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TMI Blog1988 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the computers. The Assistant Collector further held that the respondents had not disclosed to the department the amounts collected in the name of technical service charges and further that the charges on account of technical services were inflated so as to divert a part of the price of the computers to the technical service charges. Holding it a case of suppression of facts by the respondents, in which the extended time limit of 5 years applied for demand of duty short levied, the Assistant Collector confirmed the demand for duty of Rs. 34,42,668.65. In appeal, the Collector (Appeals) held that technical service charges were optional and were for rendering professional services by the respondents and hence they were not includible in the assessable value of the computers. The Collector (Appeals) further held that there was no suppression of facts by the respondents. Accordingly, he allowed the appeal of the respondents and set aside the entire demand. The department is now in appeal before us against the order passed by the Collector (Appeals). 3. We have heard both sides and have given the matter our earnest consideration. Technical service charges are of various types. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative of the department further stated that the department accepted the principles decided by the Tribunal in the Sunray and Wipro cases and he wanted those principles to be followed for the present case also. The respondents, in addition to making oral arguments, submitted a written summary of such of their submissions as they pressed for during the hearing. On going through their arguments and their written summary, we find that their only dispute in respect of the Tribunal's earlier judgments in Sunray and Wipro cases is in respect of software. The respondents maintained that "technical services are pure intellectual property" which cannot be considered as an excisable commodity. We find that we have already dealt with this argument at length in the Sunray case. We have held therein that if only a service as such is performed, there would be no question of charging Central Excise duty but where tangible goods come into existence as a result of intellectual-cum-industrial activity and such goods are bought and sold in the market, they have to be treated as excisable. We reiterate the same view here. The other plea of the respondents in respect of software is that in the Sunray ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer. We do not, therefore, think that any departure is called for from the principles laid down by us in the Sunray case. We reiterate the same view here. It is obvious that no customer would like to invest lakhs of rupees on a computer just for the luxury of doing simple jobs of addition, substraction, multiplication etc. 5. The respondents then relied on the Bombay High Court judgment in the case of Tata Sons Limited v. U. O.I. & Others -1982 E.L.T. 53 (Bom.). We find that their reliance is mis-placed. To keep the record straight, we re-produce below the passage in the said-judgment which the respondents relied on :- "The principal question which requires determination is whether the computer would fall under definition of 'machine' or could be properly described as an electrical instrument, apparatus or appliance. To appreciate the problem, it would be convenient to find out what the expression 'computer' connotes. The 'computer' is a comprehensive expression which includes the Central Processing Unit, Disk File Storage Units, Disk Pack Drives, Disk Cartridge Drives, Magnetic Tape Drive Units, Line Printers, Card Readers, Paper Tape Punch Unit, Console Printers and Display Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. To take another example, if the respondents' arguments were to be accepted there would be no excise duty on cinema films once duty on blank/un-exposed film had been paid. But it is not so because the two are different commodities and the tariff had a specific scheme to tax both separately. The respondents complained of discrimination and violation of Article 16 of the Constitution of India inasmuch as, they alleged, that while they were being called upon to pay duty in respect of the software purchased and supplied, certain other manufacturers were not so taxed. We find that this is a new argument put forth by the respondents. No such allegation of discrimination was made before the lower authorities and, consequently, the facts whether any discrimination existed or not are not before us. Secondly, this Tribunal is not the right forum where the constitutionality of a taxing provision could be challenged. Thirdly, we find that our judgments in Sunray and Wipro cases laid down certain principles which apply equally to all manufacturers of software in India. We do not, therefore, know how the question of discriminating against the respondents alone arises. 7. In the lower orders a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988 (36) E.L.T. 517 (SC) - Collector of Central Excise v. Kelvinator of India Ltd.] 9. Since we have held that cost of some of the items of technical services is includible in the assessable value of the computers while the cost of certain other items is not includible, the Assistant Collector would have to go through each contract and segregate the includible and non-includible items. From the sum total of the invoices issued by the respondents for the computer as well as the technical services, the cost of non-includible items could be excluded and the assessable value re-determined. As to whether there had, in fact, been diversion of the cost of the computer to the cost of ex-cludible items of technical services, can be determined with the help of a Chartered Accountant/Cost Accountant. If the Assistant Collector did not agree with the costing done by the respondents' Chartered Accountant/Cost Accountant, the department could appoint its own Chartered Accountant/Cost Accountant. The respondents contended that there was no diversion of cost because in a few cases the contract for technical services and software was cancelled but because of such cancellation the price of the mai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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