TMI Blog2017 (5) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... n them. This being so, whether the complete computer system was assembled by him after procuring the required components, peripherals and accessories in his own premises or whether he does it at the rented premises at Besant Nagar, Chennai or for that matter even at the schools where he is supposed to supply the systems, will not make any difference to the inevitability that appellant is the manufacturer of these goods. Duty liability cannot be escaped from. The original authority has been generous and considerate in allowing not only Rs.one crore exemption limit of SSI but also has extended cum-duty benefit. In the process, the contract value of ₹ 2,78,80,500/- has been reduced to ₹ 1,61,85,686/- for the purposes of duty levy. Penalty - Held that: - contumacious conduct of the appellant has been exposed, they have attempted to weave a web of deceit with intent to suppress their value of dutiable clearances with intent to evade discharge of required duty liability to the exchequer - Penalty u/s 11AC of the Act is therefore fully justified - for the same reason, the equal penalty u/s 11AC of the Act has been imposed, we set aside the penalty of ₹ 5,00,000/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,31,84,900 Rs.2,61,14,400/- 3.1 He submits that the impugned goods were actually manufactured by independent contractors who were paid job charges for such activities. Hence, liability would be on such contractors. He submits that they had cleared only CPUs and not full assembled computer systems. He further submits that the integration of various components into a network system took place in schools and it cannot be construed as assembling of computer systems. The system that emerged in schools was not marketable and hence not dutiable. He contended that in any case the installation and commissioning of the manufactured CPU was done along with bought-out accessories like monitors, keyboards, mouse etc. Hence, there was no case for levy of excise duty invoking larger period. 3.2 Learned counsel further placed reliance on Board Circular No. 58/1/02-CX dated 15.1.2002 to support his stand that the activity done by the appellant cannot be treated as manufacture. 3.3 He placed reliance on the following case laws- (i) Commissioner of Central Excise Vs. CMS Computers 2005 (182) ELT 20 (SC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent statement on 5.10.2001 he has spilled the beans of the entire modus operandi. Along with admissions, Shri Vijayakumar has admitted that their contract with M/s.Everonn Systems India Ltd. was for supply of 540 numbers of computer systems to 54 schools, which included assembly and installation at the respective school, and that similarly, they had a purchase order from M/s. Pacific Blue Technologies for supply of 390 computer systems. He has admitted that the assembly of these computer systems were organized and monitored by him under his control. In a further statement dated 25.10.2002, Shri R. Vijayakumar stated that the whole activity of assembling the said computer systems was done at his another office premises at Besant Nagar, Chennai. It is pertinent to note that there is nothing from the record which indicates that the last two statements of Shri Vijayakumar have been retracted. It is interesting to note that even in the grounds of appeal, the appellant has admitted to his acts and omissions as can be seen from the following para:- 23. The appellant submits that but for the ill-advice and mis-guidance of Mr. Kishore and Mr. Mohanraj, the appellant would not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(f) of the Central Excise Act, 1944 to hold that the appellant only is the manufacturer under section 2(f) of the Act as they had hired labourers for assembling of the computers on the materials supplied at their rented premises and since they had total control on the assembling activities. 6.8 The original authority has also correctly analyzed the Tariff Entry 84.71 to show that computers (CPU, monitor and keyboard, mouse, printer) as a unit by virtue of Chapter Note 5D to Chapter 84 of the Act will stand classified under the said heading. 6.9 With reference to learned counsel's reliance on certain case laws, it is seen that while the Hon'ble Supreme Court in the case CMS Computers (supra) has no doubt laid down that a monitor or printer, not being essential parts of a computer, their value cannot be included in the value of the computer, nonetheless, the Hon'ble Apex Court has however clarified that situation may be different where a manufacturer sells a computer with a monitor and a printer as a unit . 6.10 In Acer India (supra), the Hon'ble Supreme Court had laid down that it is not possible to agree that without the operating softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion limit of SSI but also has extended cum-duty benefit. In the process, the contract value of ₹ 2,78,80,500/- has been reduced to ₹ 1,61,85,686/- for the purposes of duty levy. In our considered opinion, we do not find any reason to interfere with the classification of computer systems under Chapter 8471 of CETA and the demand of differential excise duty of ₹ 25,89,710/- along with interest thereof. 8. Coming to the issue of penalty, contumacious conduct of the appellant has been exposed, they have attempted to weave a web of deceit with intent to suppress their value of dutiable clearances with intent to evade discharge of required duty liability to the exchequer. Penalty under section 11AC of the Act is therefore fully justified and the appeal on its score is also rejected. However, for the same reason, the equal penalty under section 11AC of the Act has been imposed, we set aside the penalty of ₹ 5,00,000/- (Rupees five lakhs only) imposed under Rule 173Q of the Central Excise Rules, 1944. 9. In the result, the appeal is dismissed except for setting aside the penalty imposed under Rule 173Q of the Central Excise Rules, 1944. (Pronounced in open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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