Composite import classification: software CDs supplied with hardware were treated as part of the kit, not standalone software.

Imported software CDs supplied as part of a composite docking kit were not treated as standalone software for exemption purposes. Because the invoices, manufacturer description and product presentation showed a package containing both hardware and software components, classification followed the composite import rather than the media alone. Chapter Note 6 of Chapter 85 supported classification by reference to the apparatus with which the media were presented. On that basis, the CDs were classified with the hardware under heading 8473.30, and the claimed exemption for software under heading 85.24 was unavailable.

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Issues: Whether the imported software CDs were classifiable as software under heading 85.24 so as to qualify for exemption under Notification No. 21/2002-Cus., or were part of a composite kit including hardware classifiable with the hardware under heading 8473.30.

Analysis: The goods were imported as part of Hydra PAC 2000/XP docking kits and related items, and the invoices and manufacturer's description showed that the package contained both hardware and software components. The factual finding recorded in appeal was that no software lock or protection lock was found, and the manufacturer's website described the product as a kit enabling connection and operation of additional stations from an existing computer. The principle that software remains software even when stored on a hard disk did not assist the appellants because the present import was not of standalone software, but of complete kits presented together with hardware. Chapter Note 6 of Chapter 85 also supported classification according to the manner in which the media were presented with the apparatus for which they were intended.

Conclusion: The software CDs were not independently classifiable under heading 85.24 for the claimed exemption; they were correctly treated as part of the composite import with hardware and classified under heading 8473.30.

Final Conclusion: The challenge to the customs classification and denial of exemption failed, and the departmental view on classification was upheld.

Ratio Decidendi: Where imported media form part of a composite kit supplied with hardware and are not standalone software, classification must follow the composite presentation rather than the abstract character of the media alone.

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