2008 (12) TMI 139 - AT - Central Excise

Includibility of installation and maintenance charges contract entered into between assessee and Mahanagar Telephone although was a composite contract, there was clear divisibility of supply and service, by a thorough reading of the purchase order therefore, impugned charges are not includible in respect of demand raised on ground that bought out items also manufactured and supplied with computers manufactured, demand is confirmed in absence of any evidence adduced by the assessee to show that those were distinctly supplied goods without being integral part of computer system

Issues:
1. Imposition of levy on installation charge and taxing inputs used in the computer.
2. Duty demand and penalty against the Assessee.
3. Levy of duty on computer components.
4. Appeal against penalty imposed on the Managing Director.
5. Appeal regarding the limitation of filing an appeal.

Issue 1: Imposition of levy on installation charge and taxing inputs used in the computer
The Revenue appealed contending that the Adjudicating Authority properly imposed the levy on the installation charge and taxing the inputs used in the computer. The Revenue argued that a composite contract involving supply and service was executed by the Respondent, making it inconceivable to exempt installation from duty. The Appellate Authority had erred in not including the installation and commission charges in the assessable value. However, the Tribunal found that the services agreed upon in the purchase order were distinct from the value of the goods, and the services rendered were independent of each other. Therefore, the services not being goods were not liable to duty. The Tribunal dismissed the Revenue's appeal and confirmed the levy of duty on computer items.

Issue 2: Duty demand and penalty against the Assessee
The Assessee was in appeal against a duty demand of Rs. 76,800 with an equal amount of penalty. The duty demand was on the supply of computer components as an integral part of the computer supplied by the Assessee. The Tribunal found that the bought-out items were not distinctly supplied goods without being an integral part of the computer system. As a result, the Tribunal dismissed the Assessee's appeal on the grievance of duty and penalty, confirming the first Appellate order on the issue.

Issue 3: Levy of duty on computer components
The learned counsel for the Respondent relied on previous judgments to argue that commissioning, installation charges, and training charges were beyond the scope of duty levy. The Tribunal examined the purchase order and invoices, concluding that the contract between the Assessee and the Telephone Authority was a composite contract with clear divisibility of supply and service. The Tribunal found that the services agreed upon were distinct from the value of the goods, and therefore not liable to duty.

Issue 4: Appeal against penalty imposed on the Managing Director
There was an appeal against the penalty of Rs. 1,00,000 imposed on the Managing Director of the Appellant-Company. The Tribunal found that the appeal was dismissed erroneously due to a misunderstanding of the timeline of communication and the bar of limitation. The Tribunal dismissed the appeal against the penalty.

Issue 5: Appeal regarding the limitation of filing an appeal
The appeal before the Tribunal was challenged on the grounds of limitation. The Tribunal examined the provisions of the Central Excise Act, 1944, and found that the Assessee did not demonstrate how they were aggrieved by the order passed by the Appellate Authority. Without delving into the question of limitation, the Tribunal dismissed the appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal on the imposition of levy, upheld the duty demand and penalty against the Assessee, ruled against the levy of duty on computer components, dismissed the appeal against the penalty imposed on the Managing Director, and dismissed the appeal regarding the limitation of filing an appeal.

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