Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2014 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (6) TMI 387 - AT - Central ExciseValuation of goods - s.4(1)(b) of CEA, 1944 - Rule 6 of Valuation Rules, 2000 - royalty/licence fee paid by Tata Sky to NDs for the download of the software by the appellant - Ehancement in valuation of goods - Revenue contends that STB manufactured and supplied by the appellant is sought to be enhanced in terms of the provisions of Rule 6 of the Central Excise Valuation Rules, 2000 - whether the cost of remote control supplied free of charge by the buyer can be added in the value of STBs supplied by the appellant to the buyer - Held that:- both the smart card (viewing card) and the software are an integral part of the STB manufactured and supplied by the appellant. From the statement of Sri. A.K. Mehrotra, Group Financial Controller, it is evident that the STB contains PCB boards and various electronic components which include integrated chips (IC). These ICs are first put on to the AP 600 programming machine from where the software is copied on to the IC and ICs are then fixed on the PCB board through surface mounting technology process. As per system integration agreement, the STB integration costs refer to the cost of development of the software, which is required to be supplied by the manufacturer. NDS assists the manufacturer to develop this software to be loaded on to the STB - subscriber access card is the key component of the conditional access system and it is an active security device of the STB and hence an integral part of the STB. Therefore, the cost of the same has to be included in the assessable value of the STB in terms of Rule 6 of the Central Excise Valuation Rules. Pre-loaded operating systems software in the Hard Disk Drive of the laptop forms an integral part of the laptop and therefore, the cost of such pre-loaded software forms part of the value of the laptop - cost of software which has been loaded on to the flash memory which in turn has been soldered onto the PCB of the STB forms an integral part of the STB and therefore, the value of the STB shall include the value of such software also. In these circumstances, we uphold the confirmation of duty demand against the appellant by including the value of remote control, smart card and software in the value of STB. Consequently, the appellant shall also be liable to interest on the said duty demand confirmed. - Decided against the assessee. Penalty under Rule 25 of the Central Excise Rules - whether the penalty should be imposed equal to the duty sought to be evaded or not - Held that:- No doubt, the assessee did not declare or reveal to the department the cost of items supplied free by the buyer and the non-inclusion of cost of such free supply in the assessable value of the STB manufactured and cleared by them. The appellant also did not inform or declare to the department the existence of various agreements relating to the design, manufacture and supply of the STB which could have supported its contention that it did not have any intention to evade payment of duty. Since the issue entailed interpretation of the provisions relating to valuation, in our considered view, imposition of penalty equal to the duty is not warranted. A penalty of (say) 5% of the differential duty demanded would suffice for contravention of the statutory provisions - Decided partly in favour of assessee.
|