Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Chennai vs Skycell Communications Ltd on 21 January, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/71/99
[Arising out of Order-in-Appeal No.C3/305/98 (air) C.Cus.1208/98 dt. 23.10.98 passed by the Commissioner of Customs, Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Mr. P.KARTHIKEYAN, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Customs, Chennai
Appellant/s
Versus
Skycell Communications Ltd.
Respondent/s
Appearance :
Shri V.V.Hariharan, JCDR Ms.Padmapriya, Advocate For the Appellant/s For the Respondent/s CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr. P. Karthikeyan, Member (Technical) Date of hearing : 23.1.2009 Date of decision : 23.1.2009 Final Order No.____________ Per Jyoti Balasundaram The issue for determination in this appeal namely as to whether the benefit of exemption from payment of duty in terms of Sl.No.173 of the Table to the Notification No.11/97-Cus. dt. 1.3.97 is available to computer software imported by the respondents herein, is no longer res integra as it stands settled in favour of the importers and against the Revenue by the decision of the Larger Bench as reported in 2008-TIOL-1898-CESTAT-MAD-LB in the assessees own case holding that such benefit is available. The relevant extract from the Larger Bench decision is reproduced herein below :-
4. We have given careful consideration to the submissions. In the context of referring to the Explanation to Sl. No. 173 of Notification No. 11/97-Cus as amended by Notification No. 3/98Cus., the learned SDR has submitted that computers have been referred to as automatic data processing machines and classified under Heading 84.71 of the Customs Tariff Schedule. The learned counsel has not contested this submission. It is also not in dispute that software used in a computer can be called 'computer software'. Indeed, it is so called in common parlance. The software imported by the respondents was, admittedly, used in computer for operating telecom equipments. It is the case of the Revenue that, since the imported software was used for the operation of equipments / machines having a specific function (telecommunication) other than data processing, it should not be held to be computer software in as much as the Explanation to Sl. No. 173 of Notification No.11/97-Cus excluded from the scope of 'computer software', "any machine performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine". It has been submitted that, as per Chapter Note 5(E) in the Customs Tariff Schedule, any machine performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine is not classifiable under Heading 84.71 as automatic data processing machine. The argument is that a software which is used in a stand-alone computer [automatic data processing (ADP) machine] only can be called computer software and that a software used in ADP machine for operation of any other machine cannot be called computer software. In our considered view, these hyper technical arguments cannot be applied prior to 11.2.98. The explanation , couched in technical language, was not there prior to that date. During those days, the entry at Sl. No. 173 of Notification No. 11/97-Cus. read 'computer software' only. Any reference to Heading No. 84.71 or to automatic data processing or other machine was conspicuously absent in the entry. In the circumstances, the expression 'computer software' at Sl. No. 173 of the said Notification as it stood prior to 11.2.1998 should be understood in the popular sense. In the common parlance, any software used in any computer, whether it be a personal computer (desktop, laptop etc.) or one incorporated in, or working in conjunction with, any machine performing a specific function, is known as 'computer software'. The term 'computer software' figuring at Sl. No. 173 of Notification No. 11/97 -Cus prior to its amendment by Notification No. 3/98-Cus. dated 11.2.98 has to be understood in this sense. The software in question was imported prior to 11.2.98 and the same was admittedly used in a computer for operating telecom equipments. It squarely fell within the ambit of 'computer software' under Sl. No. 173 of Notification No. 11/97-Cus., with the result that the respondents were entitled to claim exemption from payment of duty on the software imported by them.
5. The Explanation, which was added to the description of goods in Col. No.3 against Sl. No. 173 of the Table annexed to Notification No. 11/97-Cus. had the effect of imparting a technical meaning to the expression 'computer software', according to which a software required for operation of any machine performing a specific function (other than data processing), and incorporating or working in conjunction with an automatic data processing machine would stay outside the ambit of 'computer software'. Such a restrict ion prejudicial to importers of computer software cannot be given retrospective effect. In any case, this restriction, which was introduced only on 11.2.1998, did not affect the software imported by the respondents prior to that date.
6. In the case of BPL Mobile Communications (supra), the West Zonal Bench of the Tribunal held that, in construing the meaning of the term 'computer' in the Notification, which was not found in the Tariff, one must apply its meaning as generally understood. We are in agreement with this view, which represents correct interpretation of the relevant entry in Notification No. 11/97 -Cus before its amendment. We also note that the Civil Appeals filed by the Department against the decision of the West Zonal Bench in BPL Mobile Communications case was dismissed by the apex Court vide 2002 (146) ELT A215 (SC). Their lordships ordered thus: "After hearing the counsel for the parties, we are of the opinion that the decision of the Tribunal does not call for any interference. The appeals are, therefore, dismissed". We also note that the Civil Appeals filed by the Department against two other orders of the Tribunal [wherein the ratio of BPL Mobile Communications (supra) was followed] were also dismissed by the Apex Court . The view which we have taken in the present case is fully supported by the opinion expressed by the Hon'ble Supreme Court in BPL Mobile Communications case. Contextually, we observe that the view taken by the South Zonal Bench [Chennai] in Penta Media Graph ics case (supra) and in the referral order does not appear to be correct and that Circular No. 7/98-Cus. dated 10.2.98 did not provide correct clarification of the Notification.
7. In the result, the referred issue stands answered in favour of the respondents and consequently the Revenue's appeal gets dismissed.
2. Following the ratio of the above decision, we uphold the impugned order and reject the appeal.
(Dictated and pronounced in open court)
(P.KARTHIKEYAN) (JYOTI BALASUNDARAM)
MEMBER (T) VICE-PRESIDENT
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