Customs, Excise and Gold Tribunal - Bangalore
Sunray Computers (P) Ltd. vs Cce on 5 June, 1997
Equivalent citations: 1997(72)ECR916(TRI.-BANGALORE)
ORDER
V.P. Gulati, Vice-President
1. The issue in the appeal relates to includibility or otherwise of the technical services rendered by the appellants towards upgradation and shifting of the computer while arriving at the assessable value of the computer/parts supplied by the appellants. The lower appellate authority has followed the ratio of the decision of the Tribunal in the case of P.S. Data System v. CCE while holding that technical services rendered have enriched the value of the goods.
2. The learned Counsel at the outset pointed out that the said order of the Tribunal has since been set aside by the Hon'ble Supreme Court vide their order . He has pleaded that the appellants had contracted to supply goods to the Port Trust as well as to the Central Bank and in terms of these contracts the appellants were to depute some technical personnel for the upgradation work of the computers which were already installed in the premises of above two customers and the goods supplied by them were to be integrated with the system of the customers. He has pleaded for setting aside the order of the CCE(A).
3. Shri V. Thyagaraj, learned SDR for the department has pleaded that since the service was rendered in the context of the goods supplied, these charges as recovered in terms of the contracts would be includible.
4. We have considered the pleas made by both the sides. We observe that what the appellants have contracted for supply were computers and parts thereof and thereafter the appellants undertook to render technical services for the purpose of upgradation of the system which was already installed at the customers premises by deputing their man power. The question to be answered is as to at which point of time the goods which have been supplied can be taken to have been manufactured and where the activities carried out at the customers' premises are relatable to the goods and can be taken to be enriching the value of the goods . The services as have been brought out in the order of the lower authority which were carried out by the appellants were at customer's place. The upgradntion of the equipment at places other than place of manufacture was done. Upgradation of the equipment already installed required change of some parts to make the system function qualitatively better than what was in existence earlier. The question to be answered is whether the value of such services can be taken to be relatable to the goods as were supplied or can be taken to be a separate activity carried out with reference to the system which was already in existence. The lower appellate authority has merely observed that the technical services rendered at the customers premises enriched the value of the goods. But nothing has been stated as to in what way the value of the goods came to be enriched and whether there was any further operation which were carried out in respect of the goods to change their character or otherwise and whether there was any activity curried out which would constitute manufacture at the premises of the customers. It is common knowledge that in case of sophisticated equipments customers seek the help of the manufacturer to make the system workable to the desired levels and that by itself would not enrich the value of the goods, but would rather contribute towards the goodwill of the suppliers of the goods. Technical services though may be an activity relating to the goods, but it relates to the making of the equipment functional at the customers premises. In our view, these activity cannot be taken to enrich the value of the goods. We observe that it has not been shown that the extra realisation made towards technical services rendered was disproportionate to the services rendered. In the above view of the matter, we hold that the lower appellate authority was in error in having included these charges for the purpose of assessment. We, therefore, set aside the order and allow the appeal of the appellants.
(Pronounced and dictated in open Court).