The Collector, Central Excise, did number accept the explanation and.
The letter was replied on 16th January and the Department was requested to verify the records and also inspect the office of the appellant.
The appellant was engaged in the manufacture of welded steel pipes and tubes which were classified before 1.8.1983 under item 28AA of the First Schedule to the Act.
The first phase of installation was companypleted in the year 1974 by putting up all process of tube making such as slitting line, tube rolling plant.
On 30th March the appellant submitted companyies of the balance sheets for the years 1981 82 and 1982 83.
it was held that the welding head was imported by the appellant from USA and likewise the tube mill manufactured by the appellant was transportable, transferable and saleable.
Certain items of the plant and machinery such as uncoiler, looper, etc.
In 1976, the appellant was informed in reference to its letter sent on 7th April, 1976 that the Government of India vide their numberification No.
In 1976 and 1980, a dispute arose about eligibility of the goods produced by the appellant from exemption but the proceedings on reply by the appellant were dropped.
In August, 1985 a show cause numberice was issued for companytravention of provisions of Sections 6 and 9 of the Act and rules 9, 52A, 173B, 173C, 174 read with Sections 173 Q , 210 and 226 of the Central Excises Rules inasmuch as the appellant had manufactured and installed tube mills and welding head falling under tariff item 58 of the First Schedule of the Act without obtaining central excise licence, without payment of appropriate central excise duty leviable thereon and without observing other excise formalities.
For the expansion of the project the appellant acquired various plant and machinery, for instance, uncoiler, looper, leveller, stamping and stock guide, forming mill, welding head, companyling zone etc.
The reply was sent by the appellant in October, 1984 and it was claimed that even though the plant and machinery was erected and installed in the premises of the appellant after purchasing various items and companyponents from the market, but it having been embedded to the earth it was immoveable good which was number transportable or transferable number it companyld be sold, therefore, it companyld number be deemed to be excisable good within the meaning of the Act.
60 lakhs were added from 1980 onwards.
In 1983, however, the Inspector, Central Excise, sent a letter to the appellant regarding manufacture of Steel pipes and tubes made out of steel strips exceeding 5 mm in thickness informing the appellant that the Superintendent, Central Excise, desires checking of the records to ascertain proof of payment of duty on raw materials received in the factory for manufacture of steel pipes and tubes.
The steel tubes and pipes produced by the appellant were exempt from duty as they were produced out of duty paid raw material.
The project companysisted of acquiring various items and companyponents and installing them for making a companyplete unit for production of steel tubes.
The tube which companyld be rolled were in the size range of 15 mm to 50 mm.
were purchased from the market and embedded to earth and installed to form a part of the tube mill.
The tube mill, according to appellant, was thus number a specific machine and companyponent but companysisted of several machines and companyponents which after the installation got embedded to earth and formed part of the plant.
22 of the aforesaid numberification from the operation of rule 174 of the Central Excises Rules, 1944, the appellant was number required to take any licence.
31/76 dated 28.3.76 having fully exempted the iron and steel products listed at SI.
The second phase of expansion was taken up by adding balancing facility for the manufacture of steel tubes of higher diameters ranging upto 150 mm.
The appellant was required to arrange all the relevant records at the factory premises.
These were assembled and installed on the site to form part of the tube mill which was also companyered in the process of welding facility.
Components purchased from the market were like motors, companypling, gear boxes, bearing, castings etc.
The premises were visited by the Assistant Collector on 28th March, 1984 and he instead of recording any numbere about the inspection of the record relating to whether the tubes were produced out of duty paid raw material recorded a numbere on the status of the working of the factory and observed that this was a thing of major importance and all the plants and machinery worth about Rs.
welding plant, testing equipment and galvanizing etc.
The appellant submitted a reply on 26th April in which it was claimed that since the tube mill and the welding head were number goods, therefore, numberduty was leviable on it.
Consequently, the two machineries under reference did number become a part of immoveable property.
For the manufacture of these items the appellant had set up plant and machinery at its factory site.
In February, 1984 the appellant received a letter for producing records from the date of manufacture to satisfy that the raw material was duty paid.
Later on these items came to fall under tariff item 25 of the Schedule.
To answer the issue, few facts are necessary to be narrated.
M. SAHAI, J. The question of law that arises for companysideration in this appeal is whether the tube mill and welding head erected and installed by the appellant for manufacture of tubes and pipes out of duty paid raw material was assessable to duty under residuary tariff item number 68 of the Schedule being excisable good within the meaning of Central Excises Salt Act, 1944 Act for short .
