2002 (2) TMI 146 - AT - Central Excise

Issues Involved:
1. Inclusion of value of bought-out peripherals in the assessable value of computers.
2. Assessment of software supplied under separate contracts.
3. Classification and duty assessment of peripherals, hardware, and additional units.
4. Modvat credit entitlement.
5. Finalisation of duty assessments and demands.
6. Validity of Commissioner (Appeals) decisions and reliance on prior judgments.

Issue-wise Detailed Analysis:

1. Inclusion of value of bought-out peripherals in the assessable value of computers:
The assessee filed refund claims arguing that duties were paid under protest on bought-out peripherals like printers and drives, which were not integral parts of the computer but merely accessories. The Assistant Commissioner initially ordered the inclusion of these peripherals' values in the assessable value of the computer system. However, the Collector (Appeals) set aside this order and remanded the case for reconsideration.

Upon de novo consideration, the Assistant Commissioner concluded that if peripherals were supplied under a single contract, their value should be included in the assessable value of the computer system. The Commissioner (Appeals) later set aside this order, relying on Supreme Court decisions in cases like ORG Systems v. CCE and PSI Data Systems, which held that peripherals are accessories and not essential parts of the computer system.

2. Assessment of software supplied under separate contracts:
The Assistant Commissioner determined that software supplied separately should be classified and assessed on its own merit unless exempted from duty. This was upheld by the Commissioner (Appeals), who noted that the issue had been previously decided by the CEGAT, which required de novo adjudication based on the Supreme Court's decision in PSI Data Systems.

3. Classification and duty assessment of peripherals, hardware, and additional units:
The Assistant Commissioner held that if peripherals and additional units were sold without any manufacturing activity, no further duty would be attracted. This required the assessee to submit full details and declarations. The Commissioner (Appeals) later upheld this view, emphasizing that peripherals supplied along with computers under a common purchase order constituted an integral part of the system under Chapter Note 5(b) of the CETA, 1985.

4. Modvat credit entitlement:
The Tribunal ruled that if the value of peripherals was included in the assessable value of the computer systems, the assessee would be entitled to Modvat credit for the bought-out items, subject to compliance with legal requirements. However, the Assistant Commissioner did not allow Modvat credit due to the lack of duty-paid documents from the assessee.

5. Finalisation of duty assessments and demands:
Duty assessments for the period April 1988 to March 1991 resulted in a demand of Rs. 4,36,19,004/-. The assessee filed a writ petition, and the High Court granted a stay on recovery, subject to a partial payment. The Commissioner (Appeals) remanded the case for de novo examination, which led to a demand of Rs. 5,61,10,894.66 after including the value of peripheral units in the assessable value.

6. Validity of Commissioner (Appeals) decisions and reliance on prior judgments:
The Commissioner (Appeals) relied on Supreme Court decisions in PSI Data Systems and ORG Systems, and Tribunal decisions in the assessee's own case, to conclude that bought-out peripherals were accessories and not essential parts. The Tribunal dismissed the Revenue's appeal, finding no infirmity in the Commissioner (Appeals)' findings and emphasizing that peripherals should be viewed as accessories, not parts.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)' decision that the value of bought-out peripherals is not includible in the assessable value of computers, relying on Supreme Court and Tribunal precedents. The appeal by the Revenue was dismissed, affirming that peripherals are accessories and not essential parts of the computer system under Excise Law.

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