Retrospective amendment cannot defeat an existing customs exemption for imported software used in industrial control systems.

Imported software used to control or manage industrial processes and data systems qualified for exemption under Notification No. 11/97-Cus. as it stood on the date of import. The later explanatory amendment in Notification No. 3/98-Cus., which added a restriction concerning interaction with special machines or instruments, operated only prospectively from 11.02.1998 and could not be applied retrospectively to withdraw the earlier benefit. Prior decisions on similar software imports supported the same interpretation. The exemption was therefore sustained and the appeal failed.

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Issues: Whether imported computer software used in conjunction with machinery was entitled to exemption under Notification No. 11/97-Cus. dated 01.03.1997, and whether the amendment introduced by Notification No. 3/98-Cus. dated 11.02.1998 could be applied retrospectively to deny that benefit.

Analysis: The imported software was examined and found to be used for controlling or managing industrial processes and data systems. The exemption under Notification No. 11/97-Cus. was available at the relevant time, and the later explanatory amendment introducing a restriction regarding interaction with special machines or instruments operated only from 11.02.1998. The later notification could not be given retrospective effect to withdraw the exemption for imports made earlier. The issue was also covered by prior decisions applying the same notification to similar software imports.

Conclusion: The imported software was eligible for exemption under Notification No. 11/97-Cus. and the later amendment could not be applied retrospectively to deny the benefit.

Final Conclusion: The appeal failed and the order allowing the exemption was sustained.

Ratio Decidendi: A subsequent explanatory amendment to an exemption notification cannot be applied retrospectively to defeat an exemption that was available on the date of import, especially where the imported software falls within the scope of the notification as then existing.

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