Customs, Excise and Gold Tribunal - Mumbai
Hutchison Max Telecom Ltd. vs Commissioner Of Customs on 4 November, 2000
Equivalent citations: 2001(132)ELT774(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. The question for consideration in this appeal is the eligibility or otherwise to the exemption contained in entry 173 of the Table to Notification 11/93 of the software imported by the appellant.
2. The appellant is a mobile telephony service provider. The software was used by it, for obtaining details of the extent to which a subscriber availed of voicemail facility, in order to bill him for their use.
3. The entry to the notification after its amendment on 11-2-1998 (which is the period with which we are concerned) exempts from duty "computer software". The Explanation to the entry says that software "does not include 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". The Asstt. Commissioner, whose order has been confirmed by the Commissioner (Appeals) has found that the software falls within this exclusion and denied the benefit of exemption. He says that although software is used in a computer "it is indirectly connected to Mobile Switching Centre via Front End Call Processing Units, which are machines performing specific telecommunication function. That is to say that ADPM on which this software is engaged is working indirectly in conjunction with Telecom hardware/equipments."
4. After the software was imported the Department had asked the National Centre for Software Technology, Mumbai, for its opinion on whether the software would fall within the Explanation to the heading. This is clear from the covering letter dated 3-6-1998 of its Director to the Addl. Commissioner of Customs. This Centre had explained that the software runs on computers which are general purpose machine. The computers were "connected to the front end call processing units, which in turn are interfaced with the Mobile Switching Centre". It had explained that the software does not have any capability "for any real time interface with telecom machine". The first phrase reproduced above has been used by the Commissioner to say that the software works indirectly with the telecommunication equipment and denied the exemption.
5. In the case before us, the computer in which the software in question is in use has to receive from the front-end call processor in which it is stored, the data relating to the extent to which the subscriber has availed of the voicemail facility. The computer uses the billing software to process this data by applying the rate per minute and other factors so as to determine the amount payable. But this fact, that it is used in conjunction with telecommunication equipment does not result in its not being computer software.
6. For the Explanation to apply, the software must be required for operation of a machine performing functions other than data processing incorporating, or working in conjunction with an automatic data processing machine. The software in question does not fulfill any of these conditions. It is not used for the operation of any machine performing a function other than data processing. It is, in fact, not used for operation of any machine. The computer in which it is used does not need it for its operation, it only makes use of the software to perform a specific function.
7. The words used in the Explanation are in fact identical to the words found in the Explanatory notes to the Harmonised System of Nomenclature under Heading 84.71. From the words it is clear all machines performing a specific function other than data processing that incorporate, or work in conjunction with, data processing machines of heading will fall for classification under that heading. While the Explanatory Notes make it applicable to hardware i.e. the data processing machines, the Explanation to the notification makes this condition applicable to software. Reading the Explanation, as it stands, it will apply to software required for operation of a machine performing a specific function other than data processing which machine incorporates, or works in conjunction with the automatic data processing machines. In the case before us, the computer which makes use of the billing software performs the specific function of data processing. Therefore, the fact for the software to be utilised retrieval of the data relating to the subscribers from the front end call processor unit is required does not by itself attract the Explanation. The Assistant Commissioner has completely misdirected himself when he says that the software is indirectly connected to the switching center. Software, in point of fact, is not connected to anything. It is used in the computer which may be said to be connected to the front end call processing unit but that, as we have seen, is no disqualification for the benefit, of the notification.
18. Appeal allowed. Impugned order set aside.