1998 (11) TMI 280 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of computer parts or peripherals in the valuation for Central Excise purposes.
2. Alleged under-valuation of the computer system.
3. Applicability of SSI exemption.
4. Limitation period for issuing the Show Cause Notice.

Summary:

1. Inclusion of Computer Parts or Peripherals in Valuation:
The primary issue in this appeal was whether certain computer parts or peripherals, specifically printers and monitors, should be included in the assessable value of the computer system for the purpose of Central Excise Act. The Tribunal held that printers and monitors are not parts of the computer but are only accessories for effective utilization and convenience. This conclusion was supported by the Supreme Court's decision in PSI Data Systems v. C.C.E., which clarified that accessories sold along with the main product do not form part of the assessable value for excise duty purposes.

2. Alleged Under-valuation of the Computer System:
The Collector of Central Excise had previously held that the appellants resorted to under-valuation of the computer system by not including the cost of printers and monitors, confirming a duty amounting to Rs. 23,04,866/- and levying a penalty of Rs. 2 lakhs. The appellants argued that the CPU and keyboard constituted the computer, and peripherals like printers and monitors were optional and not manufactured by them. The Tribunal agreed with the appellants, noting that the peripherals were trading items and not subject to excise duty as part of the computer system.

3. Applicability of SSI Exemption:
The appellants claimed SSI exemption under Notification 175/86 for the period 1987-89. The Tribunal noted that the turnover, including the disputed peripherals, would affect the eligibility for SSI exemption. However, since the peripherals were not to be included in the assessable value, the exemption would be applicable.

4. Limitation Period for Issuing the Show Cause Notice:
The Tribunal found that the Show Cause Notice issued on 10-9-1992 for the period 1-3-1987 to 31-3-1989 was barred by limitation. The classification lists treating CPU, keyboard, and drives as the computer had been approved by the department, and there were regular audits and visits by departmental officers. Citing several judgments, including Pushpam Pharmaceuticals v. C.C.E., the Tribunal concluded that the claim was barred by limitation.

Conclusion:
The appeal was allowed, with the Tribunal ruling that printers and monitors should not be included in the assessable value of the computer system, the claim of under-valuation was not substantiated, SSI exemption was applicable, and the demand was barred by limitation.