TMI Blog2017 (2) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... the network does not bring into existence goods with a distinct new name, character and use. Appeal allowed - decided in favor of assessee. - E/876 - 877/2003-DB - Final Order No. 20197 - 20198 / 2017 - Dated:- 6-2-2017 - Shri S. S. Garg, Judicial Member And Shri V. Padmanabhan , Technical Member Mr. M. S. Nagaraja, Advocate T. Rajeswara Sastry Associates For the appellant Mr. N. Jagadish, AR For the respondent ORDER Per V. Padmanabhan The present appeals are directed against the Order-in-Original passed by the Commissioner of Central Excise, Bangalore dated 30.6.2003. In the impugned order, Central Excise duty amounting to ₹ 21,12,555/- was demanded from the appellant-assessee along with interest. The appellant-assessee was also imposed penalty of an equal amount. In addition, Shri Sunil Kumar, Director was imposed a penalty of ₹ 1,00,000/-. The appellant-assessee was engaged in procuring various parts of computers such as CPU, monitor, hard-disk drive, mouse, etc., from different suppliers. These parts were being assembled by the assessee by interconnecting the various components resulting in the emergence of computer systems. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether those documents have any bearing on the outcome of the case. It is made clear that we are not making any observations on merits of the case and the CESTAT shall consider the case on merits in accordance with law within the stipulated time. 3. With the above background, we heard Shri M. S. Nagaraja, learned advocate for the appellant and Shri N. Jagadish, learned AR for the Revenue. 4. Learned advocate, in his arguments, emphasised the following points. i. The appellants have purchased various components of computers like CPU, monitor, keyboard, etc., and have been selling them to their customers. The department has not produced any evidence to the effect that they were engaged in undertaking manufactureof automatic data processing machine. The activity engaged by them is in the form of trading which constitutes second sale for the purposes of sales tax/VAT. ii. The various component parts of computers are duty paid separately and putting together these duty-paid components does not amount to manufactureattracting excise duty. iii. The Department has failed to furnish copies of purchase documents for the period from 25.1.1996 to 31.3.1997 and 7 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme court in the case of UOI vs. Delhi Cloth and General Mills Co. Ltd.: 1997 (1) ELT (J199) (SC) and argued that the activity of assembling various duty-paid components of computers brings into existence a working computer system under Chapter 8471 as an automatic data processing machine. The activity of assembling the various components of computers has brought into existence a new commodity which can be called as computer system and it will be liable to excise duty. He also relied upon several case laws to support the argument that this activity amounts to manufacture. In particular, Leo Circuit Boards Pvt. Ltd. vs. CCE, Belapur: 2015 (330) ELT 227 (Tri.-Mumbai); Sheth Computers Pvt. Ltd. vs. CCE, Bombay: 2000 (121) ELT 738 (Tribunal); and Computer Aid vs. CC, Allahabad: 2001 (130) ELT 68 (Tri.-Del.). 5.1 On the issue of non-submission of documents, he submitted that these documents which have been cited in the show-cause notice but not furnished by the department were originally submitted by the assessee himself. He further referred to the correspondences with the department had with the Deputy Commissioner of Commercial Taxes from which it emerges that purchase docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included 16% Further the relevant chapter note to Chapter 84 dealing with the classification of goods under chapter 84.71 is also reproduced below:- 5(a) For the purpose of heading No.84.71, the expression automatic data processing machinesmeans:- (i) Digital machines, capable of (1) storing the processing programme or programmes and at least the data immediately necessary for the execution of the program; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and (4) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run; (ii) Analogue machines capable of simulating mathematical models and comprising at least : analogue elements, control elements and programming elements; (iii) Hybrid machines consisting of either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o existence by assembly of various components to form the computer system. We note that all units of an ADP are designed to be interconnected to enable the ADP system to be formed to carry out its function. It cannot be said that the assembly of various units into a working system has brought about any new goods which have a distinct name, character or use different from that of the units of computer system. This has been laid down as the test for manufacture by the Apex Court in the DCM case. Further we note that each of the components bought out by the assessee is separately duty paid. Though the Revenue has not gathered specific evidence of assembly of various components into an ADP machine by the assesse, the thrust of the case is that the assessee has undertaken such activity which is claimed to be an act of manufacture. 6.4 The Revenue has already clarified vide their Circular No.497/63/99-CX dt. 30/11/1999 that the activity of creating a computer network from duty paid computers and peripherals would not amount to manufacture, since the network does not bring into existence goods with a distinct new name, character and use. We are of the view that the above clarification, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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