2004 (6) TMI 149 - AT - Customs

Tribunal allows software development equipment import under Customs Notifications

The Tribunal ruled in favor of the appellants, finding that the imported goods were essential for software development for export under Notification No. ... Capital goods - Demand - Limitation Issues:- Interpretation of the words 'used within the unit in connection with manufacture or development of software' for export under Notification No. 96/93-Cus. and Notification No. 140/91-Cus.- Whether the goods imported by the appellants are eligible for exemption under the mentioned notifications.- Time-barring of show cause notices for duty demand on imported goods.Analysis:The appeals involved a dispute regarding the interpretation of the conditions for exemption under Notification No. 96/93-Cus. and Notification No. 140/91-Cus. The appellants imported various items for the manufacture and development of software for export under specific notifications. The Commissioner (Appeals) had held that while the goods were capital goods, they were not used in the development of software, leading to the demand for duties. The appellants argued that the goods were essential for the software development process and should be exempt. They emphasized the need for surveillance, access control, and communication equipment in software development, citing specific examples like EPABX systems, video conferencing equipment, and security systems. They contended that these items were continuously used in connection with the development of software for export, thus qualifying for exemption under the notifications.The appellants relied on precedents such as Everest Building Products Ltd. v. CCE and CCE v. Kudremukh Iron Ore Co. Ltd. to support their argument for exemption. They also raised the issue of time-barring, stating that the show cause notices were issued beyond the prescribed period, with one notice being issued after five years. However, the revenue argued that the essentiality certificate issued by the Standing Committee on Software Technology Park was not sufficient for granting exemption, and that the goods must meet the criteria specified in the notifications for exemption to be allowed. The revenue also contended that the show cause notices were not time-barred, citing the Supreme Court's decision in Mediwell Hospital and Health Care Pvt. Ltd. v. UOI.After considering the submissions, the Tribunal ruled in favor of the appellants, stating that the goods in question were indeed essential for the development of software for export. They highlighted the necessity of equipment like video conferencing tools, surveillance systems, and access control systems in the software development process. The Tribunal also clarified that the show cause notices were not time-barred, as the obligations under the exemptions needed to be continuously monitored, as per the Supreme Court's ruling in Mediwell Hospital and Health Care Pvt. Ltd. The Tribunal allowed the appeal for the specific equipment mentioned in the case and rejected the appeals for other items not eligible for exemption under the notifications.