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2017 (5) TMI 598 - AT - Central ExciseClandestine manufacture and removal - manufacture of of automatic data processing machines - it was alleged that IDS had manufactured and cleared computer systems without payment of duty in the guise of trading activity by issuing trading invoices and splitting the value into different categories and adopting such other practices to show as if it was a trading activity - case of appellant was that they have bought out computer systems and merely added peripherals and software which does not amount to manufacture to it and instead amounts to trading. Held that: - appellants obviously were following an ingenious modus operandi of camouflaging their manufacturing activities in the guise of trading. In the process, they were issuing split invoices purporting to be parts and components of computer systems while actually clearing fully assembled workable computer systems which they subsequently installed at the premises of their customers. Thus a fraud was perpetuated by the appellant to deprive the exchequer of duty liability amounting to ₹ 38,21,398/- as worked out in respect of 397 computer systems. The modus operandi has been corroborated in the statement of Shri R. Balakrishnan, then General Manager of the appellant (second appellant herein) wherein he admitted in his voluntary statement dt. 25.01.1995 that they were clearing fully assembled workable computer systems to the customers against orders, but, however, splitting the orders while issuing invoices as per instructions of company Directors - none of the customers or officials of the appellant from whose statements have been recorded have subsequently retracted their say. The activity carried out by the main appellant is nothing but manufacture of computer systems on which duty at applicable rate is very much liable to be discharged. We therefore find no infirmity with the findings of the adjudicating authority on this score. In the event, no merit is found in the appeals with respect to duty demand of ₹ 38,21,398/- on Integrated Data Systems. Penalties - Held that: - The imposition of penalty should always be proportionate and commensurate with the acts of omission and commissions of the persons concerned and should also have some bearing on the quantum of duty or tax that has been short paid or not paid on account of such acts of omission and commissions - we set aside penalties imposed by the de novo adjudicating authority in the impugned order against the appellant herein and restore the level of penalties to the extent imposed in the first round of adjudication namely to ₹ 10,00,000/- on IDS and ₹ 50,000/- on Shri R. Balakrishnan (second appellant herein). Appeal allowed - decided partly in favor of appellant.
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