2018 (1) TMI 529

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....eal No. E/699/2010 (hereinafter referred to as Acer), are engaged in the manufacture of Personal Computers, Laptops and Computer Systems . It appeared to the department that Acer had imported laptops and that they are loading software on them at the premises of one M/s. Supreme Cables, appellant in appeal No. E/698/2010 (hereinafter referred to as Supreme) on job work basis. During investigation, the officers opened some cartons lying in the premises of Supreme at random and found that they contain laptop computers received from Acer and that the machines could not be operated upon. However, in respect of other cartons, which had completed the QC at the premises of Supreme were found to contain laptop computers loaded with application softw....

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....at Credit, of only the CVD paid, subject to fulfilment of conditions stipulated in Cenvat Credit Rules and production of all requisite data and documentation to the jurisdictional authority. Aggrieved, both Acer and Supreme filed these appeals. 3.1 Today when the matter came up for hearing, on behalf of both the appellants, Ld. Advocate, Shri R. Parthasarathy made oral and written submissions which can be broadly summarized as under:- a) The laptops in dispute are purchased by Acer from M/s. Acer Asia Pacific SDN BHD, Malaysia under proper sale invoices. The imported laptops are already pre-loaded with the necessary BIOS and Linux operating software. b) The laptops in question were only with the software supplied by the....

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....ng and putting it back into the same carton cannot be considered either as packing or repacking. e) The labelling or re-labelling activity done at the factory is only to comply with the provisions of SWM Act and the rules made there under. Consequently, this activity also cannot be considered as the activity contemplated under Section 2 (f) (iii). f) None of the other activities like unpacking, dismantling the hard disk from the laptops, mounting of the HDD back to the laptops, conducting Burn test, carrying out physical and functional test and screen printing the same ILCOT on the laptops are covered by the artificial definition of manufacture under Section 2 (f) (iii) of the Central Excise Act, 1944. Ld. Advocate subm....

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....ure in Section 2 (f) (iii) of the Act and has arrived at a well-reasoned finding that the eleven processes are carried at the premises of Supreme, which result in the emergence of the product is required by the buyer (ELCOT). c) The said processes are indispensible without which ELCOT will not accept the laptops in question. 5. Heard both sides and have gone through the facts of the case. 6.1 For better understanding, Section 2 (f) as it was in force during the disputed period is reproduced as under:- "(f) manufacture includes any process, - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Sc....

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.... repacking of goods in or into the unit container, and in addition relabeling, testing, and loading of software without which the laptops would not be fully functional and would not be accepted by ELCOT. The ingredients of Section 2 (f) (iii) of the Act will definitely get attracted in respect of processes undertaken, hence the impugned activity will definitely fall within the legal definition of manufacture under the said Section 2 (f) (iii) ibid. 6.3 We therefore do not find any infirmity to t he decision of the adjudicating authority that the processes carried out would amount to manufacture. Hence, we do not interfere with the duty demand of Rs. 35,90,378/- with interest thereon made against Acer and Rs. 1,11,95,801/- with interest m....