Excise valuation cannot include separately classifiable software loaded on computers before clearance.

Central excise valuation cannot extend the charging provision in Section 3. Operational software and computer hardware are separately marketable and classifiable commodities, and Chapter Note 6 of Chapter 85 preserves the software's independent character even when it is loaded onto the computer before clearance. Software may increase the computer's utility, but it does not become part of the computer for excise valuation merely because it is installed on the hard disk. The transaction value under Section 4 therefore cannot be used to include the value of software that is not itself exigible in that form, and the assessable value of the computer excludes the loaded software.

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Issues: Whether the value of operational software loaded into computers before clearance is includible in the assessable value of the computers for central excise duty, and whether software loaded on hardware loses its separate character so as to be taxed as part of the computer.

Analysis: Central excise is a duty on manufacture of excisable goods, and the valuation machinery in Section 4 cannot override the charging provision in Section 3. The Court held that computers and operational software are separately marketable commodities, classified differently under the tariff, and Chapter Note 6 of Chapter 85 preserves the character of software even when it is cleared with the apparatus for which it is intended. The operational software may enhance utility, but it does not become part of the computer merely because it is loaded on the hard disk. The definition of transaction value cannot be read de hors the charging provision so as to include the value of goods that are not themselves exigible in that form.

Conclusion: The value of operational software loaded in the computer is not includible in the assessable value of the computer for excise duty, and the demand raised by the Revenue could not be sustained.

Final Conclusion: The appeal failed because computer hardware and operational software remained distinct goods under the tariff, and excise duty was payable only on the computer's assessable value, not on the value of the separately identifiable software.

Ratio Decidendi: For excise valuation, a non-excisable or separately classifiable commodity does not lose its independent character merely because it is loaded into or sold with an excisable good, and the transaction value under Section 4 cannot enlarge the charge beyond Section 3.

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