2017 (2) TMI 834 - AT - Central Excise

SSI Exemption - use of brand name of others - denial on the ground that the appellant has undertaken manufacture of computers with the brand name of NOVO which belonged to another person - whether the activities of the appellant can be construed as manufacture and thus duty can be demanded? - Held that - whether assembling various components of computer include computer system amounts to manufacture has been examined by the Tribunal in a recent decision in the case of Lampo Computers Pvt. Ltd., 2017 (2) TMI 665 - CESTAT BANGALORE in which it has been held that such activity will not amount to manufacture. The activities of assembling of various components of computers into a working computer system will not amount to manufacture and hence are not liable to payment of excise duty - Consequently there is no need to discuss the issue of brand name and SSI benefit - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activities of the appellant constitute manufacture for excise duty demand.
2. Whether the Small Scale Industry (SSI) concession can be denied due to the use of another person's brand name.

Analysis:
1. The appellant, engaged in trading computer systems under the brand NOVO, faced excise duty demand for allegedly manufacturing computers with another person's brand. The original authority upheld the demand, denying SSI exemption. The appellant appealed, arguing they only traded computer components and assembling them did not constitute manufacture. The Revenue contended that assembly of computer components falls under Chapter 8471, attracting excise duty. The Tribunal, in a recent decision, held that assembling components into a working computer system does not amount to manufacture under Chapter 84.71. The Tribunal emphasized that each component remains classified under 84.71 even when interconnected, concluding that no new distinct goods emerge. The Tribunal also cited precedents supporting this view and set aside the demand, allowing the appeal.

2. The second issue pertained to denying SSI benefit due to using another person's brand name. However, as the Tribunal ruled that assembling components into a computer system did not constitute manufacture, the need to discuss the brand name issue or SSI benefit denial became unnecessary. The Tribunal's decision focused on the non-manufacture aspect, leading to the appeal being allowed on that basis. The judgment clarified the distinction between assembling components and creating new goods, emphasizing that the former does not trigger excise duty liability. The decision highlighted relevant chapter notes and precedents to support the finding that the appellant's activities did not amount to manufacture, thereby invalidating the excise duty demand and obviating the need to address the brand name issue or SSI concession denial.