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TMI Blog2009 (2) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules, 2002 (CER). The demands are towards duty due on installation charges collected by HCL from buyers of computers. The impugned orders deal with the same dispute for different periods. Appeal No. E/53/08 is taken up for detailed examination. 2. HCL manufactures and clears computers on sale from their factory, branches and frontline divisions. Components of each computer namely CPU, monitor, keyboard, mouse etc. are cleared in unassembled condition and are assembled by HCL in cases of request at the premises of the buyers. When computers are so installed at the buyer s premises, installation charges are charged separately in the respective invoices. During March 06 to September 06, HCL collected Rs. 6,68,60,561/- as installation charges in addition to the invoiced price of the goods. As per Section 4 of the Central Excise Act, 1944 (the Act), with effect from 1-7-2000, excisable goods subject to duty with reference to their value shall be assessed on their transaction value . The transaction value means the price paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay, by reason of, or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of transaction value did not seem to be divergently wider in connotation and scope from the reading of value under existing Section 4 by the Apex Court. Most of the charges covered on account of specific activities in the definition of the transaction value were includible in the computation of value under the Section 4 as it existed prior to 1-7-2000. In its Circular dated 30-6-2000, Ministry of Finance clarified further that such elements held to be includible in the assessable value under erstwhile Section 4 by various court judgments formed part of the transaction value. All the elements of cost which the assessee incurred till the sale/marketing of the goods continued to be included in the assessable value even under new Section 4. No additional amount which the buyer was liable to pay as part of the price was realized after the goods were sold. The consideration includible in the transaction value was the liability present at the time of sale of the goods. In Para 47 of the Bombay Tyre International Ltd. - 1983 (14) E.L.T. 1896 (S.C.), the Apex Court had identified the following charges to have enriched the value of the excisable goods and given the goods its marketa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The goods involved were EPABX. Same view was held in National Radio and Electronics Co. Ltd. v. CCE, Bombay -1995 (76) E.L.T. 436 (Tribunal). In the PSI Data Systems Ltd. v. CCE - 1997 (89) E.L.T. 3 (S.C.) the Supreme Court had held that installation charges were not addable to the value of the computer. This ratio was followed in Thermax Ltd. v. Collector of Central Excise - 1998 (99) E.L.T. 481 (S.C). The Commissioner wrongly held that CCE, Pondicherry v. ACER India Ltd., (supra), judgment was passed without considering the ratio of Bombay Tyre International Ltd. (supra). The same was per incuriam. HCL submitted that CCE, Pondicherry v. ACER India Ltd. case (supra) was an authoritative pronouncement on the transaction value and could not be described as per incuriam. That the computers were sold without charging installation charges showed that computers were marketable without undertaking installation. About 25% of the computers were sold without charging installation charges. Installation was a service activity and not one of sale. If installation could be included in the manufacturing activity, the same could not be charged to service tax. In the judgment of the Hon ble Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation of computers for levying duty of excise in cases they are installed by HCL. 7. Upto 30-6-2000, value of excisable goods subject to duty on ad valorem basis was defined in Section 4 of the Act as the price at which such goods are normally sold in arms length transactions. The new Section 4 introduced on 1-7-2000 replaced the concept of normal price with transaction value for assessment. As per Section 4(3)(d) of the Act, transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. Thus any amount which is paid or payable by the buyer to, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt concurred with the observations in its judgment in the Bombay Tyre International Ltd. case and extracted the following text. Now, the price of an article is related to its value (using this term in a general sense), and into that value have poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value up to the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently where the sale is effected at the factory gate, expenses incurred by the assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales service and marketing and selling organization expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organization expenses and after-sales service promote the marketability of the article and enter into its valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1996 (85) E.L.T. 102 (Tri.), the Tribunal relied on the decision in Uptron India Ltd. case and held that installation and commissioning charges (in the case of EPABX) could hot be added to the assessable value of the goods if they were separately realized. In National Radio and Electronics Co. Ltd. v. CCE, Bombay, the Tribunal held that installation and commissioning charges were not includible in the value. In PSI Data Systems Ltd. v. CCE - 1997 (89) E.L.T. 3 (S.C.), the Apex Court held that charges for installation of the computer and training of the purchaser s personnel to operate and maintain computers were not includible in the value of the computers. Similar ratio was laid down by the Apex Court in Thermax Ltd. v. CCE (supra) and the Quality Steel Tubes Pvt. Ltd. v. Collector of Central Excise (U.P.) - 1995 (75) E.L.T. 17 (S.C.). 8.1 We find that the Commissioner seeks to include consideration for an activity subject to service tax in the assessable value of excisable goods. The Tribunal held in Ericsson India Pvt. Ltd. v. CCE, Pondicheny - 2007 (212) E.L.T. 198 (Tri.- Chen.) = 2007 (7) S.T.R. 225 (Tri.-Chennai) and in CCE v. Stone India Ltd. - 2007 (212) E.L.T. 209 (Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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