9911796707
TMI Blog1996 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1989) relate to the Tariff as it was prior to 28th February, 1986. The appeal of M/s. Tata Unisys Limited (Civil Appeal No. 6042 of 1994) relates to the present tariff under the Central Excise Tariff Act, 1985. 2.The question, principally, is in relation to the inclusion of the value of software sold with the computer in the assessable value thereof. It is not the contention of the appellants that the firm or etched software that is implanted into a computer is not to be taken into account in the valuation thereof for the purposes of excise duty. It is their case that the value of the software, such as discs, floppies, C.D. rhoms and the like, that they may sell along with the computer is not to be taken into account for the aforesaid p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational program controls the hardware and actually makes the machine operate. It is fundamental and necessary to the functioning of the hardware. An applicational program is designed to perform specific functions once the programming information is fed into the computer." 5.Tariff Item 33DD of the earlier Tariff dealt with "computers (including central processing units and peripheral devices), all sorts". 6.The present tariff deals with computers in Chapter 84. Heading 84.71 reads thus :- "Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included." Chapter Note 5(a) states ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments that are impugned proceeded upon the basis that the appellants sold computer systems and that a computer system was incomplete without systems software inasmuch as mere hardware without systems software did not make the system workable. It relied upon its earlier judgment in the case of Collector of Central Excise, Bangalore v. Sunray Computers Private Limited - 1988 (33) E.L.T. 787, in this behalf. That judgment observed that "without software the hardware was incomplete, a mere dumb box and of no use at all to the customer. If there was a single contract for the supply of a computer including software the total value of the computer including that of the software would have to be assessed to duty irrespective of the fact whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commercial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essential part of a typewriter so as to attract tax as per Entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957." On the same reasoning, it was submitted, the software that was sold by the appellants along with their computers was not an essential part of the computers. What a computer was had to be judged in the light of its commercial sense and, in that sense, the software was not understood to be a part of the computer. Reference was made to Section 80HHL of the Income Tax Act which pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm software that was etched into the computer; this is not even the appellants' case. 12.In the first place, the Tribunal confused a computer system with a computer; what was being charged to excise duty was the computer. 13.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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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