Excise exemption for software and exclusion of site engineering charges from assessable value upheld on ordinary meaning principles.

Software supplied for a distributed control system was treated as exempt computer software because the excise notification contained no restrictive definition, and a customs-specific distinction could not be imported to narrow the exemption. The allegation of deliberate misdeclaration also failed because the department was already aware of the product nature and supporting technical material. Systems Engineering charges for site-based layout and installation work were held not includible in assessable value, as that activity was not shown to form part of manufacture. The duty demand and connected penalties were set aside.

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Issues: (i) Whether software supplied for the Distributed Control System was eligible for exemption as computer software and whether the allegation of misdeclaration could be sustained; (ii) whether Systems Engineering charges were includible in the assessable value.

Issue (i): Whether software supplied for the Distributed Control System was eligible for exemption as computer software and whether the allegation of misdeclaration could be sustained.

Analysis: The relevant excise notification did not define computer software or draw a distinction between software and computer software. The software was supplied on tapes, floppies or disks and loaded into workstations functioning as computers. In the absence of any restrictive definition in the excise exemption, the meaning could not be narrowed by importing the customs notification and circular, which were confined to customs purposes. The department had also been aware of the technical literature and the nature of the product, and the charge of deliberate misdeclaration was not established.

Conclusion: The software qualified for exemption and the allegation of misdeclaration failed.

Issue (ii): Whether Systems Engineering charges were includible in the assessable value.

Analysis: The Systems Engineering activity was undertaken at site in connection with layout and installation of the system and was not shown to be part of the manufacture of the DCS. Such post-manufacture site activity did not form part of the assessable value.

Conclusion: The Systems Engineering charges were not includible in the assessable value.

Final Conclusion: The assessee succeeded on the substantive dispute, the duty demand and connected penalties were set aside, and the Revenue's challenge to penalty and interest did not survive.

Ratio Decidendi: In the absence of a restrictive definition in an excise exemption, software supplied for computer-based systems is to be understood in its ordinary sense, and a customs-specific restriction cannot be imported to deny excise exemption; site-based engineering work not forming part of manufacture is not includible in assessable value.

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