COMPIN TECHNOLOGIES Vs. CCE, AHMEDABAD-I

JUDGEMENT

(1.) THIS is an appeal filed against the order dated 10.9.2001 passed by the Commissioner of Central Excise and Customs (Appeals), Ahmedabad. Shri Jitendra Singh, learned Advocate has appeared on behalf of the appellant and he has submitted that the appellant is an educational institution and they impart training in software to the students; that on 11.5.1996, Preventive Officers of Central Excise, Ahmedabad have visited the premises of the appellant and they found that 55 computer systems are installed in the said premises. Out of the above, 32 systems tallied with the purchase bills available in the premises and for the remaining 23 systems, the Partner of the company, Shri A.R. Patel could not produce any purchase documents, and therefore, the aforesaid 23 computer systems were detained under a panchnama; that as per the statement of Shri A.R. Patel, the said 23 computer systems were assembled by them and further in his statement recorded on 11.5.1996, he admitted that they had not obtained Central Excise Registration for the assembly of the said computer systems; that he further admitted that 22 more systems had been assembled by them and out of that 15 had been cleared to M/s. Microsoft Techniques, Kankaria, Ahmedabad and 7 to M/s. Intersoft Techniques, Ambawadi, Ahmedabad without payment of duty; that on 23.10.1996 the officers again visited the aforesaid premises and out of the 23 systems under detention, they seized 4 systems which had been manufactured without payment of duty; that for the remaining 19 systems, the appellants had produced original purchase invoices which were found to be tallied with the Sl. Nos. of the systems and logo of the seller company; that in the reply dated 20.11.1996, the appellants have submitted that they being an educational institute are in the business of providing computer education; that they were not aware that they are liable to pay excise duty on the computer hardware; that they have assembled and installed for their own use for educational purposes within the institute premises; that they were also not aware that the activity of assembling of machines amounts to manufacturing activity and hence it was not known to them that they were liable to pay excise duty in such cases; that they requested to consider waiving of penalty as well as interest. The learned Advocate also submitted that the provisions for imposition of penalty under Section 11AC of the Central Excise Act, 1944 were brought into force w.e.f. 28.9.1996 and as such, no penalty is imposable on the appellant because the period in dispute relates to the period prior to the enforcement of Section 11AC; that in support of his contention he relied on the decision in the case of M/s. Elgi Equipment Ltd. reported in, 2001 ELT (128) page 52 SC; that he finally submitted that no duty or penalty is called for and as such, the appeal may be allowed. Shri R.D. Negi, learned SDR appeared on behalf of the Revenue and he submitted that this is a clear cut case based on the admission of the appellant; that the appellants have themselves admitted that they have assembled complete computer systems; that assuming that a few items are not there, that will hardly make any impact on the computer systems and the computer system cannot be said to be incomplete without that; that penalty under Section 11AC read with Rule 173Q is rightly imposed and in support of his contention, he relied on the direct decisions in the case of Sheth Computers (P) Ltd. reported in, 2000 (121) ELT page 738 (T) :, 2002 (102) (ECR) 739 (SC), BPL India Ltd. reported in, 2002 (143) ELT page 3 SC and Hansa Electronics reported in, 1999 ELT 113 page 472 (T); that the case of BPL India is a direct case of assembly of imported kits wherein the Apex Court has held that the same amounts to manufacture; that the present case is squarely covered by the above decisions; that the manufacture has not been disputed by the appellant; the learned Advocate Sari Jitendra Singh appearing on behalf of the appellant tried to distinguish the said cases on the ground that they relate to kits and parts and whereas the present case is different from that as no clear cut case is made out as to the computer systems have been assembled by outright purchase of the parts and in support he also relied on Chapter Note V of Chapter 84.