1998 (3) TMI 421 - AT - Central Excise

Summary

Issues:
1. Allegation of short payment of Central Excise duty on computers with peripherals.
2. Challenge to the order demanding duty and imposing penalty.
3. Merits of including the value of peripherals and software in the assessable value.
4. Grounds of limitation for the show cause notice issued.

Analysis:
1. The appellant, a computer manufacturer, cleared computers with peripherals paying duty only on the Central Processing Units (CPU) without including the cost of peripherals and software in the assessable value. A show cause notice alleged short payment of duty, leading to an order demanding duty and imposing a penalty. The appeal challenges this order.

2. The appellant's counsel contended that the peripherals supplied were accessories, not integral parts of the computers, citing relevant case law. Additionally, they argued that the show cause notice was time-barred due to prior intimation of their invoicing practice to the department.

3. The Departmental Representative argued that peripherals were integral parts of computers, supported by tariff entries and notifications. The Collector upheld this view, referencing tribunal decisions. The appellant's claim of non-inclusion of peripherals' value and duty payment was disputed.

4. The Tribunal found that the appellant had informed the department about issuing separate invoices for CPUs, peripherals, and software, which the department failed to act upon. The letter of intimation was considered genuine, supporting the limitation plea. The Collector's interpretation of tariff entries and notifications was analyzed, concluding that the appellant's failure to claim exemption led to the duty demand.

5. The Tribunal determined that the inclusion of peripherals' value in the assessable value was crucial for exemption benefits. Since the appellant did not claim this exemption, the duty demand was affected. Due to the department's inaction on the intimation and the failure to follow exemption procedures, the appeal succeeded on the ground of limitation, leading to the order's reversal.

This detailed analysis highlights the key legal arguments, interpretations of relevant laws and notifications, and the ultimate decision based on the issues raised in the appeal before the Appellate Tribunal CEGAT, New Delhi.