TMI Blog2016 (7) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... of evidence to establish how the items from their trading premises was transferred to manufacturing premises. So also, there is no satisfactory explanation for insisting upon the customers to place split orders on two premises. Demand of duty confirmed - however penalty reduced. - Decided partly in favor of assessee. - E/46/2007 & 461/2007 - Final Order No. A/30541-30542/2016 - Dated:- 21-6-2016 - Ms. Sulekha Beevi, C.S., Member (Judicial) and Mr. Madhu Mohan Damodhar, Member (Technical) Shri V.J. Sankaram, Advocate for the Appellant Shri R.R. Bangar, AR for the Respondent ORDER Both the above appeals emanate from the same order and involve identical issue and period. Appeal No. E/46/2007 is filed by assesee and appeal No. 461/2007 is filed by Revenue. The parties are hereafter referred to as assessee and Revenue for sake of convenience. 2. The case against the assessee is that they are effecting clearances of computers by bifurcating the value of the goods into (i) CPU and (ii) HDD and there by discharging payment of central excise duty only on the former without taking into account value of the latter. It appeared that assessee intentionally suppress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t confirming demand of Rs 21,66,995/- was provided to the appellants. It is not known on what basis Commissioner computed the demand. c) No; finding was given in the order in regard to eligibility to the benefit of Cenvat Credit in respect of duty paid hard disk drive an cum-duty benefit already allowed by the Commissioner vide Order-in-Original No. 12/2004-CEX dated 31-03-2004 and the same was confirmed by Cestat vide Final Order dated 14-02-2005. d) Out of the 18 items which were in dispute, the learned Commissioner during De-novo adjudication allowed exclusion from the assessable value in respect of 10 items and in regard to rest of the items, the dispute is in regard to interpretation of valuation provisions and as per the settled decisions the value of hard disk drive is to be excluded from the assessable value of computer system the learned Commissioner ought to have dropped the proceedings on the question of time bar. e) Since the show cause notice dated 27-04-1995 having been issued beyond the period stipulated under Section 11A is clearly barred by time. f) In regard to proposal to impose penalty under 209A of Central Excise Rules, 1994, referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponse to the enquiry placed by M/s BHEL, the assessee vide their letter dated 19-12-1992 the following quotation was raised for supply. 1. 80386-33 CPU running at 33 Mhz 3167 weitek co- processor 64 kb Cache memory(15ns.5RAM) - ₹ 73,000/- 1.1 80387-33 CPU Mhz co-processor 4 MG Memory IDE 40MB HD.D. with intelligent disc control card - ₹ 26,800/- 2. Charge for integration cards - free 3. Software control - ₹ 36,000/- 4. 0.5 KVA 4 ps. Etc. - ₹ 27,550/- 8. In the aforesaid quotation, it was mentioned that for item No. 1, the purchase order is to be placed on the address at 401, Paigah Plaza and for rest of the purchase order is to be placed on the address ,202, Paigah Plaza. In the terms and conditions regarding excise duty, it was mentioned that excise duty is applicable for item No. 1 only and will be at present rate of 17.25%. Consequently, M/s BHEL placed purchase order dated 05-01-1993 for the items at a combined cost of ₹ 1,63,350/- at address 401, Paigah Plaza only. The Territory Manager of assessee factory vide letter dated 07-01-1993 replied to M/s BHEL stating that they have not received purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the show cause notice for its inclusion in the assessable value: (a) Basic computer - It consists of Central Processing Unit enclosed in a mechanical box and it forms basic component of the assessable value. (b) Key Board : It is an input device through which data/information is fed into the computer. Since it forms part of computer, its value is also includable. (c) Monitor : It is a video display unit on which the input or output commands are displayed. Since without monitor, it is not possible to observe the commands and data, it forms essential component of the computer and its value is includible in the assessable value. i) Hard disk drive : It is a data-storing device permanently fixed in the computer and forms essential component of the computer. Its value is also includible in the assessable value of the computer. ii) Floppy disk drive : It is a device where removable medium called Floppy diskette is used to store and retrieve the data. It is inbuilt in the mechanical box of the CPU and hence forms pan of the computer. Its value is includable. iii) Cartridge tape drive : it is a data backup device where a removabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : This is an external device meant for providing uninterrupted and stable power to the computer and does not form part of the computer system. It is optional in nature. Its value also cannot be included. [emphasis supplied] 11. When the appellant had appealed against this order, the Tribunal ide order dated 14-02-2005 observed has under: 4. After hearing the rival submissions, we are inclined to accept the decision of the adjudicating authority as regards the includibility and non-includability of certain items of the computer in the value of clearances cleared. It should be borne in mind that the remand order has the effect of setting aside the original order passed by the adjudicating authority. Hence, contrary to the view of the adjudicating authority, we hold that the penalties in the original order do not survive. That means, in the de-novo order, the adjudicating authority should have considered the question of penalty and also the time ban In as much as she has ignored these points we have no other option, but to remand the case to the original authority(Commissioner) for re-computing the duty liability and redetermination of penalty, after examining the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sters and documents. Their contention is that this visit brought out items separately and therefore, the show cause notice dated 27-04-1995 was clearly time barred, as it was issued beyond 6 months from the date of knowledge of the department 13. As regards the knowledge of the department, it is seen that the Large Bench of the Hon'ble CESTAT has settled the issue in the case of M/s Nizam Sugar Factory Vs Collector of Central Excise, Hyderabad-1999(114) EL T 429. this case, the Hon'ble CESTAT has stated that there is no warrant to refer to the acquisition of the knowledge to the department when understanding the relevant date defined under Section 11A(iii) of the Central Excise Act, 1944. In coming to this conclusion, the Hon'ble CESTAT has referred to a number of case laws. 14. Even otherwise, the argument is based on the assumption that all relevant facts required for issuing notice, have been placed before the department on 02-04-1993 itself. This may not be a correct assumption. From the show cause notice, I see that the investigation process was a long drawn one. The last statement of Shri G. G. Choudhary, was recorded on 14-03-1995 which concluded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture sells a computer with a monitor and printer as a unit (emphasis supplied) In the case on hand, the appellant sells computer systems/as a unit and therefore, as clarified, the ratio laid in the above judgment is of no assistance to the appellant c) The Tribunal in the case of Electronic Corporation of India Ltd vs CCE, Hyderabad 2004(167) ELT 420(Tri. Bang) held that bought out items however essential, supplied along with machine cannot be subjected to duty. We do not have any quarrel with this legal position. But the appellant though contends that the peripherals are bought out items have failed to produce invoices and establish their case that these are bought out items manufactured by others, on which duty has been already paid. The said decision is therefore distinguishable on facts. d) Another judgment relied by appellant is CCE, Pondichery Vs ACER India Ltd 2004(172) ELT 289(SC) and PSI data Systems Ltd. 1997 (89) ELT.3(SC). The question considered in these cases was whether the value of software installed in the computer before clearance is includable in the assessable value. The issue in the present case being entirely different the judgment is not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aging Director of assessee and to ₹ 50,000/ on the asssessee. 16. Coming to the computation of duty payable, we find that .the adjudicating authority has computed a duty demand of ₹ 21,66,995/- on the basis of the Tribunal's earlier order dated 14-02-2005. Assessee has raised a contention that no computation statement was provided to them, however we do not find any merit in this contention. The learned counsel for assessee relied upon the proposition laid in Kemtech International (P) vs CCE (I G) 2013(292) ELT 321(SC) to canvas the argument that the appellant was not provided with the basis of the computation of duty demand and this amounts to violation of principles of natural justice. We fully acknowledge that the appellant should be supplied copies of all documents which are likely to be relied for fresh adjudication. 17. At this juncture, the interim order dated 14-10-2004 passed by Tribunal is noteworthy. In the second round of appeal before the Tribunal (this appeal is the third round) the appellants had filed stay application. The Tribunal vide the said Miscellaneous Order, observed that as per remand order, the re-quantification is not over and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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