TaxTMI 
TaxTMI 
2016 (7) TMI 800
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....nvoices instead of on central excise invoices. 3. A show cause notice dated 24-11-1995 was issued to the appellant inter-alia proposing differential duty payable on the computer peripherals. The adjudicating authority in his order dated 19-01-1998 confirmed the duty demand of Rs. 48.18 lakhs, imposed penalty of Rs. 50 lakhs and an option to redeem confiscated goods on payment of fine of Rs. 25 lakhs. On appeal , the Cestat, vide orders dated 15-10-1999 remanded the matter to original authority for denovo consideration with a direction that function of each item should be commented upon in detail and then conclusion is to be reached as to whether its value could be included in the assessable value or not. After denovo adjudication in the denovo order dated 31-03-2014, the Commissioner directed the jurisdictional Asst. Commissioner to carefully re-examine the case records, identify the peripherals etc., and to re-determine the value of computer system. Meanwhile a show cause notice dated 05-01-2000 was issued to Managing Director of the appellant, on adjudication of this notice vide Order-in-Original dated 31-03-2004 a penalty of Rs. 1,00,000/ was imposed on him. On further appeal t....
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....ection 11A. There is no basis, reason or logic in implicating the Managing Director after 5 years of initiation of first proceedings. 4. The Revenue represented by Shri. R.R. Bangar, AR reiterated the grounds of appeal stated in the appeal No.461/2007 filed by Revenue against the very same order(order dated 29-09-2006). The grievance of the department is that the order in denovo limiting to the issue of 1) re-computation of duty liability and 2) redetermination of penalty and time bar leaving the proposal of confiscation without any finding is not legal and proper. 5. We have heard both sides and gone through the appeal records. 6. The assessee has its registered office of factory at 401, Paigah Plaza, and also at 202, Paigah Plaza, where the assembly and testing of computers are done. According to the department, the assesse , intentionally, with an intent to evade payment of duty has created a service centre at 202, Paigah Plaza as subterfuge in the vicinity of the Registered Manufacturing premises. The modus operandi: adopted by the assessee is that some parts/peripherals of the computer which are purported to be bought out items, and meant for trading activity, are bro....
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....for an amount of Rs. 73,000/- at the address 401, Paigah Plaza and another purchase order for Rs. 90.350/- at the address 202, Paigah Plaza. The computer system was then dispatched on two delivery challans dated 27-03-1993 issued form the address 401, Plaigah Plaza and 202, Paigah Plaza. The letter issued to the department from University of Hyderabad dated 13-07-1993 states that they placed two purchase order, on 401, Paigah Plaza and 202, Paigah Plaza for supply of two computers. While delivering the system, the 40MB HDD, 16 bit Eternet Card, 200 MB I-HDD, 4MB Memory, 1.44 MB Floppy Disk Drive, 16 bit Eternet Card were fitted in the CPU mother board, and brought in assembled condition from their factory. The assessee was thus clearing computer peripherals without including their value in the assessable value of the computer system and not discharging Central Excise duty on such items. It is also the case of department that there were no separate accounts for the trading items and no documents were maintained for transfer of items from trading premises to manufacturing premises. 9. The main defence raised by assessee against the allegations is that separate invoices were issued f....
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....n-essential in the sense that computer can function without them, they are more considered as primary sources of input and output and are regarded as extensions of the system than as peripheral. i) Controller cards: CGA/VGA cards: these cards are require to connect a Monitor to the Computer and hence its value is includable in the assessable value. Telex cards: This an add-on card mounted on the Motherboard to connect a telex. Since this is an optional requirement, its value is not includible Port cards: These are required to connect serial devices like Terminal, Printer, and Mouse etc. since the devices are optional, the value is not includable in the assessable value. ii) PRINTER : This is an optional out put device connected externally to print the data. By its optional nature, its value is also not includible. iii) MOUSE: This is an optional external device used as substitute for the keyboard in graphical user interfaces. Even though it became standard equipment, its value is not to be included. iv) CO-PROCESSOR: It is distinct from the main processor in that it performs additional functions or assists ....
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....he areas as mandated in the Tribunal order. The appellant has no case that fresh evidence with regard to includability and non includability of items in the assessable value was furnished after remand in denovo adjudication. The relevant portions of the denovo Order in Original dated 29-09-2006 is reproduced below: "10. I have seen the Honourable CESTAT's Order. As per the remand order of the Hon'ble CESTAT, I am required to determine two issues: (a) Recompute the liability on the basis of Commissioner's Order (Order-in-Denovo No. 12/2004-C.Ex. Dated 31-03-2004). (b) The issue of personal penalties. 11. Both these issues are required to be determined after determining the issue of limitation. On the issue of limitation, it was submitted that the department had all the relevant information when the classification list and price lists were filed before the excise authorities. This argument is incomprehensible to me. The show cause notice clearly states that the classification lists filed by them elated to computer systems, computer mother board, add on cards ec. T....
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....tion of the khowledge by the department was when the investigations actually concluded. 15. On the second issue, viz. penalty of Shri G G Choudhary, I find that no arguments have been raised in the written submissions or during the course of personal hearing. Therefore, I hold that Shri G. G. Choudhary being in-charge of day to day affairs is liable for penalty in terms of Rule 209A of the Central Excise Rules. 16. regards to the computation of the duty payable, it is done on the basis of the Hon'ble CESTAT's order which has accepted the criteria laid down in Order-in-Denovo No. 12/2004-C.Ex. dated 31-03-2004. The duty on that basis works out to Rs. 21,66,995/-". 13. The appellant has placed reliance on various judgments as under to canvass the position that the parts which are not integral to the computer system is not to be included in the assessable value. a) The judgment of the Hon'ble Apex Court in Vintron Electronics (P)Ltd vs CCE Delhi 2012(279) ELT 161 (SC) was a case where the core issue was the classification/duty liability on add-on cards and mother boards. In the said case, the assessee had filed declaration before adjudicating authority t....
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.... software is not includable while computing liability. e) In O.R.G. systems vs CCE, Vadodhara 1998(102) E.L.T. 3(SC) Apex Court observed that a complete computer is one which has CPU, Etched in Software, and input device(key board), an out-put device(Monitor), and disc driver. In the case on hand, the adjudicating authority has rightly considered these components to be includable in assessable value. The Tribunal in the case of Integrated Data Systems 2002(147) ELT 81 (Tri-Chennai) has remanded the matter directing the adjudicating authority to denovo adjudicate in the light of decision in O.R. G. Systems case( supra) 14. Most of the judgments placed before us by the appellant are regarding the issue whether the software is includable in the assessable value. The issue in the case being entirely different we do not consider it necessary to discuss them. At the cost of repetition, it has to be stated that the appellant was clearing computer system/a whole unit as is seen from the illustration in the show cause notice. Though appellants contend that peripherals were bought out items assembled in the factory, and then cleared as a computer unit, there is no iota o....