2005 (7) TMI 479 - AT - Customs

Tribunal classifies imported software separately, granting duty exemption under Notification No. 23/98-Cus.

The Tribunal ruled in favor of the importer in a case concerning the classification of software imported separately from automatic data processing ... Classifiaction - Valuation Issues:1. Classification of software imported separately from automatic data processing machines.2. Denial of exemption under Notification No. 23/98-Cus.3. Confiscation of goods under Section 111(m) and imposition of penalty.Classification of Software:The appeal concerned the classification of software imported separately from automatic data processing machines. The Commissioner of Customs had enhanced the assessable value of the software, considering it should be assessed along with the ADP machines under a specific sub-heading. However, the Tribunal referred to a Supreme Court decision in Sprint R.P.G. India Ltd. v. Commissioner of Customs-I, Delhi, which established that computer software loaded on a hard disk drive should be classified as computer software under a different tariff heading. Following this decision, the Tribunal concluded that the imported software should be classified separately under a specific tariff heading, making it eligible for exemption from duty under Notification No. 23/98-Cus. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal.Denial of Exemption:The denial of the benefit of exemption under Notification No. 23/98-Cus was based on the argument that the software could not be separately classified from the main automatic data processing machines as it was recorded on the hard disk drive. However, the Tribunal's analysis, guided by the Supreme Court decision, determined that the software loaded on the hard disk drive should be classified under a distinct tariff heading related to computer software. This reclassification enabled the appellants to claim the benefit of the exemption under the notification, as the software was now considered separately classifiable and eligible for the duty exemption.Confiscation of Goods and Penalty Imposition:Additionally, the Commissioner had confiscated the goods under Section 111(m) and imposed a penalty on the importer. However, upon reclassification of the software and recognizing its separate classification under the Customs Tariff Act, the Tribunal found that the confiscation and penalty were unjustified. As a result, the Tribunal set aside the order of confiscation and penalty, providing relief to the importer in this regard.---