Customs exemption for software and rejection of suspicion-based valuation confirmed for imported CD-ROMs.

Imported CD-ROMs were treated as computer software for customs exemption because software does not lose that character merely because it needs another program to operate; the notification was applied according to its own terms, and the goods qualified for benefit under Notification No. 11/97-Cus. The declared customs value was also accepted because valuation under Section 14 of the Customs Act must be based on the price of like goods at the time and place of importation; contemporaneous imports prevailed, and suspicion without supporting evidence was insufficient to reject the declared value or allege misdeclaration. As a result, duty demand, confiscation, redemption fine, interest, and penalties were set aside.

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Issues: (i) Whether the imported CD-ROMs were classifiable as computer software and eligible for the benefit of Notification No. 11/97-Cus. dated 1-3-1997. (ii) Whether the declared value was liable to be rejected as mis-declared and inflated.

Issue (i): Whether the imported CD-ROMs were classifiable as computer software and eligible for the benefit of Notification No. 11/97-Cus. dated 1-3-1997.

Analysis: The Tribunal followed the earlier decision on identical goods and applied the principle that software does not cease to be software merely because it requires an operating system or another program to run. The departmental opinions were found to be of little assistance because the decisive test was the meaning of computer software under the notification, not a condition of standalone operability that the notification did not prescribe.

Conclusion: The goods were held to be computer software and entitled to exemption under Notification No. 11/97-Cus. dated 1-3-1997.

Issue (ii): Whether the declared value was liable to be rejected as mis-declared and inflated.

Analysis: The Tribunal accepted the view that valuation under Section 14 of the Customs Act, 1962 must be determined from the price of like goods at the time and place of importation. It relied on contemporaneous imports of identical or similar goods and held that export declarations made abroad could not displace the Indian customs valuation framework. Suspicion, without supporting evidence, was held insufficient to reject the declared value, and the residuary valuation approach was found unwarranted on the facts.

Conclusion: The declared value was accepted and the allegation of mis-declaration was rejected.

Final Conclusion: The duty demand, interest, confiscation, redemption fine, and penalties were unsustainable, and the appeals succeeded in full.

Ratio Decidendi: For exemption under a customs notification, goods must be tested against the notification's actual terms, and software retains that character even if it requires another program to operate; for valuation, contemporaneous import evidence at the place and time of import prevails, and a declared value cannot be rejected on suspicion alone.

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