2012 (8) TMI 600 - AT - Central Excise

Waiver of pre-deposit - software licence key - contention of the applicant is that prior to 1.3.2006 the software was exempted from payment of central excise duty. It is only with effect from 1.3.2006 the software is liable to central excise duty Held that - Board vide circular dated 18.3.2011 in respect of the Customs Tariff has clarified that such keys which only permit the right to use the software are classifiable under Chapter Heading 49 of the Customs Tariff - matter is remanded to the adjudicating authority for de novo adjudication

Summary

Issues:
Classification of software licence key under Central Excise Tariff - Applicability of Circular No.15/2011-Customs - Pre-deposit of duty, interest, and penalty.

Analysis:
The case involved the classification of a software licence key under the Central Excise Tariff and the applicability of Circular No.15/2011-Customs. The applicants sought waiver of pre-deposit of duty amounting to Rs.68,86,990, interest, and penalty for the period March 2006 to December 2006. The contention was that prior to 1.3.2006, the software was exempt from central excise duty, and it was only after this date that the duty became applicable. The applicant argued that the software licence key, which permitted additional use of software supplied before 1.3.2006, should be classified under Chapter Heading 4907 of the Central Excise Tariff with a nil rate of duty. However, this argument was not accepted by the adjudicating authority.

The applicants relied on Circular No.15/2011-Customs, dated 18.3.2011, which clarified that paper licences conveying the right to use software should be classified under Chapter Heading 49 of the Customs Tariff. They contended that since the Central Excise Tariff aligns with the Customs Tariff, this circular should also apply to the Central Excise Tariff. The Revenue, on the other hand, reiterated that the circular pertained to the Customs Tariff and was not applicable to the Central Excise Tariff.

The Tribunal found that the dispute centered around the classification of the software licence key, which the applicant argued permitted the use of software supplied before 1.3.2006. Considering the circular issued for the Customs Tariff, which classified such keys under Chapter Heading 49, the Tribunal decided to set aside the impugned order. The Tribunal waived the pre-deposit of dues and remanded the matter to the adjudicating authority for fresh consideration. The adjudicating authority was instructed to reexamine the issue after providing the appellant with an opportunity to be heard. Consequently, the appeals were disposed of through remand.