Exemption for software export unit equipment upheld where specially designed workstations and chairs were treated as covered office equipment.

Computer workstations, storage racks and specially designed chairs used in a software export unit were held to qualify for exemption under Notification No. 1/95-C.E. because the notification specifically extended benefit to office equipment, spares and consumables. The Tribunal found the goods to be specially designed and essential for software engineers and software development for export, so they were covered by the notified entry even if they were not conventional capital goods. Reliance on a separate decision involving tables, chairs and air-conditioners in another manufacturing context was distinguished, as the present notification itself contemplated office equipment integral to the unit's functioning. The demand was therefore held unsustainable.

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Issues: Whether computer workstations, storage racks and specially designed chairs used in a software export unit were eligible for exemption under Notification No. 1/95-C.E. as capital goods or office equipment.

Analysis: The Tribunal held that the goods in question were covered by Sl. No. 3 of Annexure-I to Notification No. 1/95-C.E., which specifically extended the benefit to office equipment, spares and consumables. The items were found to be specially designed and necessary for the work of software engineers and for software development for export. The reliance placed on the decision concerning tables, chairs and air-conditioners in another manufacturing context was found distinguishable because the present notification itself contemplated office equipment and the goods were integral to the software development process.

Conclusion: The items were held to be eligible for the notification benefit and the demand was not sustainable.

Ratio Decidendi: Where an exemption notification specifically covers office equipment, goods that are essential and specially designed for the functioning of a software export unit fall within the notified benefit and cannot be denied on the ground that they are not conventional capital goods.

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