2008 (3) TMI 522 - AT - Central Excise

Summary

Issues:
Classification of computer software under Central Excise Tariff Act - Sub-heading 8524.20 vs. 8524.90

Analysis:

Issue 1: Classification of computer software under Central Excise Tariff Act

The appeal was filed by the Revenue against the order of the Commissioner (Appeals) regarding the classification of computer software manufactured and cleared by the respondents. The Revenue contended that the software should be classified under Sub-heading 8524.90 as other computer software, specifically for telecommunication application. They argued that software under Sub-heading 8524.20 is only operational software, while the present software is application software. On the other hand, the respondents argued that Heading 85.24 of the Tariff covers various recorded media, including computer software, and that the software in question is used with a data processing machine for telecommunication satellite operations.

Issue 2: Interpretation of Tariff headings

The Tribunal examined Tariff heading 85.24, which encompasses records, tapes, and other recorded media for sound or other similarly recorded phenomena, including computer software. Sub-heading 8524.20 specifically covers computer software, while 8524.90 pertains to other recorded media for sound or other similarly recorded phenomena, such as magnetic tapes and discs. The respondents argued that since the software is used with a data processing machine for telecommunication operations, it should be classified under 8524.20 as computer software, without a further distinction between operational and application software as claimed by the Revenue.

Conclusion:

After a detailed analysis, the Tribunal found that the software in question, used with a data processing machine for telecommunication satellite operations, falls under the category of computer software as per Sub-heading 8524.20 of the Central Excise Tariff Act. Since there was no specific differentiation between operational and application software in the classification, the Tribunal upheld the order of the Commissioner (Appeals) and dismissed the appeal filed by the Revenue. The judgment provides clarity on the classification of computer software under the Tariff Act based on its usage and functionality with data processing machines.