TMI Blog1998 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Companies Act. They are engaged in the manufacture of mini computers, micro processors based computer systems falling under Heading 84.71 of CETA. They had a licence from 1982. At that time the above items were falling under T.I. 33-D and when they were exempted from 17-3-1985 till 28-2-1987 they surrendered their licence. The duty on the same started to be levied from 1-3-1987 and they applied for licence and were issued with the same on 3-3-1987. They filed classification lists showing the mini computer with CPU only which was approved by A.C. on 28-2-1985. On 1-3-1987 they filed first classification list from 1-3-1987. Second classification list was filed effective from 1-4-1987 claiming as under : Mini computer micro processors base system as models listed below: (i) CMS - II, CPU with Floppy drive and keyboard. (ii) CMS PC CPU with floppy drive and keyboard. (iii) CMS PC/XT CPU with floppy drive and keyboard. (iv) CMS PC/AT - with keyboard, Winchester drive and floppy drive. (v) CMS mini CPU with keyboard and floppy drive. 4. Further the appellants were also carrying on business of trading activity in items known as monitors and printers. By their letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onitors and printers. It is also argued that printers which is an additional device for carrying out the function of printing cannot be a part of computer. Therefore clearance of such printers and monitors outside the licenced premises cannot be part of the assessable value of the computer as computers is manufactured only at the licenced premises and cleared as such. The entire process of the marketing of the final product viz. the computer is that at the time of clearance the computer is purchased viz. CPU and keyboard and when these materials are cleared as such the peripherals like the printers and the monitors which are the output device are cleared from outside the licenced premises optionally as a trading activity which was known to the department. The assessing authority did not agree with the contentions raised by the appellants and levied the duty. Hence the present appeal. 5. Learned Advocate Shri M.H. Patil assisted by Shri Arun Mehta argued before us that the approach of the Collector in this case was absolutely wrong. They reiterated their contentions raised before the Collector. They tried to emphasise the fact that whatever may be the Chapter Note 5 of Chapter 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. 7. As far as the question of levy of duty on printers and monitors is concerned, it is to be stated that they are not parts of computer but are only accessories for the effective utilization under convenience. The entire law has been fully crystallized by the Supreme Court in the case of PSI Data Systems v. C.C.E. - 1997 (89) E.L.T. 3. Secondly that computer and its software were 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. ROMs, but that it 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 recognized 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been claimed for printer and monitor. Moreover it is urged the supply of printer were optional at 30 to 40%. No doubt the statement of Pankaj Jain shows that output device is used by means of monitor and printers. Where it is a bought out item, it need not be included for the purpose of valuation. For that purpose he mentions several cases and one of which we cited is C.C.E. v. Kishore Pumps - 1997 (91) E.L.T. page 91 where the Tribunal has held that electrical motor, cannot be regarded a component or an integral part of a pump unless the excisable product manufactured is an unit combining both article or is a component system which also may be known to the trade. The court held that electrical motor could be distinct article or best as an accessory. Nowhere in the show cause notice or in the statements that they were manufacturing monitor and printers. They were only trading in those items. Hence the duty cannot be included in respect of trading items as it may not amount to levy by way of excise duty. Moreover the judgment of Supreme Court in ORG Systems, Baroda v. C.C.E. - 1998 (102) E.L.T. 3 (S.C.) = 1998 (77) ECR 619 has held that peripheral devices system software coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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