Customs, Excise and Gold Tribunal Delhi Collector Of Central Excise vs Sunray Computers (P) Ltd. on 17 December, 1987 Equivalent citations: 1989(22)ECC362, 1988ECR99(TRI.DELHI), 1988(33)ELT787(TRIDEL) ORDER K.L. Rekhi, Member (T) 1. The respondents manufacture and sell computers. The dispute in this appeal of the department is whether (i) technical consultancy fee; (ii) installation and commissioning charges; (iii) charges for training the staff of the customer; (iv) warranty charges; (v) other service charges; and (vi) software/ROMs supply charges should form a part of the value of the computers for purposes of assessment of central excise duty under Section 4 of the Central Excises and Salt Act, 2. The dispute pertains to 5 pricelists of 1983. The respondents filed these pricelists in Part II, separate for each contract of sale. The purchase order itself was Annexed to the price lists and it disclosed the goods and the services to be supplied and the charges therefor. When we saw the pricelists, we found that they were stamped with an undated approval endorsement by the Assistant Collector. A doubt arose in our mind whether after having approved the pricelists, net of the software and service charges, the Assistant Collector could reopen the assessment on his own. The learned representative of the department then explained that the sequence of events was not so. He stated that as soon as the respondents filed the price lists, the valuation dispute started. The then Assistant Collector immediately issued a show cause notice proposing to include the charges for the software and the services which were a part of the same consolidated contract. On adjudication, the Assistant Collector relying on the Supreme Court judgment in the case of Bombay Tyres International Limited [1983 ELT 1896 (SC)], held that the supply of software and services promoted the marketability of the computers and hence the charges for software and the services could not be excluded from the assessable value of the computer. The respondents went in appeal and the Collector (Appeals) held that supply of software and services had no nexus with the manufacture and sale of computers and hence the charges for the software and the services could not be included in the assessable value of the computers. It was after the passing of this orderinappeal, favourable to the respondents, that the successor Assistant Collector then holding charge approved the price lists net of the cost of software and services. The department was now in appeal before this Tribunal with the prayer that the impugend orderinappeal may be set aside and the order of the Assistant Collector may be restored. 3. We have heard both sides and have given the matter our earnest consideration. The relevant paragraph of the aforesaid Supreme Court judgment in the case of Bombay Tyres International Limited reads as under : "49. We shall now examine the claim. It is apparent that for the purpose of determining the 'value', broadly speaking both the old Section 4(a) and the new Section 4(1)(a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old Section 4(a) or under the new Section 4(1)(a) is not ascertainable, the price is determined under the old Section 4(b) or the new Section 4(1)(b). Now the price of an article is related to its value (using this term in a genral sense), and into that value have poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stock carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses marketing and selling organisation expenses and after sales service promoted the marketability of the article and enter into its value in the trade." The scope of this paragraph has been further clarified by the Supreme Court in their later judgment in the case of M/s. MRF Limited [1987 (27) ELT 553 (SC)] according to which all costs incurred for manufacturing and marketing of the goods upto the stage of delivery at the factory gate have been held to be includible while expenses incurred after removal of the goods from the factory gate have been held to be not includible in the assessa