HCL INFOSYSTEMS LTD. Vs. CCE

JUDGEMENT

(1.) M /s. HCL Infosystems Ltd. (HCL), filed the captioned appeals. Details of the appeals are as follows :

(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 1.07.2000, 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 in connection with the sale, at the time of sale or at any other time. CBEC had clarified vide Circular No. 634/34/02 -CX dated 01.07.2002 that if expenditure is incurred on erection, installation and commissioning to bring into existence any new excisable goods, these charges would be includible in the assessable value of the goods. Accordingly, a Show Cause Notice dated 05.04.2007 was issued to HCL, proposing to demand duty of Rs. 81,83,733/- on the installation charges of Rs. 6,68,60,561/- collected by HCL during 01.03.2006 to 30.09.2006, applicable interest and to impose penalty on HCL under Rule 25(1) of CER. HCL contested the proposals relying on various case law and Circulars issued by CBEC. In the impugned order, the Commissioner of Central Excise confirmed the proposals and also imposed a penalty of Rs. 50000/- on HCL under Rule 25(1) of CER.

(3.) EXCISE duty was payable on transaction value with effect from 01.07.2000. Transaction value comprised price actually paid or payable for the goods by the buyer and included in addition, any amount that the buyer was liable to pay to the assessee by the reason of sale, or in connection with sale including any amount charged for,