Customs valuation of preloaded software turns on disclosure and facts; declared value protected the importer from differential duty.

Software preloaded in imported hardware was not required to be separately added for customs valuation on the facts presented, where the importer had disclosed the software value in the bill of entry and paid duty accordingly. A contemporaneous clarification showed that the software component had been added again by mistake, which weakened the allegation of deliberate suppression and undermined the Revenue's case for denying exemption, demanding differential duty, interest and penalties. The authorities relied on by the Revenue were found unhelpful on these facts, and the appeal failed in favour of the assessee.

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Issues: Whether the value of software preloaded in the imported hardware was liable to be separately added for customs valuation and whether the Revenue was justified in denying the exemption and demanding differential duty, interest and penalties.

Analysis: The importer had declared the software value in the bill of entry and had also paid duty, with the record showing a further clarification that an error had occurred by adding the software value component again. The Revenue's allegation of deliberate suppression was therefore weakened by the contemporaneous clarification and payment. On the facts, the dispute did not justify rejection of the declared valuation or denial of the exemption on the footing that the software value had been concealed. In the circumstances, the authorities relied upon by the Revenue did not assist its case.

Conclusion: The software value was not required to be separately disallowed on the Revenue's case, and the appeal failed. The dismissal is in favour of the assessee.

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