TMI Blog2009 (11) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... amanan, Special Counsel, for the Respondent. [Order per: P. Karthikeyan, Member (T)]. - Appeal (No. E/596/08) filed by M/s. Xerox India Pvt. Ltd. () challenges demand of duty of Rs.178647382/- and applicable interest found due on manufacture of photocopiers carried out by XIL during the period from April 2002 to November 2006 and equal penalty imposed on it under Section 11AC of the Central Excise Act, 1944. Appeals (No. E/591 and 592/08) filed by Sri S. K. Gupta, Finance Controller and Shri A. K. Srivastava, Senior Manager both of XIL challenge personal penalty of Rs.50,000/- each imposed on them under Rule 26 of Central Excise Rules, 2002. The finding of manufacture by the Commissioner is on the basis that XIL had undertaken assembly of components of photocopiers imported by it into complete photocopiers. This activity was held to be converting an incomplete machine into a complete machine envisaged in Section 6 of Section XVI of the Central Excise Tariff (tariff) and was manufacture. The demand is on the value of the complete machines cleared by XIL. 2. Learned Counsel for the appellants as well as Revenue advanced extensive arguments to canvass their respective cases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s installation not exigible to duty. Moreover, assembly took place outside the jurisdiction of the adjudicating authority and the impugned order was non est. Ld. Counsel cited several decisions treating assembly of components into machine as manufacture and otherwise. The Tribunal had held in a similar case of import of components of photocopiers assessed as photocopiers for assessment of CVD in Indian Xerographic System Ltd. v. Collector of Customs, Bombay [1995 (80) E.L.T. 337 (Tri.)J that assembling imported components into complete photocopiers did not involve manufacture. Apex Court dismissed Civil Appeal No 4799(NM) of 1996 [1997 (93) E.L.T. A68 (S.C.)]. filed by Collector of Central Excise against this decision. In view of conflicting decisions on the subject, it was argued that longer period could not have been validly invoked. It was also submitted that in case it was held that the appellants were liable to pay duty on impugned clearances, they were entitled to Cenvat credit of CVD paid on the imported components. 4 . Learned Special Counsel for Revenue submitted that XIL undertook kitting in the warehouse before clearing the goods. The process of kitting involved a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assembly of the components and parts m their warehouse at Hyderabad. 16. In their reply, they have failed to show that they had imported a compete machine, which was presented in unassembled form at the time importation to the sake of handling or transportation. A complete machine comes into existence by assembly of various components in their Ware house at Hyderabad. This process is well covered under the provisions of note 6 of section XVI of Central Excise Tariff read with section 2(f) of the Central Excise Act. Therefore the submission that the imported goods are traded as photocopiers is not factually correct. There is manufacturing activity within the purview of Section 2(f) of the Central Excise Act read with note 6 to Section XVI. The duty, therefore, is correctly payable on the sale price of the assembled goods as photocopiers. Therefore I hold that the party is liable to pay the duty on the sale of various models of photocopiers as per details given in the show cause notice." We observe that XIL imported Xerox brand photocopiers of different models in CKD form inducting printers. These consignments on import were received in the warehouse of the appellants at Hyderab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including blank, that is an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or a part), into complete or finished article shall amount to 'manufacture'." 6. We find that the appellants did not carry out any activity as envisaged in this note. The components received in sets were cleared as such; no con version of an incomplete machine into complete machine took place in the ware house of the appellants. Assembly of components into photocopiers took place at the premises of the respective buyers. In view of this factual position the arguments ad' by the Revenue are totally irrelevant. 7. The Ld. Spl. Counsel argued that the components imported were assembled in the warehouse by kitting and this operation using the computer sys tem was assembly, though not in a physical sense. This logic seeks to support the finding of the Commissioner that XIL assembled components in the warehouse. However, we find that in a case involving parts of copier machines process of manufacture can only be a physical process. A computer cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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