2004 (1) TMI 617

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....it situated at Koramangala, Bangalore. They undertake offshore work in software developing, designing and manufacturing embedded software for use in passenger cars in Europe-France. Under Notification No. 140/91-Cus., dated 22-10-91, appellants are eligible for duty free import of goods enumerated therein. These include capital goods and any other item required in relation to production of export goods with prior approval of Inter-Ministerial Standing Committee. The software is required to be 100% tested under real-time situations before export of the software for acceptance by the customer. The appellants needed to import a prototype car - in this case a Peugot-306 Model car with accessories for their ultimate testing in India. Accordingly....

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.... includes any goods required for manufacture or production either directly or indirectly of goods or for rendering services or for use in service sector. To bring into existence of a product like software, complete and fault free in all respects, comes under the term 'manufacture'. He pleaded that in Sprint Services Pvt. Ltd. v. Revenue [2003 (155) E.L.T. 385 (Sett. Comm.) = 2003 Vol. 85, ECC at P. 258], the Hon'ble Settlement Commission, accepted the argument that the term 'capital goods' covered cars as they were required for rendering services. For development of the software for car, the proto-type of the car is required, they therefore, imported the car under Notification No. 140/91-Cus., dated 22-10-91. The car imported by them is cov....

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....ed by the lower authorities and they have correctly rejected this plea. The order of Settlement Commission relied upon is not relevant as it is with reference to Notification No. 99/2000, dated 27-4-2000 where the term capital goods is defined in the Notification. In that case of Sprint Services Pvt. Ltd. & Others v. Revenue reported in 2003 (85) ECC 258 cars were imported under EPCG Scheme for providing services of Taxi whereas in the present case the car imported is not for providing service but it is used as a proto-type. The car cannot be considered as capital goods for development of software. 8. He further pleaded that the Commissioner (Appeals) has not correctly appreciated the fact disallowing duty free import of the Peugot ....