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1. M/s. Tata Unisys Ltd. have filed the present appeal being aggrieved with the Order-in-Appeal dated 11-3-1993, passed by the Collector of Central Excise (Appeals), Bombay.

2. The appellants were engaged in the manufacture of computer systems, falling under Heading No. 8471.00 of the schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff). They used to enter into contracts with their customers for supply of hardware, software and support requirements, making the computer configuration, as per requirements of their customers. For excise purposes they did not include the value of software to arrive at the assessable value of the computer system, and paid central excise duty only on that part of the value which they ascribed to the hardware. In the show-cause notice dt. 2-8-1991 it was alleged that the value of the software was includible for the purposes of arriving at the duty liability on the computer system. It was observed therein that their software was very much essential for the working of their computer; hardware without software will not make the computer workable, and that the total value of software plus hardware will form the assessable value of the computer system. The Asstt. Collector of Central Excise, Panaji, Goa, in his Order-in-Original dated 27-9-1991 observed that as their softwares were bought out items, were classifiable separately/independently, and enjoyed exemption from central excise duty, the value of the software could not be clubbed for arriving at the assessable value of computer system. On appeal the Collector of Central Excise (Appeals), Bombay under his Order-in-Appeal dated 11-3-1993 came to a finding that the software supplied by the assessee as per their contracts, was an essential component for the computer system to function, and the software and the hardware were cleared as one functional unit/system as per contracts. He held that the value of the computer system would include the value of software also.

5. Shri A.M. Setalvad, the learned Sr. Advocate referred to the relevant tariff entries and the Chapter notes, and stated that under the new tariff, the value of computer hardware could not include the value of software. In the old Central Excise Tariff there was no definition of the computer, while there is such a definition in the new Central Excise Tariff. Under the new Central Excise Tariff the software is classifiable separately and independently. Their sales were on contract basis and they have filed their price lists in Part-II proforma. He referred to the various categories of their contracts with the buyers and stated that in some cases there was a composite contract with a composite price, covering both hardware and software, while in some cases there were two distinct contracts - one for hardware and the other for software. There were also single contracts showing separately the prices of software and hardware. In some cases they had only supplied hardware. Sometimes the list of software was annexed with the contract, while at other times no such list was annexed. Relying upon the Supreme Court decision in the Sales Tax case - State of Uttar Pradesh v. Kores (India) Ltd. - AIR 1977 SC 132, the learned Sr. Advocate pleaded that the software, as typewriter ribbon in that case, was an accessory and not a part of the computer system. In that case the Hon. Supreme Court had stated that just as aviation petrol is not a part of the aeroplane nor diesel is a part of a bus, in the same way ribbon is not a part of the typewriter, though it may not be possible to type out any matter without it. The learned Sr. Advocate- however, admitted that without the systems software the computer will not work, and that the computer was useless without the systems software. The learned Sr. Advocate summarised that (1) the software could not be taken as part of the computer, (2) earlier decisions of the Tribunal in the cases of Sunray Computers, Wipro and PSI Data Systems, were not applicable to the present case, (3) the exemption notification should be given effect to, and (4) the appellants do not make software. He invited attention to the Chapter Notes in the new Central Excise Tariff, and referred to the following decisions :

6. Shri Prabhat Kumar the learned SDR referred to the legal submissions made by the learned Senior Advocate and stated that the reliance placed on Chapter Notes in the Tariff for valuation purposes was not proper. The Chapter notes were only for classification, and the valuation was independent of it. He referred to the Tribunal decision in the case of Col-Tubes (P) Ltd. v. Collector of Central Excise, Indore - 1994 (2) RLT 129 (CEGAT-A), wherein it has been held by the majority decision that valuation has to be done in accordance with the valuation provisions, and that the valuation is independent of the classification aspect. The learned SDR referred to the Tribunal decision in the case of Andhra Pradesh Paper Mills Ltd. v. Collector of Central Excise - 1993 (65) E.L.T. 447 (Trib.), wherein it has been held that classification of goods and valuation are two different concepts covered by their respective rules. Relying upon Tribunal's decision in the case of Bata (I) Ltd., Calcutta v. Collector of Central Excise - 1986 (25) E.L.T. 559 (Trib.) - it was contended that the commercial parlance test for classification was not extendable for arriving at the assessable value. He also stated that while construing one statute no help could be taken of other statute. In respect of the contention that the classification and valuation were two different matters and were to be determined on the basis of separate enactments - classification under the Central Excise Tariff Act, and the valuation under the valuation provisions of the Central Excises and Salt Act, the learned SDR referred to the Supreme Court decisions in the cases of Hari Khemu Gawali v. Deputy Commissioner of Police, Bombay - AIR 1956 SC 559, and the Board of Muslim Wakfs, Rajasthan v. Radhe Kishan - AIR 1979 SC 289 - wherein it has been held that the expressions used in one Act cannot be interpreted with reference to the expressions in another Act, unless the two Acts are in pari materia. He added that while we are concerned with Section 4 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act') the language under Heading 84.71 of the Tariff does in no way provide for the exclusion of the value of systems software while arriving at the assessable value of the computer system. The systems software are a set of instructions as how the machine should approach the given problem. The computer machine is incomplete without systems software. In the case of Name Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise -1988 (38) E.L.T. 566 (SC) - the Hon. Supreme Court had held that assembling of duty paid components of the weigh-bridge amounts to manufacture when both parts and final product are separately and specifically dutiable. It was mentioned that only when software has been supplied alongwith hardware, the value of the software has been included in the value of the computer system for calculating the duty liability. If the software has not been supplied, the value of software has not been included. He referred to the Bombay High Court's decision in the case of Telco v. UOI -1991 (52) E.L.T. 500 (Bom.) - to say that the assessable value was to be the value of the goods which are cleared from the factory, and added that we have to go by their purchase orders in each and every case. Reliance was placed on the Tribunal's decision in the case of Orient General Industries Limited v. Collector of Central Excise, New Delhi, 1994 (70) E.L.T. 764 (Trib.) - wherein it has been held that the regulators when sold alongwith the electric fan were an integral part thereof and were assessable at the same rate as electric fan. In the Jay Engineering Works Limited v. Govt. of India -1982 (10) E.L.T. 378 (AP) - it has been held that the cost of regulator was includible in assessable value of fan. In the case of Paharpur Cooling Towers v. Collector of Central Excise, 1986 (24) E.L.T. 611 (Tri.) - it has been held that assessable value of industrial fans has to include the value of gears which are important components. In the case of Bajaj Auto Limited v. Collector of Central Excise, 1989 (44) E.L.T. 763 (Trib.)- it has been held that the value of footrest was includible in the assessable value of scooters. This decision of the Tribunal has been confirmed by the Hon. Supreme Court as reported at 1993 (44) ECR page 23J. In the case of Auto Control (P) Ltd. v. Collector of Central Excise -1993 (63) E.L.T. 156 (Trib.) - it has been held that daizy wheel being an essential part of electric typewriter, and not an accessory, the value thereof was includible in the assessable value of electric typewriter. The learned SDR referred to the Supreme Court decision in the case of State of Uttar Pradesh v. Kores (India) Ltd. - AIR 1977 (SC) 132 -wherein it was held that typewriter ribbon was an accessory and not a part of the typewriter (unlike spool), he referred to para 18 of the Supreme Court decision wherein the criteria of essentiality has been referred to, and stated that the appellants' reliance on this Supreme Court decision goes against their case as in the present matter the system software was an essential part of the computer system. Reference was also made to the Tribunal decision in the case of Collector of Central Excise, Bombay v. Lawkin Pvt. Ltd., Thane, 1987 (31) E.L.T. 700 (Trib.) - wherein it has been observed that the value of parts and accessories of an article marketed was not excludible from assessable value of article on grounds of parts not being integral or essential part thereof, but merely accessories. The learned SDR submitted that the matter was entirely covered by the Tribunal's earlier decisions in the three cases of (1) Collector of Central Excise, Bangalore v. Sunray Computers (P) Ltd. - 1988 (33) E.L.T. 787, (2) Collector of Central Excise, Bangalore v. Wipro Information Technology - 1989 (39) E.L.T. 113 and (3) Collector of Central Excise v. PSI Data Systems - 1989 (39) E.L.T. 692. He added that there was no contrary judgment to these decisions. It was also added that the various judgments referred to by the appellant related to "accessory" only. As regards the effect of exemption on software he submitted that such scheme was normal in the Central Excise Tariff, and the matter has been discussed by the Collector of Central Excise (Appeals) in his order.

13. We find that the matter is entirely covered by the Tribunal's earlier decisions in the cases of Sunray Computers, Wipro and PSI Data Systems. Although the appellants have contended that after the introduction of the new Central Excise Tariff, the rationale of these decisions has lost their basis, as we will presently see, the law laid down by these decisions is very much valid law, in so far as the valuation of the systems software, as part of the computer system is concerned.

14. In the case of Collector of Central Excise, Bangalore v. Sunray Computers (P) Ltd. - 1988 (33) E.L.T. 787 (Trib.), the Tribunal has quoted with approval the following extracts from the book titled "Computer for Everybody" IIIrd edition by Jerry Willis and Merl Miller : "Hardware, the actual computer and its accessories is only half a computer system. To get it to do anything useful the computer must be given a set of instructions that will tell it exactly what to do. These instructions are called programs or software and they are at least as important as the nuts and bolts of a system." "A computer is only a dumb box with a bunch of electronics in it. All the talk about the marvellous things computer can do is really only talk about all the marvellous things software can do. The Tribunal observed that "without software the hardware is incomplete, a mere dumb box and of no use at all to the customer." They held that "if there is a single contract for the supply of computer including software the total value of the computer including that of the software would have to be assessed to duty irrespective of the fact whether the software part is supplied along with the hardware or in a separate lot and irrespective of the fact whether a single invoice is made for both hardware and software or a separate invoice is made for the software."