Design software exemption upheld where software remained for data processing and was not required to run non-data-processing equipment.

Imported design software used to create three-dimensional designs and print-outs on an automatic data processing machine qualified for exemption under Notification No. 11/97-Cus. The exclusion did not apply because the software was not itself required for operating equipment performing a specific function other than data processing; the stereo lithography machine had its own software and did not use the imported software for manufacturing. The interface with other machines did not change the software's character as data-processing and design software, so denial of exemption was unsustainable and relief was due.

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Issues: Whether the imported software described as an advanced designer package was eligible for exemption under Sl. No. 173 of Notification No. 11/97-Cus. as amended, or stood excluded because it was associated with equipment performing a function other than data processing.

Analysis: The imported software was found to be used for developing three-dimensional designs on a computer screen and for generating print-outs, i.e. for design and data processing purposes. The record showed that the stereo lithography machine which produced miniature modules had its own software and did not use the imported software for manufacturing. The interface with other machines did not alter the character of the imported software as software required for operation of an automatic data processing machine. The exclusion in the explanation applied only where the software was required for operation of a machine performing a specific non-data-processing function.

Conclusion: The software fell within the exemption and was not hit by the exclusion.

Final Conclusion: The denial of exemption was unsustainable, and the assessee was entitled to relief.

Ratio Decidendi: Software used for design and processing on an automatic data processing machine remains eligible for exemption unless it is itself required for operation of a machine performing a specific function other than data processing.

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