Computer valuation excludes software and non-essential peripherals, but includes essential components like a numerical co-processor.

For excise valuation of computers, software cost was excluded because software was not treated as part of the manufactured computer for assessable value purposes, so that amount was not includible. A numerical co-processor was treated as an essential part of the computer and was therefore includible, while a dot matrix printer was treated as a non-essential peripheral that need not form part of every computer system and was therefore excluded. The penalty was also reduced because it was considered excessive in light of the limited value involved.

---

---

Issues: (i) Whether the cost of software was includible in the assessable value of computers. (ii) Whether the cost of the bought out items, namely a numerical co-processor and dot matrix printers, was includible in the assessable value of computers. (iii) Whether the penalty imposed on the assessee required reduction.

Issue (i): Whether the cost of software was includible in the assessable value of computers.

Analysis: The exclusion of software cost from the assessable value was consistent with the settled position that software is not to be treated as part of the manufactured computer for valuation purposes.

Conclusion: The cost of software was not includible in the assessable value, in favour of the assessee.

Issue (ii): Whether the cost of the bought out items, namely a numerical co-processor and dot matrix printers, was includible in the assessable value of computers.

Analysis: A numerical co-processor was treated as an essential part of the computer and therefore includible. A dot matrix printer was not treated as an essential part of every computer system, since a user may not require a separate printer and one printer may serve several computers.

Conclusion: The value of the numerical co-processor was includible, while the value of the dot matrix printer was not includible, in favour of the assessee to that extent.

Issue (iii): Whether the penalty imposed on the assessee required reduction.

Analysis: In view of the limited value involved, the penalty was considered excessive and was reduced.

Conclusion: The penalty was reduced.

Final Conclusion: The valuation of computers was modified by excluding software cost and printer value, while treating the numerical co-processor as part of the computer, and the penalty was reduced accordingly.

Ratio Decidendi: For excise valuation of computers, software cost and non-essential bought out peripherals are not includible, whereas an item that forms an essential part of the computer is includible.

---