2017 (3) TMI 417 - AT - Central Excise

Manufacture - whether assembling of computers amounts to manufacture? - Held that - it is very clearly established that there was no computer manufacturing going on at the business premises of appellants - the Original Authority has in the impugned Order-in-Original has stated that On summing-up of the cases of sale of computer system/computer sets sold , also implies that manufacture is not taking place - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Central Excise Duty liability on the assembly of computers.
2. Penalty imposition on appellants for alleged duty evasion.
3. Appeal against Order-in-Appeal No.73-77CE/ALLD/2006.

Central Excise Duty Liability on Assembly of Computers:
The case involved a show cause notice issued to appellants regarding the assembly of computers by M/s. Lansys Computers P. Ltd without payment of duty. The Original Authority found that computer systems comprising 38 computer sets were cleared without duty payment, amounting to ?17,12,890. The appellants argued that they were engaged in networking and repair/maintenance of computers, not manufacturing. The Commissioner (Appeals) recalculated the assessable value to ?14,89,470 and reduced the demand. The Tribunal observed that the Original Authority's mention of "sale of computer system/computer sets sold" indicated no manufacturing was conducted, leading to the setting aside of the Order-in-Original and Order-in-Appeal.

Penalty Imposition for Alleged Duty Evasion:
The Original Authority imposed a penalty on the appellants for allegedly assembling Central Processing Units (C.P.U.) without duty payment. Other noticees were also penalized. However, the Tribunal's finding that no manufacturing occurred invalidated the penalty imposition, resulting in the setting aside of the Order-in-Original and Order-in-Appeal.

Appeal against Order-in-Appeal No.73-77CE/ALLD/2006:
The appellants appealed against the Order-in-Appeal No.73-77CE/ALLD/2006 dated 06.07.2006, which confirmed a demand of ?2,56,933.50. The Commissioner (Appeals) reduced the demand to ?2,23,420.50 but did not interfere with the remaining part of the Order-in-Original. The Tribunal allowed all the appeals, setting aside both the Order-in-Original and Order-in-Appeal due to the absence of computer manufacturing activities at the appellants' premises.

In conclusion, the judgment revolved around the absence of manufacturing activities in the assembly of computers by the appellants, leading to the setting aside of penalty imposition and demand confirmation. The Tribunal's decision was based on the lack of evidence supporting the duty liability and penalties, ultimately favoring the appellants in all aspects of the case.