9911796707
TMI Blog1998 (10) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-3-1984 to 18-5-1984, 30-5-1984 to 30-11-1984 and 1-12-1984 to 17-3-1985 under Section 11A of the Central Excise Act, 1944, besides imposition a penalty of Rs. 10,00,000/- on the appellants under Rule 173Q(1) of the Central Excise Rules, 1944. 3. The appeals have a chequered career. The facts leading to the appeals are that the appellants are manufacturers of computer falling under erstwhile Tariff Item 33DD. They had supplied/cleared peripherals along with computers and it was alleged that they did not include the value of such peripherals in the assessable value of the computers to evade payment of duty on the value of such peripherals supplied/cleared with the computers. Therefore, they were issued with show cause notices by the Superintendent of Central Excise Range A for recovery of duty due from the appellants on the peripherals the value of which were not included in the value of components as under : Duty demanded 1. SCN OC No. 1854/84, dated 10-7-1994 for the period 1-3-1984 to 18-5-1984 for the recovery of duty on peripherals valued at Rs. 43,05,993/-. : Rs. 6,45,898.96 On further verification Addendum to the above show cause notice C.No. V/33D/3/183/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h peripheral devices are manufactured in India, that in their case, the peripheral devices were imported and as such there is no question of excise duty liability thereon; that in determining the assessable value of computers, the value of accessories and spare parts has to be excluded. The distinction between the integral part and an accessory is that while an integral part is vital to the functioning of a machine, an accessory is an equipment which is not vital or necessary for the functioning of the machine, but adds to the utility of the machine. They contended that in view of the large number of judgments distinguishing accessories from integral parts of equipments, they would not be required to add value of peripherals with the value of computer in determining the assessable value; that in a number of cases there was a time lag between the sale of computers and the sale of add-ons and different customers have ordered for different quantities of add-ons. Without prejudice to their contention as above, they contended that they had paid Rs. 3,54,213.35 on 9-3-1984 in pursuance to their letter dated 1-3-1984 and therefore, the duty is required to be reduced to that extent. They f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been approved on 14-3-1984 and hence, there was no suppression of fact on their part. 4. When the matter stood at this stage, Section 11A of the Central Excise Act was amended from 27-12-1985 and all the show cause notices in question had been transferred to the Collector for adjudication. Therefore, before proceeding further in the matter a letter C.No. V/33DD/15/15/87 C.1, dated 7-10-1987 and another letter C. No. V/33DD/15/46/88 C.1, dated 25-4-1988 were issued by the Collector invoking the penal provisions and asking the appellants to submit any further reply to the show cause notice with reference to the above letters. The appellants submitted their reply vide letter dated 26-10-1987 wherein they contended that the show cause notice, dated 10-7-1984 was issued well within six months period and therefore, there was no need to transfer this case to the Collector and if the Addendum, dated 13-3-1985 is treated as show cause notice then the same is time barred; that transfer of the show cause notice has deprived them of one opportunity of appeal and they requested for a clarification in the matter. In their reply, they reiterated the contentions made in their letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Drive Disc, VDU terminals are all essential parts required for the functioning of a computer without which a computer can never be made use of. He has held that in such a situation to separate computer from peripheral will be a useless proposition for the buyer of a computer. Therefore, he held that whether the peripherals are manufactured or bought out items or are manufactured (imported/indigenous) as long as their functional utility in the working of a computer is not disputed, the value of such peripherals should necessarily be included in the assessable value of the computer. He rejected the contentions raised by the parties that peripherals are supplied or removed under a separate invoice is of no consequence. In support of his plea, the Collector also noted the purchase order of M/s. Vysya Bank and of M/s. Mysore Paper Mills to hold that in both the cases orders have been placed for a total computer and peripherals were invoiced separately only to evade payment of duty on peripherals. He also rejected the plea of the appellants that the demands were barred by time and also the plea raised that Addendum dated 7-3-1985 and 13-3-1984 had been issued after six months was of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 7,70,757.04 and they deleted the invocation of the provisions of Rules 9, 49, 52A, 53 and 173F of the Central Excise Rules. They also deleted the penal provisions invoked under Rule 173Q. He pointed out that another show cause notice was issued on 13-12-1984 demanding duty of Rs. 33,14,079.27 and later a Addendum was issued on 13-3-1985 deleting the provisions of Rules 9, 49, 52A, 53 and 173F. Provisions of Section 11A was also deleted. He pointed out that the third show cause notice was issued on 25-5-1985 invoking the provisions of Section 11A by the Superintendent of Central Excise and raising a demand by another sum of Rs. 22,80,419.96. He submitted that each of the Addendum is a fresh show cause notice and therefore, barred by time. Further, the said show cause notices cannot be issued by the Superintendent of Central Excise invoking the larger period of limitation. He submitted that the facts of removal of peripherals were within the knowledge of the department and therefore, there was no suppression in the matter. He relied upon the judgment rendered in the case of Hydraulics Ltd., Madras v. C.C.E. reported in 1983 (12) E.L.T. 533 (CEGAT) wherein in similar ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded in the value of computer as held by the authorities below. He also contended that the addendum to the show cause notices was not hit by time bar. 10. On consideration of the submissions made, we are of the considered opinion that the appellants are required to succeed in the matter both on merits as well as on time bar in respect of demands raised beyond the period of six months. As can be noticed from the initial show cause notice issued on 10-7-1984, the demand was raised to the extent of Rs. 6,45,898.96 and in that it was clearly alleged that the appellants had effected clearance of peripherals valued at Rs. 43,65,993/- from their factory without bearing a separate gate pass and without paying central excise duty. By addendum, dated 7-3-1985 the department consciously gave up invocation of Rules 9, 49, 52A, 53 and 173F of the Central Excise Rules including the provisions of Rule 173Q. Initially demand was also raised to Rs. 7,90,757.04. This amended show cause notice raised fresh ground by which it was stated that the appellants had been manufacturing computer peripheral devices falling under Tariff Item 33DD and had supplied the main peripherals as add-ons to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 30-11-1984. It also gave up the allegation pertaining to contravention of the provisions of Rules 9, 49, 52A, 53 and 173F of the Central Excise Rules. It also gave up the invocation of the provisions of Section 11A which was there in the original para 3 of the show cause notice. However, the addendum stated that the appellants had cleared computer along with main peripherals as add-ons to the computer system manufactured and cleared by them under various factory challans and called upon them to explain as to why value of these peripherals should not be included in the assessable value of computers under Section 4 of the Central Excise Act inasmuch as these peripherals adds to the functional advantage and totality of the computer and demand was raised to Rs. 33,14,079.27 under Section 11A of the Act. From the nature of the amendment set out in the addendum to the show cause notice, it is clear the department has raised fresh grounds and has given up the ground which had been urged initially and also the duty amount. Therefore, it is clear that this amendment by addendum dated 13-3-1985 cannot be considered as an amendment but only as a fresh show cause notice and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of this Court in PSI Data System (supra) and grant relief to the appellant. The Tribunal itself has placed reliance on its earlier decision on PSI Data Systems which has been reversed by this Court as noticed above. Likewise, the value of service charges also cannot be included in the light of the ratio laid down by this Court in the PSI Data Systems. The Tribunal went wrong in assuming that the appellant must have given warranty to its customers at the time of purchase of computers when it was the case of the appellant that no such warranty was given and no such case was specifically put forward in the show cause notice. For all these reasons, we do not think that we can accept the contentions to the contrary by the learned Counsel appearing for the Revenue. In the result the appeals succeed and the impugned demand including the levy of penalty is set aside. The appeals are accordingly allowed with no order as to costs." 14. A reading of the above para of the judgment, it is clear that the same would apply to the facts of the present case squarely. Further we notice that in the appellants' own case by Order Nos. 3274 to 3282/97, dated 10-12-1997, this Bench dealt with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
