ORDER
V.P. Gulati, Member (T)
1. This appeal is directed against the order of the Collector of Central Excise, dated 2-1-1988.
2. The brief facts are that the appellants availed of the benefit of Notification 73/83 and Notification 77/85 and they also sought the exemption from licensing control as per the Notification 111/78. One of the conditions for the purpose of availing of the benefit of this Notification was that the value of the Plants and machinery installed in the appellants’ Unit should not exceed Rs. 20.00 lakhs. The declaration filed by the appellants in this regard showed the value of the Plants and Machinery as Rs. 18,73,402.74. The appellants were manufacturing potassium chlorate and one of their items of machinery are the 24 electrolytic cells and in each of which 20 Titanium Metal Anodes were used. These Titanium Metal was not consumable in nature and necessary oxidisation was required to be done at certain intervals. On enquiry by the Central Excise authorities, it was found that the value of the Plant and Machinery installed in the appellants Unit was more than Rs. 20.00 lakhs. The learned Collector has concluded in the impugned order that the total value of the Plant and Machinery installed was Rs. 21,47,036.06 details of which are set out in the order-in-original and are as under :
(i) Value of 16 items furnished in the revised An- :: Rs. 11,31,736.43
nexure-A submitted at the time of personal
hearing.
(ii) Value of 480 Titanium Metal anodes in- :: Rs. 6,73,344.00
stalled.
(iii) Value of the transformer. :: Rs. 1,24,289.53
(iv) Value of the electrical installation excluding :: Rs. 93,262.20
labour charges.
(v) Value of the process storage tanks. :: Rs. 1,24,402.90
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Total :: Rs. 21,47,035.06
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It is seen that so far as the machinery valued at Rs. 11,31,736.43 there is no dispute. The dispute is in respect of Anodes, transformer, Electrical Installations excluding labour charges and the value of the process storage tanks and the issue is whether the value of these items can be included for reckoning the total value of the Plant and Machinery installed at the appellants’ Unit.
3. Shri Chellapandian, the learned Counsel for the appellants pleaded that there is no justification for including the cost of Transformer which was required to be installed at the behest of the Electricity authority which was in the nature of transformer for converting the high line voltage. He pleaded that the voltage was very high and H.T. Transformer and penel board were required to be purchased to regulate the power supply and that a certificate to this effect was obtained from the electrical authorities and produced before the lower authority showing the expenditure incurred and also the purpose for which it was installed. He pleaded that the scope of the Plant and Machinery as used in the Notification does not cover the masonry works in the nature of tanks even though the tanks are used for storage of the material.
4. We have heard the learned D.R. Shri K.M. Vadivelu.
5. We observe that in both the Notifications i.e. 77/83 and 75/85 the question that arises for consideration is as to what should be considered as plants and machinery for the purpose of arriving at the value of Plants and Machinery installed in an Industrial Unit which is claiming the benefit of Notification. In both the notifications the wordings of the proviso prescribing the limit of the value of Plant & Machinery in a Unit are identical and for the sake of convenience, the same is reproduced below: –
“Provided that an officer not below the rank of an Assistant Collector of Central Excise is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery installed in the industrial unit in which the said goods, under clearance, are manufactured, is not more than rupees twenty lakhs”.
We observe that the Collector has taken into consideration the value of the process storage tank for the purpose of arriving at the value of Plant and Machinery installed in the appellants’ Unit. We find from the records that the storage tanks have been constructed with bricks, concrete and cement and the appellants have agreed before the lower authority that these are part of the Plant. The Collector however has held as under in this regard:
“Here in this particular case the question is not whether excise duty is to be levied on the tanks but whether the process tanks constructed are to be treated as a part of the building or as an essential part of the plant and machinery. As per their own admission the storage tanks are for storage of finished products and for treatment of effluent which means that these tanks are meant to be used essentially in the manufacturing process of Potassium Chlorate. It is immaterial whether they are made of bricks, concrete and cement. So long as the process tanks act as an essential part of the plant and machinery, its value will have to be included in computing the total value of the plant and machinery”.
It is not disputed that these tanks are used by the appellants for the purpose of storage of finished products and also for treatment of effluent during the production process. For the purpose of the notification however, we observe that the legislature has required the Rs. 20 lakhs limit to be taken in respect of Plant and machinery installed (emphasis supplied) in the industrial unit. The question that is to be considered is whether it can be said that the tank which is a masonry work can be said to be installed in an Industrial Unit. According to the OXFORD ENGLISH Dictionary, the word install means “To place in position for service or use”. The Webster’s Third New International Dictionary defines the word ‘Install’ as “To set up for use or service”. No doubt the word “Plant” is of wider import and covers both movable and immovable structures and machines and the word Plant would cover tank which is made out of bricks. However, we have to examine whether it can be said that the tank built with bricks, cement and concrete as an immovable structure can be considered as installed for inclusion in the term Plant and Machinery for the purpose of notification and whether its value should be taken into consideration for arriving at the total value. The value of the Plant and machinery to be taken into consideration are to be such as are installed in an Industrial Unit. As we have seen the word install means – either to set up or place in position for use, an item like a tank in question which is a structure built at a point cannot be said to be installed as building a structure of a tank in question cannot be taken to be placing in position. If the value of the tank is to be taken into consideration there is no reason why other structures in the nature of building, foundation for machinery and structure, supporting the machinery Unit should not be required to be taken into account for the purpose. If this is so, then in most of the cases by including the value of the structures, most of the manufacturers will be precluded from enjoying the benefit of the notification. It is for this reason that the framers of the notification have used the words “Plant and machinery installed” rather than saying that the total value of the Plant and machinery which should not exceed Rs. 20 lakhs. In this view of the matter, we hold that the value of the tanks cannot be included for the purpose of reckoning the limit of Rs. 20 lakhs as set out in the notification. In regard to the Transformer, we observe that the Collector did not accept the request of the appellants to find out whether it was used as part of the Plant and Machinery installed in relation to the manufacture or it was only for drawing electric supply from the main transmission line. Normally the electricity authorities are required to supply the current at the required voltage and which is done in most of the cases. But where there does not exist any arrangement with them for supplying current at the normal step down voltage at a particular place, then they ask the manufacturer to incur the expenditure for a transformer to get the supply from the transmission line for his needs. In case the Transformer is merely for converting the high tension line voltage for electricity supply purposes by the electricity authorities then surely the value of the same cannot be included in the value of Plant and Machinery for the purpose of the notification. But in case the said Transformer is used for supplying current for inprocessing for specific needs of the Unit, then the value of the same can be included. We do not find any findings on this aspect by the Collector in his order. This will have to be gone into by the Collector. Further, in respect of the electrical installations excluding the labour charges as set out in item No. (iv), there are no details as to the nature of these electrical installations and to what these are relatable i.e. whether for the transformer alone or for other purposes also. Since this issue is connected with the question of inclusion of the cost of transformer, the question in this regard will have to be decided based on the findings as to whether the cost of transformer can be included or not. Regarding the inclusion of the cost of anodes we hold that the electrolysis cells can be said to be complete only with the anodes fitted thereon. Since the anodes are not consumable the value of the same has to be included as held by the learned Collector. In view of what we have held above, the matter is required to be re-examined and therefore we remand the case to the lower authority for de novo consideration in the light of what we have held above after affording an opportunity of hearing to the appellants to adduce evidence in this regard. The appeal is thus allowed by remand.