Software classification for machine-readable digital outputs secured notification benefit; duty demand, interest and penalty did not survive.

Digital products cleared in the Domestic Tariff Area were treated as software where the evidence showed they were animated films, serials, logos and similar machine-readable outputs created using software tools. Revenue's contrary classification was weakened by expert clarification that the earlier opinion had not considered the relevant definition of information technology software, and by inconsistent departmental classification across notices. The record also showed that the CDs and tapes functioned only within the software environment in which they were created and used, and the same products had been treated as software for export purposes. On that basis, the notification benefit was allowed and the duty demand, interest and penalty did not survive.

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Issues: Whether the products cleared in the Domestic Tariff Area were classifiable as software and consequently eligible for the claimed notification benefit.

Analysis: The products cleared in DTA were found to be animated films, serials, logos and similar digital outputs created using software tools and supplied in a machine-readable form. The prior departmental view was based on expert opinion, but the experts later clarified that their earlier view had not taken into account the relevant definition of information technology software. The classification adopted by Revenue was inconsistent across notices, which weakened its basis. The goods were also treated as software for export purposes, and the record showed that the CDs and tapes functioned only along with the software environment used in their creation and use.

Conclusion: The products were held to be software and the appellant was held entitled to the notification benefit.

Final Conclusion: The duty demand, interest and penalty did not survive and the appeal succeeded.

Ratio Decidendi: Digital products created and cleared as machine-readable software outputs are classifiable as software where the evidence supports that characterisation and the Revenue's contrary classification is not sustainably established.

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