TaxTMI 
TaxTMI 
2017 (5) TMI 610
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....osing to demand duty under proviso to section 11A(1) of the Central Excise Act, 1944 with interest under section 11AB and equal penalty under section 11AC and another penalty under Rule 173Q of the Central Excise Rules, 1944 on the grounds that the appellant had manufactured and cleared computer systems in the guise of trading of bought out items and evaded payment of duty. After due process of law, the lower adjudicating authority confirmed the demand of Rs. 25,89,710/- under proviso to section 11A(1) of the Central Excise Act, 1944 with interest under section 11AB, imposed mandatory penalty under section 11AC and another penalty under Rule 173Q of the Central Excise Rules, 1944. Commissioner (Appeals), vide the impugned order dated 31.7.2....
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....ing larger period. 3.2 Learned counsel further placed reliance on Board Circular No. 58/1/02-CX dated 15.1.2002 to support his stand that the activity done by the appellant cannot be treated as manufacture. 3.3 He placed reliance on the following case laws- (i) Commissioner of Central Excise Vs. CMS Computers 2005 (182) ELT 20 (SC). The learned counsel submits that the Hon'ble Apex Court in the above judgment has clearly held that as the monitor and printer are not essential parts of computer, their value cannot be included in the value of a computer. (ii) Commissioner of Central Excise Vs. ACER India Ltd. 2004 (172) ELT 289 (SC). Learned counsel took us through para 67 of the above judgment wherein it has ....
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....creating fictitious invoices purporting to project that 850 numbers of computer systems had been sold to them by one M/s. Metrotek Systems and Solutions Pvt. Ltd. But, that lie got caught and a clear admission of the same can be seen from the 2nd statement of Shri Vijaya kumar on 5.10.2001. While in his earlier statement dated 20.9.2001, Shri Vijayakumar, CMD of the appellant had projected totally a different story to the effect that they had done only trading activity, nonetheless, in his subsequent statement on 5.10.2001 he has spilled the beans of the entire modus operandi. Along with admissions, Shri Vijayakumar has admitted that their contract with M/s.Everonn Systems India Ltd. was for supply of 540 numbers of computer systems to 54 s....
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....that to cloud our adjudication of the core issues of this appeal. 6.3 The salient features of the contract entered into between M/s. Everonn and the appellant specifically mandates that the latter "should supply computers/equipment and installing the softwares as per the specifications mentioned in Schedule thereunder at the locations as per the address list attached." 6.4 Interestingly, the contracts also specify that "all parts of the computer / equipment supplied should be genuine, with all applicable duties paid to the concerned authority". [Emphasis supplied] 6.5 From this, it is evident that even though the supply of computer systems was under a Tamilnadu Government project for schools, however, no exemption from duties appea....
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....nd keyboard, mouse, printer) as a unit by virtue of Chapter Note 5D to Chapter 84 of the Act will stand classified under the said heading. 6.9 With reference to learned counsel's reliance on certain case laws, it is seen that while the Hon'ble Supreme Court in the case CMS Computers (supra) has no doubt laid down that a monitor or printer, not being essential parts of a computer, their value cannot be included in the value of the computer, nonetheless, the Hon'ble Apex Court has however clarified that "situation may be different where a manufacturer sells a computer with a monitor and a printer as a unit". 6.10 In Acer India (supra), the Hon'ble Supreme Court had laid down that it is not possible to agree that without ....
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.... usage distinct from the inputs / components and the resultant product cannot by any stretch of imagination be treated as immovable property. 7. We, therefore, have no hesitation in holding that the appellant was indubitably supplying completed computer systems as per the contract enjoined on them. This being so, whether the complete computer system was assembled by him after procuring the required components, peripherals and accessories in his own premises or whether he does it at the rented premises at Besant Nagar, Chennai or for that matter even at the schools where he is supposed to supply the systems, will not make any difference to the inevitability that appellant is the manufacturer of these goods. Duty liability cannot be escape....