ACER INDIA LTD. Vs. CCE

JUDGEMENT

(1.) In appeal No. E/410/2003 the appellants i.e. M/s ACER India Ltd. are manufacturing computers, peripherals, servers, notebooks and accessories falling under Chapter Heading 8471, 8473.20 and 8473.90 of the Schedule to the Central Excise Tariff Act, 1985. Consequent to an investigation initiated, it appeared that they were not including the value of operational software in the assessable value/ transactional value of computers manufacturing and cleared by them on demand of duty w.e.f. 1.7.2000, which was required. It was the view of the department that the value of such operational software loaded on the computers and cleared when it was being done for the customers before removal, in connection with the sale of computers, by the appellants, it would form part of Transaction Value of the computers, as per the provisions substituted Sec. 4 of the Central Excise Act, 1994 [effective from 1.7.2000]. Certain other charges of violation of Central Excise Rules were also found and invoked in the two show cause notices issued. The same had been decided by the Commissioner, who after considering the material on record determined the following points as raised in the show cause notices issued: -

(2.) The Commissioner, after examining the purchase orders and the invoice -cum -delivery challans, came to a conclusion that "pre -loading of the operational software was invariably done on the computers before being cleared from the factory". Therefore, he held that the requirement of operational software being optional was inconsistent with the practice as adopted. It was also found by him that for different models of computers, different operational softwares were loaded. He found that operational softwares being installed in the factory and there was no evidence produced that operational software alone was sold to a particular customer, as also manufacturers of software invariably were insisting that before shipment of the computers, the software should be loaded on to the computers to ensure that the computers contain the original and genuine software and that it was obligatory on the assessee to pre -load the software on the computers before they were removed from his factory.

(3.) The Commissioner, thereafter, distinguished the case of Hon'ble Supreme Court in the case of PSI Data Systems Ltd. (2002 -Taxindiaonline -46 -SC -CX), in as much as, in the facts of the present case, since operational software in question was pre -loaded or installed before being removed from the factory the question was not in relation to the inclusion of the value of software sold, with the computer, in the form of disks, floppies, CD Roms and the like. He concluded the valuation of the computers by coming to the following findings: -