Customs exemption for banking application software denied where notification exclusion covered machine-specific software used with automated systems.

Imported application software used for ATM and POS banking transactions was treated as outside the scope of "computer software" eligible for exemption under Notification No. 11/97-Cus. The notification's explanation, read with the departmental circular, excluded software required for the operation of a machine performing a specific function other than data processing and working with an automatic data processing machine. On that construction, specialised banking application software did not qualify for the customs exemption, and countervailing duty treatment was sustained accordingly.

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Issues: Whether imported application software for ATM and POS transactions was eligible for exemption as "computer software" under Notification No. 11/97-Cus. and whether countervailing duty was payable on such imports.

Analysis: The dispute turned on the scope of the notification's explanation defining "computer software". Software recorded on media and used for banking applications was examined against the exclusion of software required for the operation of a machine performing a specific function other than data processing and working in conjunction with an automatic data processing machine. The notification, as clarified by the departmental circular, did not extend to application software of the kind used for specialised banking functions. The software was found to be application software relating to banking operations and not software falling within the exempted class contemplated by the notification.

Conclusion: The imported software was not entitled to exemption under Notification No. 11/97-Cus.; the denial of the notification benefit was upheld, and the appeal failed on this issue.

Final Conclusion: The customs exemption claim was rejected, while the duty treatment of the software was sustained in accordance with the tariff and notification framework.

Ratio Decidendi: Software used for specialised machine-based banking applications and falling within the notification's exclusion clause is not "computer software" eligible for exemption under the notification.

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