Prima facie classification of software under Heading 85.24 supported exemption and justified waiver of pre-deposit and stay.
Imported computer software intended for use with automatic data processing machines was held, on a prima facie view, to fall under Heading 85.24, with Note 6 to Chapter 85 and Note 5 to Chapter 84 supporting classification and the corresponding exemption under Notification No. 11/97-Cus. The routers covered by the first two Bills of Entry had already suffered duty at the rate adopted in the impugned order, so no separate differential duty appeared payable on that component. On that basis, waiver of pre-deposit and stay of recovery were granted for the duty demanded on both the routers and the software pending further consideration.
Issues: (i) whether the imported computer software was prima facie classifiable under Heading 85.24 and eligible for exemption under Notification No. 11/97-Cus. dated 01.03.1997, and (ii) whether the appellants were entitled to waiver of pre-deposit and stay of recovery of the duty demanded.
Issue (i): Whether the imported computer software was prima facie classifiable under Heading 85.24 and eligible for exemption under Notification No. 11/97-Cus. dated 01.03.1997.
Analysis: The imported software was stated to be intended for use with automatic data processing machines. Reference was made to Note 6 to Chapter 85, which preserves classification of records and other media of Heading 85.24 even when presented with the apparatus for which they are intended. Note 5 to Chapter 84, including clause (E), was also relied upon to support the view that the software was not software for a machine performing a specific function other than data processing. On a prima facie examination, the software appeared to fall within Heading 85.24 and within the scope of the exemption notification.
Conclusion: The appellants made out a prima facie case that the software was classifiable under Heading 85.24 and that the benefit of the exemption notification was available.
Issue (ii): Whether the appellants were entitled to waiver of pre-deposit and stay of recovery of the duty demanded.
Analysis: For the routers covered by the first two Bills of Entry, the duty had already been paid at the rate adopted in the impugned order, so no differential duty appeared payable on that component. For the software component, the impugned order did not quantify the differential duty separately, and on the prima facie view regarding classification and exemption, recovery of the demand could not be insisted upon at that stage.
Conclusion: Waiver of pre-deposit and stay of recovery were granted in respect of the duty demanded on both the routers and the computer software covered by the Bills of Entry.
Final Conclusion: The appellants obtained interim relief against the duty demand, and the recovery proceedings were stayed pending further consideration of the appeal.
Ratio Decidendi: Computer software presented for use with automatic data processing machines may, on a prima facie view, fall within Heading 85.24 and the corresponding exemption notification, justifying waiver of pre-deposit and stay of recovery.
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AI Drafter ✕
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