2007 (5) TMI 407 - AT - Customs

Summary

Issues involved: Denial of exemption from customs duty for imported CDs under Notification No. 21/2002-Cus on the grounds of not being classified as 'information technology software'.

The judgment by the Appellate Tribunal CESTAT, Mumbai allowed the application for early hearing as the issue in dispute was settled by the decision of the Apex Court. The appeal itself was taken up for final hearing on the same day as it was covered by the Apex Court decision.

The benefit of exemption from customs duty under Notification No. 21/2002-Cus was denied to the appellants for CDs imported by them, on the basis that the imported item did not qualify as 'information technology software' as per the notification.

The explanation to the notification defines 'information technology software' as any representation of instructions, data, sound, or image, recorded in a machine-readable form, capable of being manipulated or providing interactivity to a user by means of an automatic data processing machine. The department argued that the imported CDs could not be considered as 'information technology software' because they produced sound and image. However, based on the clear language of the explanation to the notification, the imported items were deemed to fall under the category of 'information technology software'. The decision of the Apex Court in the case of Commissioner of Customs, Chennai v. Pentamedia Graphics Ltd. supported this interpretation, stating that motion capture animation CDs or computer software recorded in a machine-readable form and capable of being manipulated by an automatic data processing machine should be considered as software. The judgment highlighted that even if they required another software to achieve the final result, it did not detract from them being classified as software eligible for exemption under the relevant notification.

Considering the above discussions and recognizing that the imported goods fell under Chapter 49 or 85.24, and not restricted to Customs Tariff Heading 852431 as classified by the customs authorities, the impugned order was set aside, and the appeal was allowed.

*(Pronounced and Dictated in Court on 14-5-2007)*