2006 (9) TMI 69 - AT - Customs

Demand- Limitation- Alleged that appellant had declared a much higher value than the actual value of the goods with an intent to send out foreign exchange, which was to be subsequently brought in as remittance for export of CD ROMs under DEPB/DEEC Scheme for availing export incentives, and accordingly demand for duty and interest - After considering all the factor authority decided that allegation in not correct and allow the appeal.

Issues Involved:
1. Correctness of the declaration of the goods as "Computer Software on CD".
2. Denial of benefit of Notification 11/97-Cus. dated 1-3-97.
3. Demand of duty amounting to Rs. 20,21,456/-.
4. Demand of interest under Section 28AB of the Customs Act.
5. Confiscation of goods under Section 111(m) of the Customs Act.
6. Imposition of penalties under Section 114A of the Customs Act.

Detailed Analysis:

1. Correctness of the Declaration of the Goods as "Computer Software on CD":
The primary issue was whether the imported CDs could be classified as "Computer Software" eligible for benefits under Customs Notification 11/97-Cus. The appellants argued that the CDs should be considered as computer software, referencing the Tribunal's decision in the case of M/s. Contessa Commercial Co. Pvt. Ltd., and the Supreme Court's decision in Pentamedia Graphics Ltd. The department, however, contended that the CDs did not meet the definition of computer software as per the Notification, as they were not capable of being manipulated or providing interactivity to a user. The Tribunal, referencing the Pentamedia Graphics Ltd. case, concluded that the CDs were indeed "Computer Software" as they were capable of interactivity and thus eligible for the benefit of the said Notification.

2. Denial of Benefit of Notification 11/97-Cus. Dated 1-3-97:
The Commissioner initially denied the benefit of the Notification under Sl. No. 173. The Tribunal, however, found that the goods met the criteria for computer software as per the Notification. The Tribunal held that the goods should be granted the benefit of the Notification, overturning the Commissioner's decision.

3. Demand of Duty Amounting to Rs. 20,21,456/-:
The Commissioner had demanded duty of Rs. 20,21,456/- under Section 28(1) of the Customs Act. The Tribunal, however, found that the goods were eligible for the exemption under Notification 11/97-Cus., thus nullifying the duty demand.

4. Demand of Interest under Section 28AB of the Customs Act:
The demand for interest under Section 28AB was contingent on the duty demand. Since the Tribunal set aside the duty demand, the interest demand was also nullified.

5. Confiscation of Goods under Section 111(m) of the Customs Act:
The Commissioner had ordered the confiscation of the goods under Section 111(m) and imposed a redemption fine of Rs. 10,00,000/-. The Tribunal, however, found that there was no mis-declaration of the goods. Consequently, the order of confiscation and the redemption fine were set aside.

6. Imposition of Penalties under Section 114A of the Customs Act:
Penalties were imposed on various parties under Section 114A. The Tribunal, upon finding that there was no mis-declaration and that the goods were entitled to the benefit of the Notification, set aside all penalties.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned order in its entirety. The goods were declared as computer software and eligible for the benefit of Notification 11/97-Cus. The duty demand, interest, confiscation, and penalties were all nullified. The Tribunal's decision was based on the precedent set by similar cases and the interpretation of the relevant legal provisions.

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