Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise (Adj), ... vs Tata Honey Well Ltd on 25 March, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. E/3554/01 (Arising out Order-in-Original No. 15/2000 dated 26.9.2000 passed by the Commissioner of Central Excise (Appeals), Mumbai) For approval and signature: Honble Mr. Justice S.N. Jha, President Honble Mr.K.K.Agarwal, 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 Their Lordships wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
Commissioner of Central Excise (Adj), Mumbai Appellant Vs. Tata Honey Well Ltd.
Respondent Appearance:
Shri Ajay Saxena, SDR for the appellant Shri M.P. Baxi, Advocate for the respondent CORAM:
Honble Mr. Justice S.N. Jha, President Honble Mr.K.K.Agarwal, Member (Technical) Date of hearing : 25.2.2008 Date of decision : 25.3.2008 O R D E R No:..
Per: Mr.K.K.Agarwal, Member (Technical) The brief facts of the case are that M/s Tata Honey Well are engaged in the manufacture of Process Control Systems (PCS), Distributed Control System (DCS) and Programmable Logic Controllers (PLC) which was classified under chapter heading 9032.80. They also manufacture software for PCS and PLCs and if cleared with DCS and PLCs, the same was classified by them under Chapter sub-heading 9032.80, but when supplied independently they were cleared under CSH 8524.90 up to March 1997 and CSH 8524.20 from April 1997 onwards. For the software cleared independently, the respondent claimed exemption under notification 48/94 dated 1.3.94, which exempted computer software from the whole of duty.
2. On investigation, it was found that the DCS manufactured and cleared by the respondent typically consists of many small computers which are distributed through out the installation doing different tasks. These DCS were classified by them under Chapter 9032.80. PLC consists of a Central Processing Unit, input output model, power suppliers and hardware for man machine interface, which is a Process Control (PC). Apart from the above, the respondents are also engaged in the development and supply of software exclusively required for the above stated PCS. The said software is supplied along with the system or independently as spares. The software manufactured by them was in the nature of an application software as distinct from operation software and hence cannot be called as a computer software. These software perform specific function of controlling process and is not operational software which controls the software and actually makes the machine operate. The operational software is fundamental and necessary to the functioning of the hardware. On the other hand, the application programme is designed to perform the specific functions once the programming information is fed into the computer. In the present case, the software manufactured by the respondents is specifically and exclusively used for functioning the various systems i.e. PLC and DCS and was not at all used for functioning of the computers and has therefore to be treated as an application software only. The statute also distinguished the computer software and other software by giving specific tariff entry under 8524.20 for computer software and 8524.90 for other software. During 1998-99 the statute made changes and gave specific entry for all softwares under 8524.20 and specifically exempted computer software vide notification 48/94 dated 1.3.94. Since the two softwares are different the application software cannot be considered as a computer software. The Commissioner (Appeals)s order stating that computer software consists of all types of software including operation software and application software is incorrect and therefore his order is faulty. Computer software has been very specifically and extensively been defined by notification 3/98 dated 11.2.98. As per the said notification computer software means any representation of instructions, data, sound or image, including source code and object code recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine. In the light of this definition and the specific and exclusive application of the subject software for operating the PCS, falling under chapter heading 90.32, the application software cannot be termed as computer software. However this plea has been rejected by the Commissioner on the ground that the definition for a term in one statute cannot be used for interpreting the same term under another statute. In para 26 of the order in original he has relied upon the Tribunal decision in the case of BPL Mobile vs. CCE 2000 (40) RLT 249 which is a decision in respect of customs classification. In this decision, the Honble Tribunal has interpreted the term computer software for deciding the benefit of notification 11/97 and 3/98. The Commissioners findings are contrary to each other and therefore his order is liable to be set aside.
3. The learned advocate for the respondent submits that all software whether application software or operation software are computer software and the term computer software is a general term which as understood in trade parlance includes all types of software. He did not deny the fact that the software in dispute was an application software but in the absence of any definition of a computer software, it was his submission that the computer software comprises of all types of software. There was no separate chapter heading for software other than computer software under chapter heading 8524.90 as is being claimed by the revenue. Entry 8524.20 is a single dash entry concerning computer software. Entry 8524.90 is a residuary category in respect of all items which are not covered by the entries 8524.10, 8524.20, 8524.31, 8524.32, 8524.33, 8524.34, 8524.39 and 8524.40. The definition of computer software in notification 3/98 is not relevant as it was confined to customs notification granting exemption, which notification chose to restrict the benefit to a particular type of software only. The Tribunal in the case of BPL Mobile relied upon by the Commissioner (Appeals) has not made the customs definition applicable for the period prior to 11.2.98 when notification 11/97 was in force. So when this definition has not been adopted even for customs purposes for period prior to 11.2.98 the question of applicability of this definition to central excise matter does not arise. He submitted that the case is squarely covered by the decision of the Tribunal in Asea Brown Boveri Ltd. vs. CCE 2005 (191) ELT 900 where software for distributed control system supplied in tapes, floppies or disks was held to be classifiable as computer software and entitled to benefit of notification 48/94, which is the subject matter in the present appeal also. The products manufactured therein also were DCS which are being manufactured by them and for which only the software has been developed. It has been specifically held in the Asea Brown Boveri case that the excise tariff does not make a distinction between software and computer software and in common parlance all types of software are considered as computer software only. The computer professionals also understand software and computer software as same. It was pointed that in this case also the revenue sought to impart the definition of computer software given in the customs notification 3/98 which was held as not applicable.
4. We have considered the submissions. We find that the two terms software and computer software are no where defined separately either in any technical dictionary or any other authoritative text book. They are understood as one and the same by computer professional and all those dealing in the computers. This matter has been considered by the Tribunal both in the case of BPL Mobile cited supra and Asea Brown Boveri case. The facts of the case in Asea Brown Boveri are almost identical to the facts in the present case and the period of dispute is also identical. In view of this, we find no reason to differ from the view taken in these two decisions and following the same reject the appeal filed by the revenue.
Justice S.N. Jha K.K.Agarwal President Member (Technical) sr 5