Lipi Boilers Ltd. Vs Commissioner of Central Excise (Supreme Court of India)
Immovable Plant Not “Goods”- Boiler Erected on Site is Immovable Property – No Excise Duty on Bought-Out Items – SC; Transaction Value Cannot Create Excisability: SC Sets Aside CESTAT Order; Valuation Follows Levy, Not Vice-Versa—SC Rejects Duty on Site-Delivered Parts
The Supreme Court allowed the appeals of Lipi Boilers Ltd & set aside the CESTAT order, restoring the findings of the Assistant Commissioner & Commissioner (Appeals) which had dropped the excise demand.
The SC held that the bought-out items (pumps, valves, gauges, fans, etc.) delivered directly to the buyer’s site cannot be included in the assessable value of a boiler cleared in completely knocked-down (CKD) condition, because:
- A boiler erected at site & embedded to the earth is not “goods” & therefore not excisable.
The Court reaffirmed the principles from Quality Steel Tubes, Mittal Engineering, Sirpur Paper Mills & Bharti Airtel: anything that becomes an immovable structure upon erection ceases to be “goods” & thus is outside the scope of excise duty. - The charging provision is Section 3, & excisability must first be established.
The Court held that the CESTAT had confused the “levy” under Section 3 with the “measure” under Section 4, reminding that “transaction value” becomes relevant only if there is excisable manufacture. Valuation cannot determine excisability. - The final product (a fully installed boiler) came into existence only on site & became an immovable plant, incapable of being marketed as such.
Therefore, addition of bought-out items to assessable value was legally impermissible. - The CESTAT wrongly held that the “immovability” argument was not taken earlier.
SC noted that Lipi Boilers had clearly argued this in its reply to the Show Cause Notice, & the Assistant Commissioner had accepted it. - Since the demand fails on merits, the Court did not need to go into the extended limitation issue in detail.
Outcome:
• Appeals allowed.
• CESTAT order set aside.
• Order-in-Original & Order-in-Appeal restored.
• Excise demand & inclusion of bought-out items struck down.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
