1994 (9) TMI 170 - AT - Central Excise

Summary

Issues:
1. Whether installation and commissioning charges are includible in the assessable value of the goods?
2. Whether the value of software is includible in the assessable value of the computer?
3. Whether the demand for duty is within the limitation period under Section 11A of the Central Excises & Salt Act, 1944?

Analysis:

1. Includibility of Installation and Commissioning Charges:
The appellants argued that the demand for the period from 1-1-1981 to 31-12-1985 is time-barred as they had disclosed the collection of installation charges to the department. They contended that such charges were not part of the selling price for the computer system and were shown separately in their invoices. The appellants also highlighted a factual error in the Collector's order regarding the classification of essential peripherals. The appellants relied on various case laws to support their position. However, the department argued that the demand was not time-barred as the appellants had not disclosed all relevant information about the valuation of their goods. The department invoked the longer period under Section 11A based on the discovery of new material during a visit to the factory. The Tribunal held that installation and commissioning charges, if quantified separately, should be excluded from the assessable value. The appellants were directed to provide necessary particulars for this quantification.

2. Includibility of Software in Assessable Value:
The Tribunal confirmed that the cost of software is includible in the assessable value of the computer, even if it is a bought-out item. The Collector's order was upheld, citing previous case laws and emphasizing that software costs must be considered in the valuation.

3. Limitation Period for Demand of Duty:
The appellants successfully argued against the invocation of the longer period under Section 11A for demanding duty. The correspondence between the department and the appellants in 1982 regarding price lists indicated that the department was aware of the installation charges. The Collector acknowledged that the appellants were following industry practices and did not deliberately withhold information. Consequently, the demand for duty beyond the six-month limitation period was deemed time-barred, and the appeal was disposed of in favor of the appellants.

In conclusion, the Tribunal clarified the treatment of installation charges and software costs in the assessable value while also ruling in favor of the appellants regarding the limitation period for demanding duty.