LexO.R.G. SYSTEMS BARODA versus COLLECTOR OF CENTRAL EXCISE, VADODRA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
O.R.G. SYSTEMS BARODA
v.
COLLECTOR OF CENTRAL EXCISE, V ADODRA
JULY 21, 1998
B
[SUJATA V. MANOHARAND K. VENKATASWAMI, JJ.]
Excise Law:
Central Excises and Salt Act, 1944 : Tariff Item 33-DD.
c
Excise duty-Companies- Peripheral and Systems software-Value
of-lncludibility-Assessee got computers manufactured by other firms by
supplying raw materials as well as specifications and designs-These firms
manufactured and supplied to the assessee complete computers which had
Central Processing unit with "etched-in" or "burnt-in" software, keyboard
D (input device), monitor (output device) and disc drives-The said firms
cleared the computers in accordance with Excise law after paying proper
..
~
excise duty-Such computers along with peripheral devices and systems,
r
which were imported by assessee after paying countervailing duty, were
marketed by a dummy unit of the assessee- Held: Under these circumstances,
E such computers not liable for duty in the hands of the assessee-Further, the
value of the peripherals and value of the service charges recovered by the
assessee under service contracts, also not includible in the assessable value
of computers.
·The appellant-assessee got computers manufactured by other firms by
F supplying raw materials as well as specification and designs. Those firms
manufactured and supplied to the assessee complete computers which had a
Central Processing Unit with "etched-in" or "burnt-in" software, a keyboard
(input device), monitor (output device) and disc drives. The said firms
cleared the computers in accordance with the Excise law after paying proper
G duty. These computers alengwith peripheral devices and systems software,
which were imported by the appellant after paying countervailing duty, were
marketed by a dummy unit of the appellant.
The excise authorities held that the value of the peripheral devices,
systems software and the service charges recovered by the appellant under
H service contracts was includible in the assessable value of the computers
820
0.R.G. SYSTEMS v. C.C.E. [K. VENKATASWAMI, J.]
821
under Sections 3 and 4 of the Central Excises and Salt Act, 1944 and Tariff A
Item 33-DD. The Customs, Excise and Gold (Control) Appellate Tribunal
upheld the view of the excise authorities. Hence this appeal.
Allowing the appeal, the Court
HELD : 1. In the light of the ratio laid down by this Court in PSI Data B
Systems' case the' value of the peripheral devices and systems software
cannot be included in the assessable value of the computers. Hence, the
computers are not liable for excise duty in the hands of the assessee.
Likewise the value of the service charges also cannot be included.
(825-G]
PSI Data Systems Ltd, v. CCE, (1997) ELT 3 SC, relied on.
State of UP v. Kores (India) Ltd., (19771 1 SCR 837 ~nd State of
Mysore v. Kores, (India) Ltd, cited.
c
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6060-6061 D
of 1994.
From the Judgment and Order dated 5.7.94 & 24.1.89 of the Central
Excise & Gold (Control) Appellate Tribunal, New Delhi in F.O. No. 168/
94-A in A. NO. E/2188-85-A in Order No. 8 of 1989-A.
S. Ganesh, Mrs. Nisha Bagachi, Rajan Narian and Kamal Mehta for
M(s. J.B. Datachanji and Co., for the Appellant.
N.K. Rajpai and VJ. Francis for V.K. Verma for the Respondent.
The Judgment of the Court was delivered by
K. VENKA T ASW AMI, J. These two appeals arise out of a common
order dated 5.7.94 of the Customs Excise & Gold (Control) Appellate Tribunal,
New Delhi (hereinafter called "the Tribunal"). The issues that arise out of the
order of the Tribunal under appeal are no longer .res integra. The decision
E
F
of this Court in PSI Data Systems Ltd. v. Collector of Central Excise, (1997) G
89 E.L. T. 3 S.C. settles the controversial issues raised in these appeals.
"'-.
Briefly stated the facts are the following :-
The appellant is engaged in the manufacture of Computers falling under
Tariff Item 33-DD from May, 1982 when they got the necessary licence. Prior H
822
SUPREME COURT REPORTS
[ 1998] 3 S.C.R.
.A to May, 1982 the appellant got the Computers m~ufactured by {a) Mis Digital
Systems International (for short 'OSI') and (b) Mis Orbit Electronics (for short
'Orbit') by supplying raw materials and also by supplying specifications and
designs. The Computers so manufactured by the appellant, as stated above,
as well as those manufactured by the appellant after May, 1982 were marketed
by Mis AdprinExcerpt shown. Read the full judgment & AI analysis in Lexace.