Case Note & Summary
The judgment concerns two writ petitions under Article 226 of the Constitution of India filed by M/s Shapoorji Pallonji & Co. and Ceat Tyres of India Ltd. challenging the levy of excise duty on fabrication and construction of structurals. The petitioners were engaged in civil engineering and building construction. M/s Shapoorji Pallonji had a contract with Bharat Petroleum Corporation Ltd. to construct an LPG filling plant, involving structural steel work. The department issued show cause notices proposing to levy excise duty on the fabricated structurals. The legal issue was whether such fabrication at site amounts to manufacture under Section 2(f) of the Central Excise and Salt Act, 1944. The court held that the activity does not amount to manufacture as the structurals become part of immovable property and are not excisable goods. The petitions were allowed, quashing the show cause notices.
Headnote
A) Central Excise - Manufacture - Section 2(f) Central Excise and Salt Act, 1944 - Fabrication and construction of structurals at site - The petitioners were engaged in civil engineering and building construction, including fabrication of structural steel at the construction site. The department sought to levy excise duty on such fabrication. The court held that the activity of fabrication and construction of structurals at the site does not amount to manufacture as the structurals become part of immovable property and are not goods capable of being marketed. The court relied on the principle that excise duty is leviable only on goods produced in a factory and not on immovable property. (Paras 1-10) B) Central Excise - Excisable Goods - Section 3 Central Excise and Salt Act, 1944 - Immovable property not excisable - The court held that structurals fabricated and erected at site become embedded in the earth and are not movable goods, hence not excisable. The court distinguished between goods manufactured in a factory and construction activity at site. (Paras 11-15)
Issue of Consideration
Whether fabrication and construction of structurals at the site of construction amounts to manufacture within the meaning of Section 2(f) of the Central Excise and Salt Act, 1944, so as to attract levy of excise duty.
Final Decision
Both writ petitions are allowed. The show cause notices and any proceedings pursuant thereto are quashed. No order as to costs.
Law Points
- Fabrication and construction of structurals at site does not amount to manufacture under Section 2(f) of Central Excise Act
- 1944
- Excise duty leviable only on goods produced in factory
- Immovable property not excisable goods
