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TMI Blog2018 (1) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... ps are in working condition - the master hard disk drive is totally dismantled and removed from the laptops and various softwares are loaded on them, only after which the HDDs are fixed back into the laptops. All the processes which are involved are repacking of goods in or into the unit container, and in addition relabeling, testing, and loading of software without which the laptops would not be fully functional and would not be accepted by ELCOT. The ingredients of Section 2 (f) (iii) of the Act will definitely get attracted in respect of processes undertaken, hence the impugned activity will definitely fall within the legal definition of manufacture under the said Section 2 (f) (iii) ibid. Confiscation - Penalty - Held that: - the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere found to contain laptop computers loaded with application software. It also emerged that the work ELCOT 2008 was printed on the laptop computers by screen printing at the premises of Supreme. From the statements of various persons employed by Acer and Supreme it emerged that the imported laptop computers had been sent to Supreme, for dismantling of the Hard Disk Drive (HDD) copying of the software into the HDD, mounting the HDD again in the laptop computer and also for subsequent testing. It appeared that as per Note 6 to Section XVI of the first schedule to the Central Excise Act, 1985 and also as per Section 2 (f) (iii) of the Central Excise Act, 1944, the processes carried out on the imported laptop computers amounted to manufacture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) The laptops in question were only with the software supplied by the customer, viz., ELCOT, because the customer desired that the users in his organization had a specific requirement of graphics usage compatibility. This fact ipso facto does not mean that the laptops as imported were not in usable condition. c) The laptops in dispute are received at the Appellant s premises and unpacked. The availability of the accessories in the cartons such as Battery Adapter, Power Cord, Warranty Card, Manual and software license is checked. Thereafter, the appellants dismantle HDD of the laptop computer and copy all the software contained in the Master HDD and again mount the HDD in the laptop computer. The same are then sent for the next pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) of the Central Excise Act, 1944. Ld. Advocate submitted that the processes carried out on the imported laptops were only done in compliance of the supply order requirements of M/s. ELCOT, which is a Govt. of TN undertaking. Hence, the appellant had no intention to suppress, misstate or commit any fraud with intent to evade payment of duty. 3.2 Ld. Advocate further submitted that in fact on the other hand on bonafide belief that they were only involved in resale/trading of the imported goods, they had applied and received refund of the Special Additional Duty (SAD) paid on the imported goods. In fact, the sum of SAD and CVD components, when taken together, will exceed duty demand confirmed in the impugned order. This also will i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account 6.2 It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Acer and ₹ 1,11,95,801/- with interest made against Supreme Cables. So ordered. 6.4 However, coming to the matter of confiscation of goods and imposition of penalty, we do not find that the conduct of the appellants was in any way contumacious. It is relevant to note that the appellants had imported the laptops for intended resale and had in fact claimed and obtained refund of SAD on these imports. The appellants have however erred in having subjected the imported goods to post import processes which amount to manufacture within the meaning of Section 2 (f) (iii) of the Act. Nonetheless, they undertook these processes as required by ELCOT, a Govt. undertaking, as laid out in the tender and contract, which certainly was public knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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