2017 (1) TMI 470 - AT - Customs

Benefits of N/N. 11/97-Cus dated 1-3-1997 - penalties - import of CD-ROM - denial on the ground that the same do not figure in the letter of department of electronics addressed to Electronics and Computer Software Export Promotion Council - Held that - The letter of department of electronics, was in respect 27 different titles and in respect of some imports, probably made in Bangalore. Absence of these titles in the said list does not make these titles non interactive. Further it is noted from the description of the CD s, as it appears in net, which has been produced by the Ld. Counsel, that Sr. 1, 2 and 4 clearly interactive in nature. In respect of Sr. 3, it is apparent that the said title is covered in the letter of department of electronics - benefit of notification available - penalties set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of benefits of Notification No. 11/97-Cus to imported CD Roms.
2. Penalties imposed under Section 112(a) and (b) of the Customs Act, 1962.
3. Interpretation of Computer Software exemption criteria.
4. Determining the interactive nature of specific CD titles.

Analysis:

1. The appeals were filed against the Commissioner's order denying benefits under Notification No. 11/97-Cus to four CD Roms imported by the appellants. The Revenue also filed cross objections. The argument revolved around the exemption granted to 16 out of 20 CDs imported, with specific focus on the interactive nature of the disputed CD titles.

2. The appellants contended that the disputed CD titles qualified for the exemption under Notification No. 11/97-Cus as amended by Notification No. 3/98-Cus, which exempts Computer Software from customs duty. The key issue was whether the CDs in question met the definition of "Computer Software" as per the notification, emphasizing interactivity as a crucial criterion for exemption.

3. The legal counsel presented evidence from various sources describing the disputed CDs as interactive in nature, supporting their argument against the Revenue's assertion that the titles were non-interactive. The Tribunal scrutinized the descriptions provided and concluded that the CDs were indeed interactive, aligning with the criteria set forth in the exemption notification.

4. In the analysis, it was highlighted that the sole basis for denying the exemption was the absence of the disputed titles in a list provided by the department of electronics. However, the Tribunal found this reasoning insufficient, emphasizing that the descriptions of the CDs and their interactive features, as evidenced by online sources, supported the appellants' claim for exemption.

5. Ultimately, the Tribunal ruled in favor of the appellants, allowing the appeal of M/s. Adani Exports Ltd and setting aside the penalties imposed on the individual appellants. The decision was grounded in the determination that the disputed CD titles met the criteria for interactivity as defined in the exemption notification, leading to the disposal of the cross objections as well.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's decision, providing a detailed overview of the case.