to be grounded that embedded to the foundation. By the time integrated functional project/plant comes into existence it is embedded into the ground. He distinguished the case of the judgment of the Supreme Court in Narne Tulaman on the ground that no excisable produce comes into existence at the client's site. He further held that what is coming into existence at the site is a plant which is a civil and mechanical engineering structure which is not marketable goods so as to be charged with duty. Against that, an appeal was filed before the Commissioner (Appeals) who by the impugned order had held in paragraphs 11 and 12 as follows:- "11. In the absence of specific definition of "plant or project" in the Central Excise tariff as in the case of Customs Tariff Act under heading 98.01, the show cause notice for inclusion of the cost of construction, civil/electrical work etc. and for including the cost of the bought out items which are erected at sites other than the jurisdiction of the Central Excise officer is not maintainable.
Therefore, the proposal for inclusion of the value of the entire turnkey project cost for assessment purpose has no legal basis and is not maintainable.Sirpur Paper Mills Ltd. v. CCE, Hyderabad as reported in 1998 (97) ELT 2 (SC) was not available to the proper officer at the time of adjudication for examining the application of the decision to the present case. The Tribunal in the case of industrial Marketing Corporation 1985 (22) ELT held that "for initiating proceedings by issue of a show cause notice under Section 36 of the Central Excise Act, 1944 the Central Government was to look into the records as they stood on the date of the order sought to be reviewed was passed and not take into consideration by additional or extraneous matter." The review proposal basing on the decision of the Supreme Court in the Sirpur Paper Mills case (Supra), which was not available on the date of the Order-in-Original, is not correct and, therefore, not maintainable." 3. In the appeal before us, the department is challenging the finding recorded by the Commissioner (Appeals) at paragraph 12 which is already extracted above. When the review order was made, the department or anybody did not have the benefit of the judgment of the Supreme Court rendered in the case of Sirpur Paper Mills Ltd. v. CCE 1998 (97) ELT 3.
In our view, it may be right. The benefit of said judgment may not be there and the law declared by the Supreme Court has to be followed by everybody in terms of Article 141 of the Constitution being the law declared to be the law of the land. But the fact remains that in this case, the Assistant Commissioner in the adjudication order has given a finding that no excisable goods have come into existence. This had not been factually challenged in the grounds of appeal. When that is the question, a general and vague statement made in the first paragraph of the grounds of appeal without based on the specific evidence and adequate material, the department cannot challenge the correctness of the legality and propriety of the order passed by the Commissioner (Appeals). In our view, whenever a question arises as to the exigibility of the imposition of excise duty, it has to be specifically averred in the show cause notice as to how and item is brought into the (SIC) excise duty and it has to be proved to the satisfaction of the authorities as to how the duty can be levied on a marketable and movable property. Here, by way of repetition, we state that the Assistant Commissioner has held that only immovable property has come into existence. This has not been negated anywhere by the department in the grounds of appeal before us nor have they questioned it in the grounds of appeal before the Commissioner (Appeals). In the impugned order, the Commissioner (Appeals) has extracted the grounds raised before him that is extracted in the impugned order in page 1 & 2. We are satisfied that in the peculiar circumstances of the case and on the facts before us, no ground has been made as to the leviability of the duty on the goods which appear to be immovable to us. We therefore do not find any ground to interfere with the impugned order under the peculiar circumstances of the case.