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2018 (6) TMI 639 - AT - Central ExciseValuation - manufacture of telecom optical transmission equipments / optical multiplexers - inclusion of value of Tejas Network Element Software (TEJNES) in the value of these multiplexers - whether the value of the TEJNES software loaded into / supplied along with multiplexers is required to be added to the value of multiplexers manufactured and cleared by the appellants for the purpose of arriving at assessable value and discharge of Central Excise duty? Held that:- A multiplexer is a device used in telecommunications, inter alia high speed transmission of one or more input signals on single shared medium or single device. The Linux software which is an operating system manages the communication between the multiplexer hardware and the software TEJNES. However, the most essential and indispensible item aspect which would be required to make such multiplexer operational and function in the manner that it is expected to do, is the TEJNES software. The TEJNES software is the critical suite which provides control and management of the individual net work elements in a geographically dispersed net work - No doubt, the Linux software is also preloaded into the multiplexer, however that is only an operating system amongst one of the many operating systems that are available worldwide to support the technologies like the digital net work management which the multiplexer sets out to do. The TEJNES software is thus an integral and indispensible to the multiplexer, without which the hardware cannot function. TEJNES software is an integral and indispensible requirement software, without which the multiplexer will have any functionality. The Operating System, Linux also loaded into the multiplexer cannot in any case by itself cannot make the multiplexer perform the functions it is required to do. The Ld. Advocate for the respondent has been at pains to contend to the contrary, however, no technical or expert evidence has been adduced to support those arguments. Thus, TEJNES takes the colour of “embedded software” - It is not a case of charging duty of software but it is a case of charging duty on the equipment which includes the value of such basic software. The TEJNES software has to be held as an integral and vital requirement of the multiplexers and as a software without the embedding of which, the hardware cannot function. Hence value of the TEJNES software will require to be included for the purpose of arriving at the assessable value and discharging duty liability - The impugned orders dropping the proceedings initiated in the related SCNs are therefore set aside and the matter remanded back to the adjudicating authority, only for the limited purpose of quantifying the differential duty liability, interest and penalty/ies as proposed in in the related SCNs - appeal allowed by way of remand.
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