Imported Software on CD ROM Denied Customs Duty Exemption

The Tribunal upheld the decision that the imported goods, classified as Multimedia Application Software on CD ROM, did not qualify for customs duty exemption under the Notification for Information Technology Software due to the lack of inter-activity as defined. The appellants' argument that the software allowed communication with computers through a terminal was deemed insufficient to meet the inter-activity requirement specified in the Notification. The Tribunal emphasized the necessity of meeting the specific criteria outlined in the Notification for availing exemptions and dismissed the appeal.

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Issues:
Challenge to confiscation of imported goods based on misdeclaration.
Interpretation of Notification providing exemption from customs duty for Information Technology Software.
Definition of inter-activity in the context of software for customs duty exemption.

Analysis:
The appellants contested the confiscation of goods imported by them, claiming exemption from customs duty under a specific Notification applicable to Information Technology Software. The dispute arose from the classification of the imported goods as Multimedia Application Software on CD ROM, seeking the benefit of the said Notification. The adjudicating authority ruled that the confiscated goods did not fall within the scope of Information Technology Software, leading to the appeal.

The appellants argued that the software imported by them, although not requiring user intervention during program execution, was capable of communication with computers through a terminal, thus constituting inter-activity. They contended that the ability to communicate with the computer by means of a terminal was sufficient to meet the inter-activity requirement for exemption under the Notification.

However, the explanation provided in the Notification emphasized that software eligible for exemption must be capable of providing inter-connectivity to the user through an automatic data machine. The Departmental Representative (DR) highlighted that the imported goods, being software in the form of a program, did not involve user inter-activity during the program's execution, except for programming purposes. The DR argued that inter-activity, as defined, was not present in the goods in question.

Upon review, the Tribunal found that the critical issue revolved around the concept of inter-activity in the context of the software imported by the appellants. The Tribunal clarified that for software to qualify as inter-active, the user must be able to communicate with the computer while the program is running to locate specific information. In the absence of evidence demonstrating such user manipulation of data during program execution, the Tribunal concluded that the imported goods, such as a Cinderella story CD ROM and a USA Cook Book, did not meet the inter-activity criteria specified in the Notification.

Ultimately, the Tribunal dismissed the appeal, upholding the adjudicating authority's decision that the imported goods were not entitled to the customs duty exemption under the Notification due to the lack of inter-activity as defined. The judgment emphasized the importance of meeting the specific criteria outlined in the Notification for availing exemptions and highlighted the necessity of clear evidence to support claims for such benefits.

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