2008 (9) TMI 796 - AT - Central Excise

Summary

Issues:
1. Exemption under Notification No.6/2002-CE for "WinBee thin client."
2. Rejection of draft circular of the Board.
3. Consideration of Tribunal's decision in Hewlett Packard case.
4. Reliance on a "White Paper" prepared by an employee of the appellant.

Analysis:

1. The appellants, engaged in manufacturing computer peripherals, claimed exemption under Sl. No. 261 (a) of Notification No.6/2002-CE for "WinBee thin client." The Commissioner denied the exemption, stating that the thin client was not a computer/CPU due to its inability to store data permanently without a Hard Disc Drive (HDD). Consequently, duty payments were confirmed, and penalties were imposed on the appellants.

2. The assessee had initially relied on a draft circular of the Board, which was rejected by the Commissioner. However, the finalized circular of CBEC clarified that a CPU without HDD could still qualify for the benefit of the Notification. The appellant also referenced a Supreme Court ruling emphasizing the importance of Board circulars and a Tribunal decision in Hewlett Packard case, where servers without HDDs were considered CPUs eligible for the Notification. These arguments were not considered by the Commissioner.

3. The Tribunal noted discrepancies in the Commissioner's handling of the case, including the refusal to consider the Board's circular draft and the oversight of the Tribunal's decision in Hewlett Packard case. Additionally, undue reliance was placed on a "White Paper" prepared by an employee of the appellant, despite the company disowning the document. Consequently, the Tribunal remanded the case to the lower authority for fresh adjudication, instructing the Commissioner to consider the Board's finalized circular and the Tribunal's decision in Hewlett Packard case, while ensuring the appellant's right to a fair hearing.

In conclusion, the judgment emphasized the importance of considering relevant circulars, legal precedents, and avoiding undue reliance on questionable documents in making informed decisions regarding duty exemptions for computer peripherals like the "WinBee thin client."