Customs, Excise and Gold Tribunal Delhi Tata Unisys Ltd. vs Collector Of Central Excise on 30 June, 1994 Equivalent citations: 1994(73)ELT96(TRIDEL) ORDER Lajja Ram, Member (T) 1. M/s. Tata Unisys Ltd. have filed the present appeal being aggrieved with the OrderinAppeal dated 1131993, passed by the Collector of Central Excise (Appeals), Bombay. 2. The appellants were engaged in the manufacture of computer systems, falling under Heading No. 8471.00 of the schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff). They used to enter into contracts with their customers for supply of hardware, software and support requirements, making the computer configuration, as per requirements of their customers. For excise purposes they did not include the value of software to arrive at the assessable value of the computer system, and paid central excise duty only on that part of the value which they ascribed to the hardware. In the showcause notice dt. 281991 it was alleged that the value of the software was includible for the purposes of arriving at the duty liability on the computer system. It was observed therein that their software was very much essential for the working of their computer; hardware without software will not make the computer workable, and that the total value of software plus hardware will form the assessable value of the computer system. The Asstt. Collector of Central Excise, Panaji, Goa, in his OrderinOriginal dated 2791991 observed that as their softwares were bought out items, were classifiable separately/independently, and enjoyed exemption from central excise duty, the value of the software could not be clubbed for arriving at the assessable value of computer system. On appeal the Collector of Central Excise (Appeals), Bombay under his OrderinAppeal dated 1131993 came to a finding that the software supplied by the assessee as per their contracts, was an essential component for the computer system to function, and the software and the hardware were cleared as one functional unit/system as per contracts. He held that the value of the computer system would include the value of software also. 3. The appellant filed a writ petition in the Bombay High Court, Goa Bench, and the Hon. High Court ordered as under : "The Customs, Excise & Gold (Control) Appellate Tribunal to dispose of the appeal of the petitioners as early as possible and preferably before 31st December, 1993. In the meantime the petitioners to pay levy on the goods cleared by giving bank guarantee to the extent of 25 per cent and bond in respect of the remaining 75 per cent in the difference between the levy challenged and demanded by respondents, in so far as software is concerned. In the event the petitioners fails in their appeal the petitioners to make good the entire levy along with interest @ 12% within four weeks from the date of the order, subject to any statutory remedy." 4. The matter was posted for hearing on 3121993, but had to be adjourned on the request of the learned Sr. Advocate appearing for the appellants. The learned Sr. Advocate had stated that for the disposal of the appeal certain documents which have not been filed by them, are essential, and that he needed time for filing of those documents. The matter was adjourned to 13th January, 1994 when again the matter had to be adjourned as it could not have been concluded within the time available. The matter was accordingly posted for hearing on 451994 when Shri A.M. Setalvad, Sr. Advocate with Shri F. Sarobjee, Advocate, and Ms. P. Bhandari, appeared for the appellants. Shri Prabhat Kumar, SDR represented the respondent. 5. Shri A.M. Setalvad, the learned Sr. Advocate referred to the relevant tariff entries and the Chapter notes, and stated that under the new tariff, the value of computer hardware could not include the value of software. In the old Central Excise Tariff there was no definition of the computer, while there is such a definition in the new Central Excise Tariff. Under the new Central Excise Tariff the software is classifiable separately and independently. Their sales were on contract basis and they have filed their price lists in PartII proforma. He referred to the various categories of their contracts with the buyers and stated that in some cases there was a composite contract with a composite price, covering both hardware and software, while in some cases there were two distinct contracts one for hardware and the other for software. There were also single contracts showing separately the prices of software and hardware. In some cases they had only supplied hardware. Sometimes the list of software was annexed with the contract, while at other times no such list was annexed. Relying upon the Supreme Court decision in the Sales Tax case State of Uttar Pradesh v. Kores (India) Ltd. AIR 1977 SC 132, the learned Sr. Advocate pleaded that the software, as ty