SARABHAI ELECTRONICS LIMITED Vs. UNION OF INDIA
LAWS(GJH)-1989-12-4
HIGH COURT OF GUJARAT
Decided on December 28,1989

SARABHAI ELECTRONICS LIMITED Appellant
VERSUS
UNION OF INDIA Respondents


Referred Judgements :-

SHIVSHANKAR CHHAGANLAL SHUKLA V. LAXMAN CHIMANLAL SONI AND OTHERS [REFERRED TO]
MAJOR S S KHANNA IN BOTH THE APPEALS VS. BRIG F J DILLON IN BOTH THE APPEALS [REFERRED TO]


JUDGEMENT

A.P.RAVANI, K.J.VAIDYA - (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 :
Rs. 1 32 3 870 : Components and material supplied by DSI. Rs. 28 64 19 : Components and materials supplied by `Orbit Out of the above materials DSI and Orbit had manufactured and removed computers on payment of duty to Adprint of the value mentioned below from 197 9/05/1984 : Rs. 2 21 86 199 : DSI Rs. 38 29 8 : `Orbit The Officers also observed that after having received the computers data-entry systems and data-processing systems of the models as aforementioned from DSI and ORBIT Adprint was affixing the name plate of ORG by removing the trade mark DSI and DES and DPS and the name plate of ORG was got manufactured by Adprint from M/s. Excel Graphics Pvt. Ltd. Bombay. It was further noticed that after adding certain peripherals in the computers and after converting the trade mark as above Adprint had sold computers to different independent customers from the years 197 9/05/1984 of the value of Rs. 10 71 58 210 0 It was fruther found that service charges for the installation of computers and also supply of soft wares by ORG were collected by ORG as an approved party of Adprint in respect of the computers got manufactured from DSI and Orbit and supplied through Adprint to various customers during the years 197 9/05/1984 at Rs. 8 80 49 778.28



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