2017 (2) TMI 251 - AT - Central Excise

Manufacture - business of trading upgrading repairing and maintenance of computers - whether the activity of while installing all the items the appellant used to connect each other by using cord amounts to manufacture? - Held that - This activity does not amount to manufacture as whole computer is already manufactured items by way of assembling of various components and in the manufactured condition it is bought and sold by the appellant - there is no activity carried out by the appellant which amounts to manufacture of some new and distinct product - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Appeals filed against Order-in-Appeal regarding demand of duty and penalties imposed on the appellant company.

Analysis:
The case involved two appeals filed by the assessee, M/s Compu Shop Techno (India) Pvt. Ltd., and Revenue against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai-I. The appellant company was engaged in trading, upgrading, repairing, and maintaining computers. The dispute arose from the contention that the activity of connecting various computer components using cords during installation amounted to the manufacture of a computer. The Commissioner (Appeals) upheld the duty demand but reduced the penalty on the company and waived the penalty on the company's director. The appellant challenged the duty demand, while the Revenue appealed against the penalty reduction and waiver.

The appellant argued that merely assembling components like CPU, monitor, keyboard, and mouse did not constitute manufacturing. They cited a Tribunal decision in support of their contention. On the other hand, the Revenue, represented by the Assistant Commissioner, relied on a judgment of the Hon'ble High Court of Punjab & Haryana to support their position. The Tribunal carefully considered both parties' submissions and reviewed the records.

Upon review, the Tribunal found that the appellant was essentially selling pre-manufactured items without altering them significantly. The activity of connecting cables during installation did not amount to manufacturing a new product. Referring to previous judgments, including those of the Tribunal and the Hon'ble Supreme Court, the Tribunal concluded that the appellant's actions did not constitute manufacturing a computer system. Consequently, the duty demand was deemed unsustainable, leading to the allowance of the appellant's appeal. As the duty demand was not upheld, the Tribunal held that there was no basis for imposing penalties. Therefore, the appeal filed by the assessee was allowed, while the Revenue's appeal was dismissed.

In conclusion, the Tribunal's decision clarified that the appellant's activities did not amount to manufacturing a new product, and thus, the duty demand was not justified. The judgment highlighted the distinction between assembling pre-manufactured components and actual manufacturing, leading to the dismissal of the Revenue's appeal regarding penalties.