TaxTMI 
TaxTMI 
2017 (3) TMI 914
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.... appeal memorandum and written submissions, inter alia mainly submits as under:- i. The goods imported are a. Time Bound Software- Software launched in the market, but imported and distributed for demo/ trial purpose for a limited period of time, say 90-180 days. Such software is also available for free download. b. Beta Software- software released to developers, coders, etc. for testing and fixing bugs/ making improvements before the launch of the fully finished software. ii. Valuation as per the appellant: a. Time Bound Software- cost of media (including replication cost) on which software is loaded. b. Beta Software- Cost of media (including replication cost) on which software is loaded. iii. Valuation as per Order-in-Appeal: a. Time Bound Software- Identical goods Method, under Rule 4, CVR, i.e. value of software with license for perpetual use. b. Beta Software- Identical goods method, under Rule 4, CVR, i.e. value of final version of the software. Till such time the final version is released, assessments to be kept provisional. iv. Demand of Customs duty: The present demand arised out of ....
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....media only (including replication cost) it is submitted that by application of Rule 9, CVR (residual method), the value should be determined in the following manner: * Value of same software, for perpetual use, to be taken; and * Assuming that the life span of software, without a time restriction is five (5) years, the cost can be proportionately adjusted for the period the time bound software is available for use. ii. Beta Software: a. The beta software is made available for testing, usually through free download from the Microsoft web site or through physical CD/ media, where required. Thus, the same is a fully operative software and is not capable of being bought or sold in the market at this stage. b. It is also submitted that from the beta version to the final version, the software may undergo several key changes. In fact, there may also be a situation where the final version is never launched, taking into consideration the feedback received from the developer community, and others who have used the beta version for testing. c. Cost of media (including replication cost) should be accepted as the assessable value: in the pre....
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....goods viz. Time Bound Software and Beta Software. We shall discuss and decide on the issues concerning these one by one. 7. It has been explained that the time Bound Software is fully released functional version of the software which has already been launched in the market which is imported for demo/trial purpose with limited operative period, which could be 90 to 180 days. The appellant submits that no separate royalty is paid by them to the supplier for the use of the Time Bound Software. Time Bound Software has separate and independent identification vis a vis FPP (Fully Packaged Product) software, which is without any time limit. The importer claims that a separate code is maintained for FPP in company's internal sales / accounting system to facilitate identification and revenue generation considering the fact that time bound software falls under non revenue generating category. Time Bound Software is a non-commercial shipment and the transaction value for the same is the cost of media including replication cost alone. 7.1 The importer appellant submits that both the items namely "Time Bound Software" and "Beta Software" have been imported on a Compact disk (CD/DVD); ....
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.... version of the said "Time Bound Software". The impugned order makes a mention that identical software with no time limit restrictions is similar to "Time Bound Software", "only difference being that Time Bound Software is for free distribution to popularize the same in the market". The impugned order says that intrinsic value and nature of both "Time Bound Software" and identical software with no time restriction are same and therefore the money value cannot be lower than the value of identical software without time limit. The impugned order gives the findings that valuation of "Time Bound Software" is to be determined as per Rule 4 of the Customs Valuation Rules, 2007, which is for determination of the transaction value of identical goods. 9.1 However, we are not in agreement with the findings of the impugned order in case of valuation of "Time Bound Software" , when "Time Bound Software" has got the life of only 90 days to 180 days whereas identical software (FPP Software) with which impugned order compared and which has got no time limit, cannot have same values and they cannot be called identical or similar products. Therefore, to decide on the valuation of "Time Bound Soft....
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....007 read with provisions of Section 14 (1) of Customs Act, 1962. 11. Now, we take up the issue of valuation of "Beta Software". The appelflant importer argues that "Beta Software" is not "goods" under Section 2(22) of the Customs Act; therefore, no customs duty is liable to be paid on the said item. However, this argument of the appellant does not have sufficient force. The "Beta Software" has been imported in the form of media i.e. CD/DVSs though with the purpose of feedback but that does not mean that it is not "goods". The item is definitely "goods", which are being used by the target group and the target group is giving the feedback for its further improvement. Importer does claim that their object is to develop robust software based on the feedback given by the people, who would be using the said "Beta software" imported by the appellant. The importer has claimed that "Beta Software" is the second stage of final software of life cycle; first stage is Alpha and second stage is Beta and third stage is Fully packaged product (FPP), which is called full version software. The item imported being beta software, one cannot be allowed to state that the said item is not "goods" in t....