10. With effect from 21.12.2010 packaged or canned software falling under chapter 85 has been notified under section 4A of the Central Excise Act. Accordingly, the value of such software for the purposes of charging CVD is required to be determined on the basis of the retail sale price (RSP) affixed on the package under the Standards of Weights and Measures Act, 1976. It has been represented by the trade that in certain situations packaged software is not required to bear the RSP when imported and difficulties are being experienced in the assessment of such software to CVD. In order to resolve the issue, packaged software which is not required to bear RSP is being exempted from so much of the additional duty of customs as is equivalent to the duty payable on the portion of the value which represents the consideration paid or payable for transfer of the right of its use. Such software would therefore be required to pay CVD only on that portion of value representing the value of the medium on which it is recorded alongwith freight and insurance. The exemption is subject to the fulfillment of certain conditions. A parallel exemption is also being provided from central excise duty in respect of IT software manufactured domestically.  

CVD valuation exempts packaged imported software without RSP from duty on license component, taxing only media, freight and insurance. Imports of packaged software not required to bear retail sale price are exempted from the portion of additional customs duty corresponding to the consideration for transfer of the right to use the software, so that CVD is payable only on the value of the physical medium together with freight and insurance, subject to specified conditions; a parallel central excise exemption applies to domestically manufactured IT software.