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3. In appeal, the Commissioner (Appeals) came to the following findings :-

"04.011 have examined the disputed point and the scope of the expressions computer software used in the Customs Notfn. 11/97 in its common parlance meaning in consultation with experts and ascertaining the practice of assessment following other Air Cargo Complexes.

04.02 It is reported that for the purpose of customs classification/ notification, the word computer is interpreted as an automatic data processing machine under CTH 8471 and therefore computer software refers only to software capable of being processing machine falling under CTH 8471. Thus the expression will not cover other than data processing. Software for telecom, medical and other applications are not generally referred to as computer software for customs purpose.

04.04 As regards the contention of the appellant that the inclusion clause in the explanation relates to software which is installed in a machine other than a data processing machine and as in their case the software installed inside the computer forms a part or accessory of the computer, the item imported is a computer software, it may be noted that as the criteria adopted for categorizing a software as a computer software (for the purpose of Customs Notification) is the specific function of the software and the common parlance meaning and not ihe place of installation of the same, the cpntention is not technically correct and legally acceptable.

And therefore classified the 'Voice Mail Card' under 8524 and concluded that order of denial of benefit under Notification 59/95 was applicable to computer software & herein it was legal and proper. The computer software imports in the present case were required to pay the actual duty under 8524 at the time of import with interest.

4. We have heard both sides and considered the submissions and find:

(a) It is submitted by the appellants that the said software contains instructions to be used to control the operation of PC based on voice mail card which is a hardware inserted into the computer. When an incoming call from EPABX is transferred to an extension line and when the .extension is unanswered then the call is redirected to the computer. The voice mail card then operates to convert the redirected call to digital data, by the software therein via hard disk of the computer. When such call data is required to be retrieved subsequently, an extension from the EPABX activates the software, which then converts the digital data stored in the analog form and transmit the same through the voice mail card to the EPABX. The software processes the data entering into a computer and convert it from analog to digital and vice-versa. Since it is used inside the computer in Tandem itself computer software under Heading 8524.90 of the Customs Tariff Act and entitled to the benefit of Notification No. 11/97, dated 1-3-97. The lower authorities' conclusion about the exclusion clause of Notification No. 11/97 introduced by Notification 3/98 with effect from 11-2-98, which by an explanation which reads as "computer software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine in readable form and capable of being manipulated providing interactive to a user, by means of an automatic data processing machine falling under Heading No. 84.71, but does not include software required for operation of any machine performing a specific function other than data processing and incorporation or working in conjunction with an automatic data processing machine" will not be appropriate. The software under import being used in and by the automatic data processing machine, would be eligible to the benefit of Notification 11/97 as amended and not excluded by the above explanation. The findings of the lower authorities that the appellants had imported a software for Telecom and findings and that voice mail card and the application software performed a specific function, not involving data processing and therefore not covered to be classified as computer software was incorrect. Since the software in this case converts sound data from analog to digital and vice-versa it would be covered.