Clarificatory explanation in exemption notification held retrospective, excluding telecom software from customs exemption for prior imports.

An explanation inserted into an exemption notification was treated as clarificatory because it removed ambiguity in the scope of "computer software" rather than introducing a new restriction. On that reading, software required for operation of machines performing a specific function other than data processing fell outside the exemption, so telecom software used with such machines was not covered. The clarification was applied retrospectively, with the result that imports made before 11.02.1998 did not qualify for exemption under the relevant entry.

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Issues: Whether the explanation inserted by Notification No. 3/98-Cus. to Sl. No. 173 of Notification No. 11/97-Cus. was clarificatory so as to operate retrospectively and exclude telecom software from the exemption.

Analysis: The Tribunal compared the original exemption entry with the explanation later inserted and examined whether the amendment merely clarified an already existing meaning of "computer software" or introduced a new restriction. It relied on the Supreme Court's approach that an explanation may be clarificatory where it removes doubt and makes explicit what was implicit. On the language of the inserted explanation, software required for operation of machines performing a specific function other than data processing was outside the expression "computer software". Since the imported goods were telecom software meant for use in connection with such specific-function machines, the explanation was treated as clarifying the original entry rather than changing the law.

Conclusion: The explanation was held to be clarificatory and retrospective, and telecom software imported before 11.02.1998 was not entitled to exemption under Sl. No. 173 of Notification No. 11/97-Cus.

Final Conclusion: The substantive view taken was that the amending explanation governed the earlier import and excluded the goods from the claimed exemption, though the records were directed to be placed before the President for constitution of a Larger Bench.

Ratio Decidendi: An explanation that only clarifies the scope of an existing exemption entry and removes ambiguity is retrospective in operation and applies to prior imports.

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