1996 (12) TMI 47 - SUPREME COURT

Whether the value of the software, such as discs, floppies, C.D. rhoms and the like, that may sell along with the computer is not to be taken into account in the valuation thereof for the purposes of excise duty?

Held that:- In the first place, the Tribunal confused a computer system with a computer; what was being charged to excise duty was the computer.

Secondly, that a computer and its software are distinct and separate is clear, both as a matter of commercial parlance as also upon the material on record. A computer may not be capable of effective functioning unless loaded with software such as discs, floppies and C.D. rhoms, but that is not to say that these are part of the computer or to hold that, if they are sold along with the computer, their value must form part of the assessable value of the computer for the purposes of excise duty. To give an example, a cassette recorder will not function unless a cassette is inserted in it; but the two are well known and recognised to be different and distinct articles. The value of the cassette, if sold along with the cassette recorder, cannot be included in the assessable value of the cassette recorder. Just so, the value of software, if sold along with the computer, cannot be included in the assessable value of the computer for the purposes of excise duty. In favour of assessee.