2013 (11) TMI 1298 - AT - Customs

Entitlement to benefit of set off of CVD against Excise duty Waiver of Pre-deposit Softwares downloaded to be included in the cost of manufacture or not Held that - There was no suppression of information - Law requires that there should be presence of any of the elements of Section 28 of Customs Act, 1962 with a premeditated mind to cause evasion - Prima facie, it is not apparent from the record as to willful evasion the requirement of pre-deposits waived till the disposal There was no physical import of magnetic media or optical media with software recorded on it - ASSOCIATED CEMENT COMPANIES LTD. Versus CC 2001 (1) TMI 248 - Supreme court of India and DIGITAL EQUIPMENTS (INDIA) LTD. Versus COLLECTOR OF CUS., BANGALORE 2001 (4) TMI 476 - CEGAT, BANGALORE the show cause notice does not even mention the Tariff heading under which the software downloaded through internet is sought to be charged to customs duty - the stay application is allowed and pre-deposit is waived till the disposal stay granted.

Summary

Issues:
1. Liability of customs duty on software downloaded from the website.
2. Entitlement to set off CVD against excise duty.
3. Allegations of suppression of information and evasion.

Analysis:
1. The appellant argued that the customized software downloaded for use in manufacturing PAS and HAS should not attract customs duty as it was not tangible goods like discs or tapes. The adjudicating authority found no suppression of information, allowing excise exemption. The DR contended that customs duty was due on the downloaded software. The Tribunal noted that software downloaded via the internet does not involve physical import of tangible media and, as per legal precedents, such downloads are not taxable under customs law. The Tribunal observed that the show cause notice did not specify any tariff heading for charging customs duty on internet-downloaded software. Consequently, the Tribunal waived the requirement for pre-deposit of customs duty during the appeal.

2. Regarding the set off of CVD against excise duty, the appellant claimed entitlement to this benefit. The DR opposed this claim. However, the Tribunal did not specifically address this issue in the judgment provided.

3. The adjudicating authority's findings raised questions about the appellant's conduct, but it concluded that there was no suppression of information. The DR alleged misstatement by the appellant, but the Tribunal found no evidence of willful evasion. The Tribunal emphasized the need for a thorough examination of the matter and allowed the stay application, waiving the pre-deposit requirement during the appeal process.

In conclusion, the judgment primarily focused on the liability of customs duty on software downloaded from the internet, ruling in favor of the appellant due to the non-taxable nature of such downloads under customs law. The issues of set off of CVD against excise duty and allegations of suppression of information and evasion were also briefly discussed in the judgment.