Retrospective exemption restriction rejected for telecom software imported before the amendment, preserving the original computer software benefit.

The unamended exemption for "computer software" in Notification No. 11/97-Cus. covered telecom software imported before 11.02.1998 because the original entry did not restrict the term by reference to Heading 84.71 or software for specific-function machines. The later Explanation introduced a technical exclusion and could not operate retrospectively to withdraw exemption from earlier imports. A departmental circular could not enlarge that exclusion. The Explanation was therefore held non-retrospective, and the imported software remained eligible for exemption.

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Issues: Whether the Explanation added by Notification No. 3/98-Cus. to Sl. No. 173 of Notification No. 11/97-Cus. was clarificatory and retrospective, so as to exclude telecom software imported before 11.02.1998 from the expression "computer software".

Analysis: The entry in Notification No. 11/97-Cus., as originally issued, used only the expression "computer software" and did not refer to Heading 84.71, automatic data processing machines, or software for machines performing a specific function. The imported software, though used for operating telecom equipment, was used in a computer and, in common parlance, remained computer software. The later Explanation introduced a technical restriction and expanded the exclusion to software required for operation of specific-function machines. Such a restriction could not be applied retrospectively to imports made before the amendment, and the departmental circular could not alter that position.

Conclusion: The Explanation was not retrospective, and the imported telecom software was covered by the unamended exemption for computer software. The issue is answered in favour of the assessee.

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