TMI Blog2005 (5) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... tware and place orders for the same. 2.2 He, further, mentioned that during the early eighties, when hardware production in India was at its primitive stage the customers preferred composite services to be rendered by computer hardware manufacturers; that these services were like installation of the computer system advice on the facilities and install the computer system/office machine, advice on any ancillary equipment, assembly and installation training the personnel for operating the system etc.; that thus the supply orders specifically provided separately for technical services; that the Appellants were issuing separate invoices in respect of technical service charges known as 'T' series invoices, in respect of peripherals known as 'P' series invoices and in respect of software development known as 'S' series invoices. 2.3 He, further, mentioned that show cause notice was issued to them proposing to include the charges towards cost of software, technical services and peripheral, that the Collector, Central Excise, vide Order-in-Original No. 3/89-90 dated 13-3-1990 confirmed the demand of differential excise duty and imposed penalty; that on appeal filed by the Appellants, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has relied on the statements of various customers; that the Appellants had specifically requested for cross-examination of the customers which had not been granted to them and thus the impugned Order had been passed in violation of the principles of natural justice; that when the allegation of under-valuation in respect of non-inclusion of technical service charge is based on statements of their customers, it is not correct to say that the request for cross-examination is general and vague and without any basis; that the Commissioner had also not taken note of the various Purchase Orders filed by them along with reply to show cause notice, which clearly established that the customers specifically required them to provide technical service. In support of his contention, the learned Advocate referred to the Purchase Order of M/s. National Aeronautical Laboratory (Page 77 of the Paper Book) which clearly mentions that "HCL will depute their Engineers for installation and assembly of the system" and that "HCL shall undertake to train 5 persons from NAL on the relevant Hardware and Software features at their works and the entire cost of travel, boarding, lodging and training shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 cassettee 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." 5.2 The learned Consultant also placed reliance on the recent judgement of the Supreme Court in the case of C.C.E., Pondicherry v. Acer India Ltd., 2004 (172) E.L.T. 289 (S.C.), wherein the Supreme Court observed that "it is not possible to agree that without an operating software, the computer would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 980 to 30-11-1984 and the show cause notice was issued on 27-10-1986; that for the period 1-4-1981 to 31-10-1983, a demand had already been raised by the Commissioner on software charges and as such the Department had knowledge of these charges; that in their letter dated 10-11-1983, the Appellants had furnished the information to the Department about software and they had also mentioned that software has no relationship whatsoever to the hardware and is related entirely to the complexivity, variety and quantitative and qualitative requirements of the customer; that in view of this, extended period cannot be invoked. 6. Finally, he submitted that the entire duty demand is time-barred since the authorities were well informed of the invoicing pattern of the Appellants as the Enquiry Committee had visited their factory and minutely examined their operations including invoicing pattern; that further in show cause notice dated 15-12-83, only the software charges were proposed to be included in the assessable value; that thus the authorities felt that technical service charges were not to be included in the assessable value; that if the Department itself felt that no excise duty can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the computer is concerned, we observe that recently the Constitutional Bench of the Supreme Court has dealt with this issue in the matter of Commissioner of Central Excise, Pondicherry v. Acer (India) Ltd., 2004 (172) E.L.T. 289 (S.C.). The Supreme Court has held therein that "although a computer may not be capable of effective functioning unless loaded with softwares, the same would not tantamount to bringing them within the purview of the part of the computer to hold that if they are sold along with computer, their value must form part of the assessable value for the purpose of excise duty." The benefit of this decision was not available to the adjudicating authority as the impugned Order has been passed before the pronouncement of the judgement in the case of Acer India Ltd. (supra). We also observe that the appellants have contended that they are also selling the software in C.D. and floppies and not only software, which is found or etched software i.e. implanted into a computer. This point also has not been taken into consideration by the adjudicating authority while confirming the demand. In our view, the matter should go back to the adjudicating authority so that the d ..... 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