2008 (1) TMI 704 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery in respect of duty and penalty amounts demanded by the Commissioner.
2. Interpretation of Notification No. 6/2002-C.E. regarding exemption for computer components.

Analysis:
1. The judgment deals with an application for waiver of pre-deposit and stay of recovery concerning duty and penalty amounts exceeding Rs. 1.00 crore demanded by the Commissioner from the appellants for the period January to September, 2006. The dispute arose from the classification of a computer component, specifically a 'thin client,' for which the appellants claimed exemption under Notification No. 6/2002-C.E. The Revenue contended that the 'thin client' did not qualify as a computer unit under the Notification due to the absence of a hard disc drive (HDD) for permanent data storage. The appellants argued that the item contained a flash drive for data storage and should be considered a CPU eligible for the Notification's benefit. The Tribunal noted the relevance of a previous decision and a Board circular supporting the appellants' position, which the Commissioner had not accepted. Ultimately, the Tribunal found a prima facie case in favor of the appellants against the duty demand, leading to the waiver of pre-deposit and stay of recovery.

2. The interpretation of Notification No. 6/2002-C.E. regarding the exemption for computer components played a crucial role in the judgment. The Tribunal emphasized that a computer must possess capabilities such as receiving, processing, storing, and disseminating electronic data. Despite the dispute over the storage device in the 'thin client,' the Tribunal acknowledged that the Board had accepted that a CPU without an HDD could qualify for the Notification's benefit. Noting that the Commissioner had recognized the 'thin client' as a CPU without an HDD, the Tribunal leaned towards the appellants' argument. The Tribunal's decision was influenced by the evolving stance of the Board and the characteristics of the 'thin client,' leading to the grant of waiver and stay of recovery for the duty and penalty amounts in question.

In conclusion, the judgment addressed the waiver of pre-deposit and stay of recovery in a case involving the interpretation of Notification No. 6/2002-C.E. regarding the classification of a computer component. The Tribunal's analysis focused on the essential characteristics of a computer, the evolving position of the Board, and the specific features of the 'thin client' in question, ultimately ruling in favor of the appellants based on a prima facie case and relevant legal precedents.