2007 (9) TMI 141 - AT - Central Excise

Co-processor by its nature and use are liable to be included in the value of the computer system Co-processor are considered as integral parts of computer system because computer system can hardly function efficiently without co-processor Appeal allowed by modifying the Comm.(A) order

Summary

Issues:
Challenge to the order of the Commissioner regarding the inclusion of co-processor in the value of the computer system.

Analysis:
The Revenue challenged the Commissioner's order, specifically regarding the inclusion of the co-processor in the value of the computer system. The Commissioner had directed the Asstt. Commissioner to re-examine and exclude peripherals, including the co-processor, from the list of items constituting the computer system. The Commissioner's order was based on the belief that the co-processor, by its nature and use, was not liable to be included in the computer system's value. However, the Authorized Representative for the department argued that the co-processor is an integral part of the computer system, as concluded in previous Tribunal orders and judgments.

The Tribunal had previously remanded the matter due to the lack of a speaking order from the Commissioner. In the earlier order, it was explicitly stated that the co-processor is an integral part of a computer system, assisting the main processor in performing additional functions. The Commissioner's conclusion that the co-processor's value should not be included in the computer system's value was deemed unfounded. The Tribunal emphasized that a co-processor, especially a numeric or math co-processor, is essential for the efficient functioning of a computer system. Referring to the decision in the case of Sunray Computers (P) Ltd., the Tribunal reiterated that the co-processor must be regarded as an essential part of the computer system.

In light of the arguments presented, the Tribunal set aside the portion of the Commissioner's order directing the exclusion of the co-processor from the list of items constituting the computer system. The Tribunal modified the Commissioner's order accordingly, allowing the Revenue's appeal on this specific aspect of the matter. The decision was dictated and pronounced in open court on 6-9-2007.