Tribunal rules on excisable goods assessable value: installation charges excluded, software costs included

The Tribunal ruled in favor of the appellants in a case concerning the assessable value of excisable goods under the Central Excise Act. It held that installation and commissioning charges should not be included in the assessable value, directing the Assistant Collector to deduct these charges. Additionally, the Tribunal determined that software costs should be included in the assessable value as they are essential for the functioning of computers. The issue of bought out items was also addressed, with a directive for a detailed examination to determine their essentiality and inclusion in the value. The Tribunal also found that show cause notices cannot be issued prematurely before assessment finalization, setting aside demands issued without proper notice.

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Issues involved: Determination of assessable value of excisable goods u/s Central Excise Act.

Installation and Commissioning Charges: The issue revolved around whether installation and commissioning charges should be included in the assessable value of Computers and Electronic Telephone exchange. The appellants argued that these charges are post-manufacturing expenses and should not be included. The Tribunal agreed, citing precedents, and directed the Assistant Collector to determine the assessable value after deducting these charges.

Software and Value of Bought Out Items: The dispute focused on whether the cost of software packages and bought out items should be included in the assessable value. The appellants contended that only certain software costs should be included, while certain bought out items are not integral to the products. However, the Tribunal held that software is essential for the functioning of computers and should be included in the assessable value. Regarding bought out items, a detailed examination was ordered by the Assistant Collector to determine their essentiality and inclusion in the value.

Remaining Bought Out Items: The value of remaining bought out items was also discussed, emphasizing that if these items are fitted before clearance and are essential, they should be included in the assessable value. The appellants' trading activity and the optional nature of these items were considered, with a directive for thorough examination by the Assistant Collector.

Jurisdiction and Show Cause Notice: The jurisdictional issue arose regarding the issuance of show cause notices before finalization of assessment. The appellants argued that such notices could not be issued before assessment finalization, which was supported by legal provisions. The Tribunal agreed, setting aside demands where notices were issued prematurely and ruling that demands without notices were not sustainable.

Conclusion: The Tribunal disposed of all appeals by addressing the issues related to assessable value determination, inclusion of charges, software costs, bought out items, and the legality of show cause notices. Cross objections by the respondents were also resolved accordingly.

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