Customised software exemption claim rejected prima facie, with valuation and royalty issues left for final hearing and pre-deposit directed.

Replicated software CDs/DVDs were not treated as customized software for the purpose of Notification No. 6/2006-CE, so the exemption claim was not shown to have a strong prima facie basis on the materials then available. The valuation dispute, including whether royalty per disc should be added, was left for examination at the final hearing. Pending that hearing, the appellant was directed to make a pre-deposit of Rs. 50 lakhs within eight weeks as a condition for further consideration of the matter.

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Issues: Whether the appellant was entitled to exemption under Notification No. 6/2006-CE for replicated software CDs/DVDs claimed to be customized software, and what interim pre-deposit should be directed pending final hearing.

Analysis: The appellant was engaged in large-scale replication of Microsoft software on CDs/DVDs, and the goods were not found to bear the character of customized software for the purpose of the exemption notification. The dispute on duty valuation, including the addition of royalty per disc, was treated as a matter requiring examination at final hearing. On the materials then available, the appellant was not seen to have a strong prima facie case on merits.

Conclusion: The appellant was directed to deposit Rs. 50 lakhs within eight weeks as a condition for further consideration of the matter.

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