JUDGMENT
V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. Otto India Pvt. Ltd., is whether the vacuum Arc Degassing (VAD) erected ‘and installed by them is exigible to excise duty.
2. Shri Vipin Kumar Jain, learned Chartered Accountant, submitted that the Appellants have been engaged in the activity of setting up industrial plant on turnkey basis besides having a factory at Kalungal, Orissa, where they manufacture various equipments that they entered into an agreement with Bokaro Steel Plant for undertaking design, engineering, documentation, manufacturing and supplying of a plant and equipment, storage and handling at site, erection, testing, Commissioning, establishment of performance guarantee tests and final handing over of one number VAD installation in Steel Melting Shop II of the BSP, including civil and structural works. He, further, mentioned that the VAD system is a complete plant complex housed in several buildings spread over an area of merely 12,000 Sq meters; that it comprises 21 distinct and separate units each comprising several machines and equipments; that the VAD plant receives liquid steel from upstream converter shop and refines the same by eliminating undesirable elements like sulphur and other impurities from the steel and then delivers it down stream to the existing continuous casters. He also mentioned that the major activities involved in the actual erection and installation of the VAD plant consisted of civil foundation work, sequential erection of building structures, platform, landing etc., equipment installation and interconnection with the plant service network for power, water utilities; that the VAD plant came into existence, duly anchored to the ground with column foundations reaching up to 8-10 meters deep below ground; that the operating platforms, operators cabins, maintenance landing and stair cases were firmly secured to the ground; that the height of the plant is about 23 meters; that considering its sheer size and complexity, the VAD plant is clearly an unmovable property incapable of being brought to the market for being bought and sold. The learned Chartered Accountant mentioned that the duty of excise has been demanded from them and penalty has been imposed on them by the Commissioner, under the impugned order, holding that the mechanical system of the VAD unit is mobile which is supported by steel structures and fixed by nuts and bolts for its working convenience on civil foundation and accordingly it cannot be said that the same is an immovable property permanently embedded to the earth and the marketability of VAD unit is proved by the agreement entered into between the Appellants and BSP for manufacture and supply.
3. The learned Chartered Accountant, further submitted that no evidence has been cited in the impugned order to prove marketability of the VAD plant; that the marketability of the plant cannot be presumed from the agreement entered into between ESP and the Appellants as the same is for designing, erecting and commissioning of a complete plant on turnkey basis and not for manufacture and supply of VAD system which has been referred to as a product; that further there can be an agreement for a house and building; that the VAD plant is an immovable property which does not fall within the definition of “goods”; that the finding in the impugned order that the VAD system is not immovable property as the mechanical system of the Unit is mobile and supported by steel structures is clearly erroneous in as much as the issue is not whether a particular component of the VAD plant is movable but whether the VAD plant as a whole is movable or not. The learned Chartered Accountant contended that the impugned order is contrary to the judgment of the Supreme Court in the case of Trivenf Engineering and Industries Ltd. v. C.C.E., 2000 (120) E.L.T. 273 (S.C.). Reliance has also been placed on the decision in the case of Silica/ Mettalurgic Ltd. v. C.C.E., Cochin, 1999 (106) E.L.T. 439 (Tribunal) wherein the Tribunal, after observing that the Electric Arc Furnace was constructed and installed at site and consisted of (i) Central Pillar bolted to the foundation embedded to the earth by civil works at a depth of 15 feet, (ii) the axis on which the furnace with rotation mechanism and the wheels and rail arrangements etc. and (iii) the furnace was constructed brick by brick in a steel shell, held that the item had come into existence along with civil work and the same could not be dismantled and on such dismantling only spare parts would be recoverable. The appeal filed by the Commissioner against the said decision has been dismissed by the Supreme Court on merit as reported in 1998 (108) E.L.T. A58. Reliance has also been placed on Central Board of Excise & Customs Order No. 58/1/2002-CX., dated 15-1-2002 issued under Section 37B of the Central Excise Act in which it has been clarified that Turnkey Projects “involving supply of large number of components, machinery, equipments, pipes and tubes etc. for their assembly/ installation/erection/integration/inter-connectivity on foundations/civil structure etc. at site, will not be considered as excisable goods”. Finally, he submitted that the demand of duty is time-barred as there was no deliberate suppression of facts or any intention to evade payment of duty on their part; that they had a bonafide belief that the VAD plant was not liable to duty being immovable; that neither the show cause notice nor the impugned order spell out the specific instance of suppression of facts.
4. Countering the arguments, Mrs. Krishna A. Mishra, learned SDK, reiterated the findings contained in the impugned order and highlighted the findings to* the effect that the mechanical system of the VAD unit is mobile which is supported by steel structures and fixed by nuts and bolts for its working convenience on civil foundations and accordingly same cannot be said to be an immovable property permanently embedded to the earth; that demand of duty is not hit by time-limit as the VAD unit was manufactured and removed without following any Central Excise procedure and without payment of duty.
5.1 We have considered the submissions of both the sides. It is well settled law that to become “goods” for the purpose of levying Central Excise duty, an article must be something which can ordinarily come to the market to be bought and sold. The test of marketability or capable of being marketed is to be applied before any product can be held to be exigible to excise duty. The Supreme Court in the case of Triveni Engineering & Industries Ltd., supra, after referring to various judgments, laid down the test of marketability as under:
“The marketability test requires that the goods as such should be in a position to be taken to the market and sold.”
5.2 Applying this test to the facts of the present matter, it cannot be said that the VAD plant can be removed as such and marketed. There is nothing on record to show that the VAD plant can be taken to the market as such and sold. There is no rebuttal also from the Revenue to the submissions of the Appellants that all the machines, equipments and appliance brought by the Appellants to the site were assembled and erected on civil RCC foundations and the height of the entire plant was 23 meters. If plant is dismantled, it would result in recovery of parts and components only. The CBEC has also now clarified in Section 375 Order dated 15-1-2002 that each case has to be decided “keeping in view the facts and circumstances particularly whether it is particularly possible (considering the size and nature of the goods, the existence of appropriate transport by air, water, land for such size, capability of goods to move on self-propulsion-ships, etc.) to remove and sell the goods as they are, without dismantling into their components”. Accordingly, we hold that the VAD plant, is not an excisable goods liable to duty of excise. We, thus, set aside the impugned order and allow the appeal. Cross-objections filed by the Revenue also stand disposed of as no new point has been raised therein.