Supreme Court Annual Digest 2025: Central Excise, Customs, CGST & Finance Laws

Distinction between 'Levy' (Section 3) and 'Measure of Tax' (Section 4)– Valuation cannot determine Excisability- Held, Section 3 creates the charge and defines the nature of the levy (manufacture of excisable goods), whereas Section 4 provides the measure (value) for the levy- The Revenue Court erred by conflating the two- The "transaction value" under Section 4 is relevant only after the taxable event (manufacture of excisable goods) is established- The measure of tax cannot be invoked to prove that what has been produced is excisable. [Relied on Union of India v. Bombay Tyre International Ltd., (1984) 1 SCC 467; Paras 39-43] Lipi Boilers Ltd. v. Commissioner of Central Excise, 2025 LiveLaw (SC) 1092 : 2025 INSC 1297 Factories Act, 1948 - Section 2 (k) and (m) - Interpretation of "Factory" and "Manufacturing Process" - Washing and Cleaning as Manufacturing - Welfare Legislation - Applicability of Definition under Central Excise Act – Held, the definition of "manufacturing process" under Section 2(k) of the Factories Act, 1948, clearly encompasses "washing and cleaning" of any article or substance with a view to its delivery. The Act is a welfare legislation aimed at protecting workers' health and safety, and therefore, its provisions must be interpreted liberally to give effect to the legislative intent. The Court rejected the High Court's reliance on the definition of "manufacture" under the Central Excise Act, 1944, stating that the Factories Act provides its own specific definition, which must be applied. The Court underscored that the inclusion of "washing and cleaning" in the 1948 Act, absent in the 1934 Act, was a deliberate expansion to include previously excluded undertakings. Thus, a laundry business involving cleaning and washing clothes, including dry cleaning, using power and employing more than ten workers, falls within the definition of "factory" under Section 2(m) of the Act. (Paras 30, 36, 38 & 42) State of Goa v. Namita Tripathi, 2025 LiveLaw (SC) 276 : 2025 INSC 306 Section 11A(1) Proviso – Extended Period of Limitation – Suppression of Facts- Supreme Court set aside the invocation of the extended period of limitation (5 years)- It held that mere failure to declare does not amount to wilful suppression- There must be a positive act with an intent to evade payment of duty. Since the assessee held a bona fide belief regarding non-inclusion and had filed returns, no suppression was established- Appeals allowed. [Relied on Pahwa Chemicals Private Limited v. Commissioner of Central Excise, (2009) 4 SCC 658; Continental Foundation Joint Venture Holding v. CCE, (2007) 10 SCC 337; Paras 74-80] Lipi Boilers Ltd. v. Commissioner of Central Excise, 2025 LiveLaw (SC) 1092 : 2025 INSC 1297 Section 11D – Excess Collection of Duty – Does not confer Excisability- Rejected the Revenue's argument that because the assessee allegedly collected excise duty on the total value from the buyer, the goods are excisable- If excess duty was collected, the Revenue should have invoked Section 11D for recovery of that amount, but such collection does not render an immovable product excisable. [Paras 72-73] Lipi Boilers Ltd. v. Commissioner of Central Excise, 2025 LiveLaw (SC) 1092 : 2025 INSC 1297 Section 2(d) – Excisability – Test of Movability – Erection and Installation of Plant- Supreme Court held that a steam generating plant/boiler, assembled and erected at site using civil engineering materials (concrete, grouting, etc.), which cannot be dismantled without substantial damage, is "immovable property" and not "goods."- Therefore, it is not excisable- The mere size and weight of the boiler made it impossible to assemble before erection- The final product (steam generating plant) emerging at the site is immovable; hence, the contract price cannot be treated as the assessable value for excise purposes. [Relied on Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, (1995) 2 SCC 372; Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, (1997) 1 SCC 203; Sirpur Paper Mills Ltd v. Collector of Central Excise, (1998) 1 SCC 400; Paras 59-64] Lipi Boilers Ltd. v. Commissioner of Central Excise, 2025 LiveLaw (SC) 1092 : 2025 INSC 1297 Section 2(f) – Manufacture - Continuous Manufacturing Process/Clubbing of Activities – Held, the CESTAT erred in focusing on the distinct legal identities of two units while ignoring the fact that they were together involved in an integral and continuous process of manufacture - The conversion of grey fabrics into cotton fabrics involved a series of distinct, interlinked processes - Since all these activities were integral processes in the conversion of grey fabrics into cotton fabrics, the separate legal/operational identity of the Units (distinct partners, machinery, separate job work bills, and payments) was held to be immaterial - The entire activity amounted ...

Supreme Court Annual Digest 2025: Central Excise, Customs, CGST & Finance Laws

LIVELAW NEWS NETWORK

Tags