Purposive customs exemption for software development infrastructure upheld for anti-static carpets, adhesives and network security systems.

Anti-static carpets, adhesives and network security systems imported by a 100% Export Oriented Unit engaged in software development were treated as part of the environment and infrastructure necessary for that activity. The notification was construed purposively to advance software export development, and a narrow reading based on the absence of direct nexus was rejected. The subsequent amendment specifically including anti-static carpets was taken as supporting the claim, and precedent on security and access control systems protecting software development data was followed. The imported items were therefore covered by the customs exemption under the notification.

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Issues: Whether anti-static carpets and adhesives, and network security systems imported by a 100% Export Oriented Unit engaged in software development, were covered by Notification No. 140/91-Cus. dated 22-10-1991 and entitled to customs duty exemption.

Analysis: The imported items were held to be part of the environment and infrastructure necessary for software development. The notification was read in light of its object of facilitating software export development, and a narrow construction based on absence of a direct nexus was rejected. The subsequent amendment including anti-static carpets was treated as supporting the appellants' claim, and the cited precedent on security and access control systems protecting software development data was followed.

Conclusion: The imported anti-static carpets, adhesives, and network security systems were held to be covered by the notification and entitled to exemption.

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