Pre-deposit waiver for software licence certificates denied where prima facie linked to pre-loaded software in imported hardware.

A prima facie examination of the invoices, technical literature and software licence certificates indicated that the certificates were linked to pre-loaded software in the imported hardware and were intended to activate specified equipment functions. The appellant did not establish that the certificates related to separately imported software, and the argument that they were independently classifiable as documents of title conveying software was rejected at this stage. On that basis, complete waiver of pre-deposit was not justified, and the appellant was directed to deposit Rs. 75 lakhs within six weeks while recovery of the balance duty demand was stayed pending the appeal.

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Issues: Whether the appellant was entitled to full waiver of pre-deposit and stay of recovery in respect of the duty demand arising from inclusion of the value of software licence certificates in the assessable value of the imported hardware.

Analysis: On a prima facie appraisal of the invoices, technical literature and the software licence certificate, the Tribunal found substance in the departmental view that the certificates were linked to software pre-loaded in the imported hardware and were meant to activate specified functions of that equipment. The appellant did not show that the certificates related to separately imported software. The plea that the certificates were independently classifiable as documents of title conveying software was also found, prima facie, unacceptable. In these circumstances, the Tribunal held that a case for complete waiver of pre-deposit was not made out.

Conclusion: Full waiver of pre-deposit was declined. The appellant was directed to deposit Rs. 75 lakhs within six weeks, and the balance of the duty demand was stayed pending disposal of the appeal.

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