TaxTMI 
TaxTMI 
2014 (4) TMI 301
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.... 2. The assessees are providers of mobile telecom services and they imported certain equipments and software for running such equipments. The equipments, which were imported by the assessees are particularly classified into four categories viz.,(i) Mobile Switching Centre (MSC), (ii) Base Station Controller (BSC), (iii) Base Transceiver Station (BTS) and (iv) parts of the above equipment classifiable under Chapter Heading 85.25. The aforesaid first three equipments needed software for its functioning and such software was preloaded in the equipment. The assessee also imported media said to contain such software, in some cases in the same consignment as the equipment and in some cases in separate consignments. The assessee did not furnish separate values for each equipment and each software. It is to be noted that at the relevant point of time, the computer software was exempted from customs duty. Therefore, the assessee did not pay any customs duty on the value said to be that for the software and paid customs duty as applicable for the value declared to be that of the hardware. After the goods were cleared, the Revenue on intelligence obtained certain information stating that th....
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....nature of the software contained in the flash memory card, its value is liable to be included, then only the value of BTS software can be included since only BTS software resides in flash memory and MSC and BSC are loaded onto the hard disk drive and not on flash drive/EEPROM and hence the value of the MSC and BSC software cannot be included in the value of the hardware. Accordingly, the assessee contended that the demand of duty can only be sustained for the BTS software and has to be dropped with respect to MSC and BSC software. Various other grounds were also raised as regards the invocation of the extended period of limitation as to whether penalty can be imposed in the case and whether the assessee were eligible to avail the exemption Notification No.16/2000-Cus.(S.No.261), 17/2001-Cus.(S.No.285) and 21/2002-Cus.(S.No.157). The assessee also enclosed the balance sheet for the years ending 31.03.2012 and 31.03.2013 to explain their financial position. 6. Before the Tribunal, the assessee reiterated the contentions raised in the memorandum of appeal as well as in the application for stay and waiver of pre-deposit. It was contended that in respect of similar import in the case....
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....but it formed part of the firmware of the equipment and thus an integral part of the hardware and there was no separate identity for the software and such a situation was not covered by Note 6 of Chapter 85 as it stood at the relevant point of time. Further, reliance was placed on the decision of the Hon'ble Apex Court in the case of Anjaleem Enterprises (cited supra), which was totally against the assessee. Further the Revenue contended that when the case of Vodafone Essar was argued before the Tribunal the decision of the Supreme Court in Anjaleem Enterprises was not placed before the Tribunal. It was also submitted that the decision of the Tribunal in the case of Bharti Airtel, which is now the subject matter of appeal before the Hon'ble Supreme Court, the Hon'ble Supreme Court did not grant any stay and ordered Bharti Airtel to make the deposit of the duty amount demanded and therefore the Revenue insisted that the same treatment should given to the assessee on hand and the Revenue sought to compare the facts of the present case with the facts of Bharti Airtel. 8. The Tribunal after considering the contentions raised on either side was of the prima facie view tha....
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....ergent views rendered by it in the case of Vodafone Essar and in the case of Bharti Airtel ought to have referred the matter to a Larger Bench for consideration but without resorting to such procedure the Tribunal had ordered pre-deposit of the demand. Therefore the case calls for total stay of the demand. It is further submitted that the core issue is on what media is the software loaded and if the media is classifiable under Chapter Tariff Heading 8523, then the software is also classifiable under Chapter Tariff Heading 8523 by virtue of Note 6 to Chapter 85 and the media is classifiable under Chapter Tariff Heading 8542 then the software along with the media is classifiable under Chapter Tariff Heading 8542 by virtue of Note 5 to Chapter 85. Further, the learned Counsel sought to distinguish the case of Bharti Airtel on facts and as to how the decision of the Hon'ble Apex Court in the case of Anjaleem Enterprises could not be applied to the facts and circumstances of the present case. 11. We have heard Mr.Mohana Murali, learned Standing Counsel appearing on behalf of the Revenue on the above submission. 12. After hearing, learned counsel for the parties and perusing th....