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TMI Blog1996 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... rial on record. A computer may not be capable of effective functioning unless loaded with software such as discs, floppies and C.D. rhoms, but that is not to say that these are part of the computer or to hold that, if they are sold along with the computer, their value must form part of the assessable value of the computer for the purposes of excise duty. To give an example, a cassette recorder will not function unless a cassette is inserted in it; but the two are well known and recognised to be different and distinct articles. The value of the cassette, if sold along with the cassette recorder, cannot be included in the assessable value of the cassette recorder. Just so, the value of software, if sold along with the computer, cannot be incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intellectual property, also called software, that is recorded or stored thereon. 4.It is necessary, to start with, to make a distinction between hardware, which is the computer, and the programming necessary to run it, which is the software. (See Computer Contracts Negotiating and Drafting Guide by Robert P. Bigelow). "Software" has been stated in the same publication to describe "programmes which consist of instructions recorded on punched cards, magnetic tapes and discs. These devices instruct the computer as to what functions it will perform" to produce the desired output. In a judgment delivered by the Supreme Court of Illinois in the case of First National Bank of Springfield v. The Department of Revenue, it was observed :- "I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogramme or programmes and at least the date immediately necessary for the execution of the programme; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and (4) executing, without human intervention, a processing programme which requires them to modify their execution by logical decision during the processing run;" Heading 85.24 deals with "records, tapes and other recorded media for sound or other similarly recorded phenomena, including matrices and masters for the production of records and includes gramophone records, audio tapes, audio cassettes, video tapes, video cassettes, magnetic discs and other cassettes and discs". Chapter Note 6 states : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate invoice is made for the software." The Tribunal held that the excise liability of the computer system had to be determined with reference to the computer system itself and for assessment of the computer system it was immaterial whether the software was a bought out item. In the assessment of the computer system an individual part lost its independent identity and became a part of the computer system. 8.The appellants before us have sold only a computer, or a computer along with software, and the software might have been imported or bought out. Some contracts in this behalf are lump-sum contracts and some are for the computer and the software separately. Sample contracts are on the record. 9.Learned Counsel for the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as including any electronic or similar device having information processing capabilities and a computer programme is defined to mean a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result. Interestingly, the Copyright Act defines `literary work' to include computer programmes, tables and compilations including computer data bases. Reference was also made to the aforementioned contracts which indicate the distinction that buyers made between the computer and the software. 10.In the appeals of Wipro Information Technology Limited and PSI Data Systems Limited, the charges for installation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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