1998 (10) TMI 205 - AT - Central Excise

Tribunal overturns duty demand & penalty, cites condonation of delay, assessable value exclusion, & lack of suppression.

The Tribunal allowed the appeals on the grounds of condonation of delay in filing supplementary appeals, exclusion of peripherals from the assessable ... Demand - Limitation - Valuation Issues Involved:1. Condonation of delay in filing supplementary appeals.2. Inclusion of the value of peripherals in the assessable value of computers.3. Time-barred demands and invocation of Section 11A of the Central Excise Act, 1944.4. Penalty imposition under Rule 173Q(1) of the Central Excise Rules, 1944.Summary:1. Condonation of Delay:The COD applications were filed to condone the delay in filing supplementary appeals due to multiple show cause notices. The Tribunal allowed these applications, and all appeals were heard together.2. Inclusion of Peripherals in Assessable Value:The appellants, manufacturers of computers, were alleged to have evaded duty by not including the value of peripherals in the assessable value of computers. The Collector of Central Excise, Bangalore, confirmed a differential duty of Rs. 63,65,256.27 and imposed a penalty of Rs. 10,00,000/- u/r 173Q(1).The appellants contended that peripherals were sold under separate invoices and were not integral parts of computers. They argued that peripherals like VDU, floppy discs, and printers were accessories, not vital for the computer's functioning, and thus their value should not be included in the assessable value of computers. They cited the Supreme Court judgment in ORG Systems v. C.C.E., which held that the value of bought-out/imported peripherals is not includible in the value of computers.3. Time-Barred Demands and Section 11A:The appellants argued that the show cause notices and their addendums were time-barred. The initial show cause notice dated 10-7-1984 did not invoke the longer period of limitation. Subsequent addendums issued on 7-3-1985 and 13-3-1985 were treated as fresh show cause notices, thus barred by time. The Tribunal agreed, noting that the department was aware of the clearance of peripherals and there was no suppression of facts by the appellants.4. Penalty Imposition:The Collector invoked penal provisions and imposed a penalty of Rs. 10,00,000/- u/r 173Q(1). The appellants argued that the invocation of penal provisions was illegal as there was no suppression of facts. The Tribunal found merit in the appellants' arguments and set aside the penalty.Conclusion:The Tribunal allowed the appeals both on merits and on the ground of time-barred demands. The impugned order was set aside, and the differential duty demand and penalty were annulled.