Customs, Excise and Gold Tribunal - Bangalore
I.T.I. Ltd. vs Commissioner Of Central Excise on 22 September, 2003
Equivalent citations: 2004(168)ELT115(TRI-BANG)
ORDER
S.S. Sekhon, Member (T).
1. Three appeals were disposed by Order-in-Appeal Nos. 418/01 to 420/01 by Commissioner (Appeals), confirming duty of Rs. 17,65,080/-, Rs. 13,00,738/- and Rs. 5,83,789/- and penalty of Rs. 4,50,000/-, Rs. 1,50,000/- and Rs. 60,000/- respectively under Rules 173Q and 210 of Central Excise Rules, 1944, since the same set of facts were involved relating to different periods.
2. The appellants had declared "CD Doc entry subscription" under Chapter Heading 4901.09. Show cause notices were issued proposing to demand duty not paid on the ground that the item merits classification under 8524.90. The notices alleged -
"...... CD Doc entry subscription is a compact disc containing documents i.e. manuals of exchange stored in electronic form copied from the Master disc supplied by their collaborator viz. M/s. Alcatal France. This is actually a substitution for standard documents and microfiche documents. While standard documents are in paper form i.e. printed on paper, microfiche documents are in the form of photographic films. The standard documents are classified under tariff sub-heading 4901.90 (printed books, papers, plan, etc.) and microfiche documents under T.S.H 3705.00 (photographic plates and film, exposed and developed other than cinematographic film). Both these documents are classified according the medium used for copying the manuals of telephonic exchange in the respective chapter to which it belongs. As per HSN explanatory notes compact discs recorded (85.24 20) are classified under 8524.90. Moreover in line with classification of standard documents and microfiche documents which are classified according to the medium used for copying, the CD Doc entry subscription is rightly to be classified under the chapter to which compact disc belongs to. Hence, CD Doc entry subscription is to be appropriately classified under TSH 8524.90 attracting BED @ 16% adv. rather than 4901.90 under which the assessee has classified."
3. After hearing both sides and considering the material, it is found -
(a) The entity under classification dispute is a CD-ROM provided, as per contract to Bharat Sanchar Nigam, with documentation database besides the hard copy, having suitable means of retrieved i.e. along with IBM PC compatible machine with CD-ROM drive. The Technical write up submitted before us, and not contested describes the entity as -
"ITI LIMITED Palarkkad Plant Kanjikode West, Palakkad-678623, India Phone (0491) 66010 to 66015 Fax (0491) 66009 Telex (852-267 ITI IN ____________________________________________________________________________________________________ Our Ref. Date GPT/IPS/GEN/922 Dated : 20-6-2002 Sub : TECHNICAL WRIT-UP ITEM : CD-DOC ENTRY SUBSCRIPTION FOR OCB 283 With reference to the above, ITI Ltd., is manufacturing Digital Switching Systems (Electronic Telephone Exchanges) and supplying the same to DOT (BSNL) & MTNL.
As per the supply contract with the customer, ITI has to provide the product literature of Exchange consisting of its Operation & Maintenance Features and Installation Guide.
The literature that is being supplied are in two forms :
(1) Paper Copy (2) Electronic Data Form Both forms are required, since the same are to be supplied to our customers, i.e., Bharath Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited.
The paper copy of the literature is the standard documentation of OCB 283 product. The Electronic Data Form is the same literature converted into a different format which can be read in a computer i.e. the data are in a machine readable form. Some of these documents are in HTML (Hyper Text Mark up Language) and some are in the Acrobat Reader format. In order to enable reading these electronic documents, specific application software are bundled with these CD ROMs. These are 'Netscape Navigator' 'Perl' and 'Acrobat Reader'. These application softwares are also recorded in the CD ROMs along with the documentation (Without these application software, it is not possible to use these documentation CD ROMs.) The documentation (in the HTML or PDF format) are read with the Netscape Navigator or with the Acrobat Reader. These have special utilities like search engines, which help the Navigation through the documents being made very user friendly. Thus, it is interactive in nature. Hence, reading the documents through electronic documentation is more easier compared to paper documentation.
For ITI LIMITED Sd/-
SHREEPATHI BHAT B CHIEF ENGINEER (PRODUCT SUPPORT) __________________________________________________________________________________________________ REGD & CORPORATE OFFICE 45/1 Magrath Road, BANGALORE - 560025 An ISO 9002 Plant"
(b) The appellants had declared the goods to be classified under 4901.90, but now want the same to be classified under 8524.20 as software for the period, while the department has classified the goods under 8524.90 as 'others'.
The Tariff reads as -
in 1996 in 1998
8524.20 - Computer Software 8524.20 - Software
Magnetic Tapes - Magnetic Tapes
8524.31 - Audio Tape in any 8524.31 - Audio Tape in any
form form
8524.90 - Other 8524.90 - Other
Before 1996, the tariff did not have the Heading 8524.20. The four digit Heading 85.24 read the same. The Heading 8424.90 reads 'other'. Classification of Software for computer or stand-alones would be covered by Chapter Note 6 to Chapter 85 which throughout the period reads as -
"....6. Record, tapes and other media of Heading No. 85.23 or 85.24 remain classified in these headings, whether or not they are cleared with the apparatus for which they are intended"
This along with the six digit Heading 8524.20 for Computer Software and/or Software introduced, would indicate that 'Software' was included under the Heading 8424.90 and under head 'other' under Chapter 85.24 up to 1996.
Therefore, "Computer Software" or "Software" all sorts would remain classified under 85.24.20 after 1996 and 1998 respectively and prior to that they would be classified under 8524.90, if the entity is Computer Software.
(c) Examining the nature of entity, from the technical description of the entity under clearance, as presented, and there being no definition of 'Software' and/or 'Computer Software' in the Tariff and taking the dictionary meaning as follows -
".....(1) CHAMBERS SCIENCE & TECHNICAL DICTIONARY, 6th PRINT 1993 by Prof. PETER MB WALKER published by Allied Publishers Ltd., New Delhi.
SOFTWARE :- A general term for all types of programs and their associated documentation.
APPLICATION SOFWARE :- Special software designed to carryout a real life task.
(2) IBM DICTIONARY OF COMPUTING, 10th Edition, August 1993 by GEORGE MC DANIEL published by MCGRAW HILL INC. USA.
SOFTWARE :- All or part of the programs, procedures, rules and associated documentation of a data processing system. Software is an intellectual creation, that is independent of the medium in which it is recorded.
APPLICATION SOFTWARE :- Software that is specific to the solution of an application problem.
(3) The NEW IEEE STANDARD DICTIONARY OF ELECTRICAL, ELECTRONICS AND COMPUTER TERMS by GP KURPIS CHAIR, IEEE STANDARD 100 1992 Fifth Edition 1994.
SOFTWARE :- A sequence of instructions suitable for processing by a computer. Processing may include the use of an assembler, a Compiler, an interpreter (or) a translator to prepare the program for execution.
SOFTWARE :- Computer programs, procedures and possibly associated documentation and data pertaining to the operation of a computer system.
APPLICATION SOFTWARE ;- Software designed to fulfil specific needs of a user for e.g., Software for Navigation, payroll or process control."
It is clear that the meaning of the term "SOFTWARE" under Chapter Heading 8524.20 should be according to its popular meaning or meaning attached to it by those dealing with it or as understood in common parlance and it would be safe to conclude the entity under dispute herein i.e. a CD-ROM with Software on it would have classification under 8524.20 after 1996 and under 85.24.90 earlier to that.
(d) Since the appellants had cleared the goods at NIL duty only after filing a classification Declaration there could be no intention to evade duty in respect of the subject clearances, which after 1996 are found to be classified under 85.24.20 at NIL rate in any case. Therefore, no penalty under Rule 173Q would be called. The order as regards penalty on this Public Sector Undertaking is, therefore, set aside.
4. The appeals are allowed in above terms after setting aside the penalty.