The Division Bench of Supreme Court, on 30th March, held that the charging of Excise duty on Computers and softwares must be made separately since they are two distinct things and classified differently under the Central Excise Act. The highlights of the judgments are the following.
The respondents-assessees are manufacturers of dissolved and compressed industrial gases and allied products. These gases are transported and supplied to the customers in tonners, cylinders, carboys, paper cones and HDPE bags, BIBs, pipeline and canisters, which may be more conveniently referred to as Containers. Some container items are provided by the assessees and in some instances the customers bring their own cylinders/containers. For providing the containers, the assessees charge the customers certain amounts under different heads. These amounts are not reflected in the sale invoices for the purpose of computation of assessable value. The assessees treat the said amounts as their income from ancillary or allied ventures.
The issue arising in all these appeals is whether the aforesaid charges are liable to be taken into account for determination of value for the purpose of levy of duty in terms of Section 4 of the Central Excise Act, 1944 (hereinafter referred to as “the Act”) as amended with effect from 1.7.2000.
The main issues to be considered by the Court was that Whether Section 4 of the Central Excise Act, 1944 (as substituted with effect from 01.07.2000) and the definition of “Transaction Value” in Clause (d) of sub-section (3) of Section 4 are subject to Section 3 of the Act?Whether Sections 3 and 4 of the Central Excise Act, despite being interlinked, operate in different fields and what is their real scope and ambit? And, whether the concept of “Transaction Value” makes any material departure from the deemed normal price concept of the erstwhile Section 4(1)(a) of the Act?
The Supreme Court while deciding the case took a view that computers and softwares are different and distinct goods under the said Act having been classified differently and in that view of the matter, no Central excise duty would be leviable upon determination of the value thereof by taking the total value of the computer and software. It was also opined that So far as the valuation of goods in terms of “transaction value” thereof, as defined in Section 4(3) ( d) of the Act is concerned, suffice it to say that the said provision would be subject to the charging provisions contained in Section 3 of the Act as also sub-section (1) of Section 4. The expressions “by reason of sale” or “in connection with the sale”contained in the definition of “transaction value” refer to such goods which is excisable to excise duty and not the one which is not so excisable. Section 3 of the Act being the charging section, the definition of “transaction value”must be read in the text and context thereof and notdehors the same.
The Division Bench consists of Justices Ranjan Gogoi, Arun Misra and Prafulla.C.Pant refused to comment on the rest of the issues since they were of the opinion that it would be more appropriate that the case must be considered by a larger bench including the CJI.
Read the full text of the Judgment here.
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