Lipi Boilers Ltd. V. Commissioner Of Central Excise, Aurangabad 2025 INSC 1297 - Central Excise Duty Assessment
Central Excise Act, 1944 -Sections 3, 4 -The correct sequence of central excise duty assessment is as follows: i. First, determining the applicability of the charging provision under Section 3, i.e. whether the process results in the manufacture of excisable goods; and ii. Secondly, (if the first condition is satisfied), computing the quantum of excise duty payable under the valuation provisions, such as Section 4 (or Section 4A) - Only if such product which emerges as a result of the contract qualifies as excisable goods can the next step of evaluation be undertaken, i.e. to see whether or not the contract price can be treated as the ‘transaction value’ under Section 4, for computing the quantum of payable excise duty. Consequently, if upon such examination it is found that the contract price could validly be taken as the ‘transaction value’ under Section 4, a show cause notice may be issued seeking why the value of the bought out items should not be added to the value of the boiler. In other words, if upon examination it is found that the resultant product of the contract is not excisable goods, then the contract price cannot be considered as the ‘transaction value’ for the purpose of determining the payable central excise duty on the boiler, which in turn would also mean that the value of the bought out goods is not liable to be included in the value of the boiler for computing central excise duty (Para 43-44) mere presence of a product in the Tariff Schedule does not determine its excisability. The first and primary enquiry must be whether the item satisfies the conditions of the charging section under Section 3 of the Act, 1944, an essential condition of which is that the subject matter is a movable good.(Para 66) [Context: SC held that the value of the duty paid bought out items which were delivered directly at the buyer’s site is not liable to be included in the value of the boiler cleared by the assessee from its factory in CKD condition, for the purpose of assessment of excise duty.]
Central Excise Act, 1944 -Excise duty is leviable only on ‘goods’ and that the test of movability is the decisive factor in ascertaining whether an article qualifies as “goods” for the purpose of central excise duty - if an item can be dismantled and reassembled at another site, such an item would still be considered as movable ‘goods’ under the Act, 1944. However, the test of dismantling was qualified by a subsequent Circular (no. 58/1/2002-CX) dated 15.01.2002, issued by the Central Board of Excise and Custom (hereinafter, “CBEC”), Department of Revenue, Ministry of Finance, Government of India, in which it was mentioned under Clause (e) that if an item that is assembled or erected at site cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then such items would not be considered as ‘movable’, and will, therefore, not be excisable goods. (Para 45-52)
Central Excise Act, 1944 -Section 11D- The invocation of Section 11D would be justified in a case where an assessee has collected any sum purporting to be the excise duty without the authority of law. (Para 73)
Central Excise Act, 1944 -Section 11A- In the absence of any deliberate act on the part of the assessee with an intention to evade being established by the revenue, the essential precondition of wilful suppression with intent to evade duty is not satisfied. Consequently, the invocation of the extended period of limitation under the proviso to Section 11A(1) is held to be not tenable in law. (Para 80)
Case Info
- Coram: J.B. Pardiwala, J.; Sandeep Mehta, J..
- Judgment date: 10 November 2025.
Caselaws and Citations Cited
- Union of India v. Bombay Tyre International Ltd., (1984) 1 SCC 467.
- Commissioner of Central Excise, Pondicherry v. Acer India Ltd., 2004 (8) SCC 173.
- Commissioner of Central Excise v. Chhata Sugar Co. Ltd., 2004 (3) SCC 466.
- Quality Steel Tubes (P) Ltd. v. CCE, (1995) 2 SCC 372.
- Mittal Engineering Works (P) Ltd. v. CCE, (1997) 1 SCC 203.
- Sirpur Paper Mills Ltd. v. CCE, (1998) 1 SCC 400.
- Moti Laminates (P) Ltd. v. CCE, (1995) 3 SCC 23.
- Continental Foundation Joint Venture Holding v. CCE, (2007) 10 SCC 337.
- Pahwa Chemicals Pvt. Ltd. v. CCE, (2009) 4 SCC 658.
- D.G. Gouse & Co. v. State of Kerala, (1980) 2 SCC 410.
- Province of Madras v. Boddu Paidanna and Sons, AIR 1942 FC 33 (referenced via Bombay Tyre discussion).
- Governor-General-in-Council v. Province of Madras, AIR 1945 FC 98 (via Bombay Tyre).
- M/s Quippo Energy Ltd. v. CCE, Ahmedabad-II, 2025 INSC 1130.
- Thermax Babcock & Wilcox Ltd. v. CCE, 2005 (182) ELT 336 (Tri.-Mumbai); SC appeal noted in Civil Appeal Nos. 3042-3043/2005.
Statutes and Laws Referred
- Central Excise Act, 1944: Sections 3, 4 (including pre-2000 and post-01.07.2000 versions), 4A (mentioned as not applicable), 11A(1) proviso, 11AB, 11AC, 11D, 35L(1)(b), Section 14 (statement reference).
- Central Excise Tariff Act, 1985: Chapter 84, Headings 8402.10, 8402.90.
- Central Excise Rules, 1944: Rule 9(2), Rule 173Q, Rule 57A, Rule 57(1)(5).
- CENVAT Credit Rules, 2001: Rule 13.
- CENVAT Credit Rules, 2004: Rule 3.
- Monopolies and Restrictive Trade Practices Act, 1969: Section 2(g) (inter-connected undertakings).
- Companies Act, 1956: Section 2(41) (relative).
- Customs Act, 1962 and Customs Tariff Act, 1975 (valuation references).
- Sale of Goods Act, 1930: Section 2(7) (“goods” definition discussed).
- General Clauses Act, 1897: Sections 3(36) (movable property), 3(26) (immovable property).
- Transfer of Property Act, 1882: Section 3 (“attached to earth”).
- CBEC Circular No. 58/1/2002-CX dated 15.01.2002, clause (e) on dismantling and movability.
