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"5. Computer software export will include besides physical export on magnetic media or on paper, also export through satellite data link and consultancy delivered at the location of foreign client abroad by Indian computer expertise.
[Emphasis supplied.]

2. With this background, submits the learned counsel, the applicant imported capital goods and has made exports worth over Rs. 2 crores in respect of consultancy and of over Rs. 6 lakhs worth of computer software in terms of physical goods. The department by the impugned order does not consider the export earnings on consultancy at the site of the foreign clients abroad as having fulfilled export obligation cast on the applicant in terms of Notification No. 339/85-Cus., dated 21-11-1985 (as amended). Finding of the adjudicating authority in this respect is as follows :-

Para (III) deals with 'import policy for promoting software development and export' and lists out the scheme. Sl. No. 5 reads: "Computer software export will include besides physical export on magnetic media or on paper, also export through satellite data link and consultancy delivered at the location of the foreign client abroad by Indian Computer expertise."

The policy gives entire details of policy on training, excess export entitlement, foreign collaboration and marketing abroad and the procedure to be followed and the legal prosecution of software under Copyright (Amendment) Act 1984. A clear reading of this policy brings out that there has to be development of software in the form of technology, tangibly exportable commodity in the form of 'goods'. But it does not deal merely of 'export' of trained personnel to carry out the programmes abroad, without developing the software in India in the Unit, to which the duty free import of machinery is granted.

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This notification, which merely inserts the enabling para with its Explanation in Notification 339/85 when read with the Public Notice 10/1993 of the Customs House which is prior to the Notification, clearly brings out the fact that the insertion of para 3C was clarificatory in order to make explicit, the intention already implicit in the earlier notification that the exemption shall apply to goods imported for the development of software for exports for providing consultancy services on site abroad. The introduction of a deemed export concept to cover consultancy services on site abroad has been apparently brought in so as to align the exemption notification to the export policy in respect of computer software development which had laid down that computers software exports will include besides physical export on magnetic media or on paper also export through satellite data link and consultancy delivered at the location of foreign client abroad by Indian Computer expertise. No doubt, arguments could not be made before the Referring Bench based on this material for obvious reason that these were not then available. However, having regard to the nature of this material, being documents revealing the departmental authorities' own understanding of the scope of exemption under the notification, there will be no infirmity in taking these into consideration at this stage especially when it is found that the amending notification, mentioned above, is in the nature of clarificatory notification. The intention behind the deemed concept introduced is apparently to the extent only of making the fees received by such units for consultancy services on site abroad to be exports only for the purpose of fulfilment of export obligation under the notification. This is, therefore, a situation where, in order to interpret the scope of one notification, the latter notification, which is in line with and confirms the understanding of the authorities as reflected in the Public Notice, can reasonably be looked into. Further, the submissions made by the appellants that the Board of Approval N.E.P.Z. had also, on a representation by the appellants, extended the time limit for fulfilment of export obligation upto 31-9-1997 and that the Commerce Ministry has communicated this decision to the CBEC is also a relevant aspect for consideration in this case. In the result, for the reasons set out above, the proposed order by the Hon'ble Member (Technical) that a prima facie case has been made out for grant of waiver of deposit of duty and penalty and for grant of early hearing of the appeal is concurred with.