Recorded CD-ROM classification turns on software content and function, not on the method used to manufacture the medium.

Tariff classification of recorded CD-ROMs depends on the content and function of the medium, not on the manufacturing method used to record the data. A CD-ROM carrying digitised data or software remains a recorded medium containing software whether the data is imprinted during manufacture or recorded later on a blank disc. In the absence of a specific tariff definition, the definition in Notification No. 11/97-Cus. was treated as an interpretive guide, and the software on the discs was regarded as interactive software. Classification under the residuary sub-heading was rejected.

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Issues: Whether recorded CD-ROMs containing digitised data/software were classifiable as software under Heading 85.24, and whether the mode of manufacture could change their tariff classification.

Analysis: The relevant enquiry was the nature of the goods as marketed and used, not the process by which the recorded medium was manufactured. A CD-ROM containing digitised data remains a recorded medium carrying software, whether the data is imprinted directly during manufacture or recorded later on a blank disc. In the absence of a specific tariff definition of software, the definition in Notification No. 11/97-Cus. was treated as a proper interpretive guide. On that basis, the software on the CD-ROMs was held to be interactive software, and the contention that the goods should be classified under the residuary sub-heading merely because of the manufacturing method was rejected. Taxation classification cannot be controlled by notions of equitable burden or supposed advantage.

Conclusion: The recorded CD-ROMs were classifiable as software under the relevant software sub-heading, not under the residuary sub-heading; the assessee succeeded on classification.

Final Conclusion: Classification of the goods turned on the software recorded on the medium and not on the method of recording, and the appeal was allowed with the adverse orders set aside.

Ratio Decidendi: For tariff classification, a recorded compact disc containing software is to be treated according to its content and function, and the method of manufacture does not alter its classification as software.

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