Software valuation in imported mobile equipment supports stay of recovery where prima facie case is made out

A prima facie case was found for waiver of pre-deposit and stay of recovery where the dispute concerned inclusion of software value in the assessable value of imported mobile telephone equipment. The equipment was accepted as being accompanied by essential software for functioning, and the separately declared compact discs were treated as more plausibly back-up software. The reasoning in Acer India Ltd. was considered applicable to the valuation issue, while reliance on Hewlett Packard India Sales Pvt. Ltd. was held to be factually misplaced. The revenue's additional reasoning was also not reflected in the show cause notice, and interim protection was granted pending appeal.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in respect of the demand, penalty, confiscation, and redemption fine arising from inclusion of software value in the assessable value of imported mobile telephone equipment.

Analysis: The imported equipment was undisputedly accompanied by essential software required for its functioning, and separate software on compact discs was also declared. The contention that the compact discs served as back-up software was found to be on a stronger footing. The decision in Acer India Ltd. was treated as applicable to the valuation controversy, while reliance on Hewlett Packard India Sales Pvt. Ltd. was considered misplaced on the facts. The reasoning advanced by the revenue was also not reflected in the show cause notice. On these circumstances, a prima facie case was held to exist for granting interim protection.

Conclusion: The waiver of pre-deposit was allowed and recovery of the disputed amounts was stayed until disposal of the appeal.

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