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2.2 Appellants paid Central excise duty at applicable rate on packaged software sold in CD-ROM or disc after availing small scale exemption in terms of Notification No. 8/2003-CE dated 1.3.2003, as amended by Notification No. 8/2006-CE dated 1.3.2006.

2.3 Revenue authorities were of the view that the software sales made electronically through internet download were also goods since sales tax on software sold through internet download was discharged by the appellants. It was alleged that the software sold through internet was packaged software and not customized software and therefore, benefit in terms of Notification No.6/2006-CE dated 1.3.2006 was not available. A show cause notice dated 17.11.2009 was issued to the appellant 2.4 The show cause notice was adjudicated by the original authority as per the order in original referred in para 1.2 above. Appeal filed by the appellants was dismissed by the Commissioner (Appeal) as per the impugned order hence this appeal.

27. 8524 Any customized software (that is to say, any custom designed software, developed for a specific user or client), other 6 E/85044,85045/2013 than packaged software or canned software, Explanation. For the purposes of this entry, "packaged software or canned software"
means a software developed to meet the needs of variety of users, and which is intended for sale or capable of being sold, off the shelf Nil It is not under dispute that the "Software" sold through Internet download as per the admission of the appellant themselves is not customized software and therefore, their product is not covered under this heading of the exemption Notification. The products of the appellant are not exempted at the material time under any other Notification. There is no dispute that "Software"

Para 138 of the Finance Minister's speech is as under:

"138. I propose to impose an 8 per cent excise duty on packaged software sold over the counter. Customized software and software packages downloaded from the internet will be exempt from this levy."

4.7 Hon'ble Finance Minister in his Budget speech of 2008-09, at para 151, had specifically referred to the proposal to levy service tax at 12% on the software supplied digitally or electronically. Relevant portion of the Finance Minister's speech is as follows:

Chapter 85 - Electrical machinery (2) Excise duty of 8% is imposed on packaged software, also known as canned software on electronic media (software downloaded from the internet and customized software will not 18 E/85044,85045/2013 attract duty). [S. No. 27 of the Notification No. 6/2006-C.E. refers].

4.9 Software is treated as intangible unless it is recorded on media. If software is contained on media, Courts have held such software to be goods. Heading 8523 covers software contained in media. Therefore, only when the software is recorded on media, can it be considered as excisable goods. when the software is downloaded from / through internet, none of the provisions of Central Excise Act would apply as the entire provisions of Central Excise Act contemplate physical removal of excisable goods from factory of manufacturer. Hence, demand of Central Excise duty on software downloaded from / through internet is incorrect and unsustainable in law.