SARABHAI ELECTRONICS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners manufactured `Computers which fall under Tariff Item 33 DD of the First Schedule to the Central Excise and Salt Act 1944 under a Central Excise Licence dated 14/05/1984 Petitioners got the computers manufactured by supplying raw materials from two independent manufacturers namely (1) M/s. Digital Systems International Baroda and (2) M/s. Orbit Electronics Baroda. These computers were sold through M/s. Adprint Services Ltd. Baroda. According to the department the assessable value on which duty was paid by the manufacturers of computers was considerably low in comparison to the value ultimately collected from the customers to whom the computers were sold by M/s. ORG Systems a Division of Ambalal Sarabhai Enterprises Ltd. the petitioner herein.

(2.) On 22/03/1984 the Officers of the Central Excise Department visited the factory premises of Orbit Electronics and obtained records of the unit for scrutiny and examination. Preliminary scrutiny of the records revealed that Orbit was manufacturing computers exclusively for and on behalf of Adprint Services on job work basis. On 26/03/1984 the Officers also visited the factory and office premises of M/s. Digital System International Baroda and collected records from the unit for further scrutiny and examination. Officers of the Central Excise found that M/s. Digital Systems International Baroda were also manufacturing the computers for and on behalf of Adprint on job work basis besides manufactring the computers of their own. Thereafter on 20/06/1984 the Officers of the Central Excise Departtment visited the office premises of Adprint situated at Chhani District Baroda. The Officers found that Adprint was not carrying out any manufacuring activity but was only located in one of the rooms of the building belonging to ORG Systems wherein one unit in the name and style of Research and Development Centre of ORG was situated and was enagaged in the preparation of softwares as well as specifications and designs of computers. The Officers further found that the computers manufactured by DSI and Orbit for and on behalf of Adprint were manufactured as per designs and specifications developed by Research and Development Centre from May 1982.

(3.) During the course of enquiry the Officers of Central Excise visited the factory of M/s. ORG Systems situated at Vadi Baroda. On scrutiny of further records it was found that Adprint had supplied components/materials to DSI and Orbit of the value mentioned below during the period from May 1979 to May 1984 :