Software licence keys conveying only a right to use software must be re-examined under Chapter Heading 49.

Software licence keys issued after software supply, and used only to convey the right to use the software, were treated as requiring classification under Chapter Heading 49 in light of Board Circular No. 15/2011-Customs dated 18.3.2011. The circular clarified that paper licences conveying only a right to use software fall under that heading, and the aligned treatment under the Central Excise Tariff required the classification issue to be examined by the adjudicating authority. The impugned order was set aside and the matter remanded for de novo adjudication after hearing the appellant.

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Issues: Whether software licence keys, which only permit the right to use software supplied earlier, are classifiable under Chapter Heading 49 and whether the matter required reconsideration in light of the Board circular.

Analysis: The dispute concerned the classification of software licence keys issued after the software had already been supplied, with the claim that such keys merely conveyed the right to use the software. The Board had issued Circular No. 15/2011-Customs dated 18.3.2011 clarifying that paper licences conveying the right to use software are classifiable under Chapter Heading 49 of the Customs Tariff. Since the Central Excise Tariff is aligned with the Customs Tariff on this aspect, the matter required fresh examination by the adjudicating authority.

Conclusion: The impugned order was set aside and the matter was remanded for de novo adjudication after hearing the appellant.

Ratio Decidendi: Where a later board circular clarifies that an instrument merely conveying the right to use software falls under Chapter Heading 49, the classification dispute must be reconsidered afresh by the adjudicating authority.

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