Tribunal includes Aptra software value in ATM assessment, NCR to pre-deposit Rs. 3 crores

The Tribunal upheld the Commissioner's decision to include the value of the Aptra software in the assessable value of the ATMs, as the software was deemed integral to the functioning of the machines. The Tribunal found that post the omission of Note 6 to Chapter 85, software pre-loaded onto hardware could no longer be classified separately. NCR was directed to pre-deposit Rs. 3 crores within eight weeks to stay the recovery of the balance dues pending the appeal, failing which the stay would be vacated, and the appeal dismissed.

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Issues Involved:
1. Inclusion of the value of Aptra software in the assessable value of ATMs.
2. Classification and exemption status of Aptra software.
3. Financial hardship and pre-deposit requirements for NCR.

Detailed Analysis:

1. Inclusion of the Value of Aptra Software in the Assessable Value of ATMs:
The Commissioner of Excise found that the Automated Teller Machines (ATMs) manufactured by NCR Corporation India Pvt. Ltd. (NCR) could not function without the pre-loaded Aptra software, making it an essential and integral part of the ATMs. Consequently, the Commissioner held that the value of the Aptra software should be included in the assessable value of the ATMs for the purpose of excise duty. The Commissioner relied on the Apex Court's decision in Commissioner of Central Excise, Delhi v. Frick India Ltd., which held that the value of accessories, such as a remote control for a ceiling fan, should be included in the assessable value of the main product.

2. Classification and Exemption Status of Aptra Software:
NCR argued that the Aptra software was custom-built and exempt from duty under Notification No. 6/06 dated 1-3-06. They cited several Supreme Court rulings, including PSI Data Systems Ltd. and Acer India Ltd., to support their claim that the software should be classified separately from the hardware and exempt from duty. However, the Commissioner noted that these rulings were based on Note 6 to Chapter 85, which was omitted after 1-1-2007. The omission of this note meant that software pre-loaded onto hardware could no longer be classified separately. The Tribunal found that the Commissioner correctly included the value of the Aptra software in the assessable value of the ATMs, as the software formed an integral part of the machines.

3. Financial Hardship and Pre-Deposit Requirements for NCR:
NCR did not plead any financial hardship. The Tribunal, therefore, ordered NCR to pre-deposit Rs. 3 crores within eight weeks as per Section 35F of the Central Excise Act. Upon such payment, there would be a waiver of pre-deposit and stay of recovery of the balance dues pending the appeal. Failure to comply would result in the vacation of the stay and dismissal of the appeal.

Conclusion:
The Tribunal upheld the Commissioner's decision to include the value of the Aptra software in the assessable value of the ATMs. The software, being essential for the operation of the ATMs, was not considered an independent commodity post the omission of Note 6 to Chapter 85. NCR was ordered to pre-deposit Rs. 3 crores to stay the recovery of the balance dues pending the appeal.

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