Customs, Excise and Gold Tribunal - Bangalore
P.S.I. Data Systems Ltd. vs Cce on 28 February, 2000
Equivalent citations: 2000(93)ECR158(TRI.-BANGALORE)
ORDER V.K. Ashtana, Member (T)
1. The appellants had filed the appeal No. C/886/98 in time on 12th September, 1994. However, in compliance of Defect Memo issued by the Registry, they had further filed three supplementary appeals namely C/39 to 41/99 and vide their application for condonation of delay in filing the same, they prayed for condonation and consideration of all the appeals together as they arise out of a common Order-in-Appeal impugned. In line with the standing practice of the Tribunal to condone delays in case of supplementary appeals, the COD application is allowed and the delays are condoned. All the four appeals are therefore, now being considered together.
2. These appeals are against Order-in-Appeal No. 128/94 dated 17.6.1994 passed by the Commissioner (Appeals) wherein the items imported were five sets of software and five sets of manuals pertaining to the software. The dispute arose because the importers (present appellants) on the Bill of Entry classified the software under heading 8524.90 claiming concessional rate of duty and the manuals under heading 4901.10 which was exempted from duty. The case was adjudicated by the Assistant Commissioner of Customs vide Order-in-Original No. 49/93 dated 16.12.1993, wherein it was held that the manuals would also be classified along with software under Chapter 8 and hence the differential duty of Rs. 72,467.20 had been confirmed. The Order-in-Appeal impugned has upheld the said Order-in-Original.
2. Heard Shri S. Raghu, learned advocate for the appellants and Shri S. Kannan, learned D.R. for the Revenue.
3. The learned advocate submits that the matter is already a covered one, as the question of classification of Reference Manuals/Installation Manuals and Users Guide relating to software was considered by the Tribunal in the case of Tata Elxsi India Ltd. as , wherein it was held that such manuals could be classified under heading 49.01 of the Customs Tariff Act and could be free from basic Customs duty. He submits therefore, in this case, the differential duty on the manuals as confirmed in the Order-in-Original and upheld by the Order-in-Appeal impugned needs to be set aside.
5. The learned D.R. submits that this decision is distinguishable on facts. The facts considered by the Tribunal in the case of Tata Elxsi India Ltd. (supra) was when the software had been imported earlier and these manuals were imported separately at a subsequent date. As against that, in the present case both the manuals and software had been imported together as a set. The learned D.R. is at great pains to observe that when the manual is imported along with the software in original condition, then the entire import is to be regarded as a set of software. The splitting of values between the cost of manual and cost of software is arbitrary and artificial because the foreign supplier does not make any separate invoices or separate valuation for these two items as he regards them as complete one set. This is the international trade practice. Therefore, he submits that when extra copies of manuals are imported at a subsequent date from the date of software or in cases where only manuals were imported and software not imported being not needed, then only in those events the decision of the Tribunal in Tata Elxsi India Ltd. (supra) would be applicable. Since in this case, this was not so, the decision stands distinguished.
6. At this stage, the learned advocate further submits that the manuals are optional items and therefore, even if they are imported along with software the same are rightly classifiable under heading 4901.10 and chargeable to nil rate of duty.
7. The learned D.R. submits that this is not factually correct inasmuch as that if the manual was optional the same need not have been supplied along with the software and could have been charged separately. The fact that the manual was sent along with the software and the set of these imports were charged for one single consolidated price, therefore, it shows that manual was not optional but mandatory.
8. We have carefully considered the rival submissions and records of the case. We are aware of the fact that in many cases, the software supplied by foreign exporters is supplied on a relevant media, currently most software is supplied on CDs. The load this software for its use, the manufacturer and supplier gives code word or a key number. The code word or key number is mentioned in the manual accompanying the CDs. However, there are also instances where the code number is contained in a sealed envelope along with CD. If the software cannot be loaded on to the computer without reference to the key number which is available only in the manual, then in those circumstances alone, the submissions of learned D.R. would have great force because, then the manual would not be an optional item, but would be necessary for the loading and operation of the software. In other cases, each import would require to be examined as to whether the manual would be considered as optional or necessary to the software imported. This consideration would undoubtedly require the perusal of the basic documents connected with the import such as invoices, the purchase order, packing list, the contract if any, etc. In this case, none of these records are available before us to afford such a proper consideration. In view of the absence of these original records, we are not in a position to consider the issue on merits in the details required. Therefore, we have no other alternative but to set aside the impugned order along with the attendant Order-in-Original and to remand the matter to the original authority namely the Assistant Commissioner of Customs concerned for de novo consideration of the entire issue. While doing so, the Assistant Commissioner shall hear the appellants and shall also consider the applicability of the ratio, or otherwise, of the Tribunal's decision in the case of Tata Elxsi India Ltd. (supra). The Assistant Commissioner shall also consider the facts regarding the import vis-a-vis the optional nature of the manual claimed by the appellants before us and the mandatory nature of the manual claimed by the learned D.R.
9. The appeals are accordingly allowed by way of remand with the above directions.
(Pronounced and dictated in open court).