2018 (3) TMI 103 - AT - Central Excise

Classification of software - whether the software falling under Tariff Heading 85.24 has to be assessed to duty along with the computerized equipment / machinery or whether it has to be assessed under Tariff Heading 85.24 separately? - Held that - the issue has been decided in the case of M/s. Siemens Ltd Versus CCE & ST, Pondicherry 2018 (1) TMI 1315 - CESTAT CHENNAI , where it was held that the software which is supplied separately for loading cannot be considered as part and parcel of the machines / equipments - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of software under Tariff Heading 85.24 for duty assessment.

Analysis:
The appeals involved the question of whether software falling under Tariff Heading 85.24 should be assessed to duty along with computerized equipment or separately. The appellants supplied customized software along with their machinery for specific applications. The issue was whether this software should be considered part of the machinery or assessed separately under Tariff Heading 85.24. The Tribunal referred to previous decisions, including the case of M/s. Siemens Ltd. Vs. Commissioner of Central Excise, Puducherry, where it was held that software supplied separately for loading cannot be considered part of the machinery.

The Tribunal analyzed Note 6 of Chapter 85, which stated that records, tapes, and other media remain classified in their headings when presented with the apparatus they are intended for. However, as the software in this case was not supplied along with the device, the Tribunal found that the Note did not apply. The Tribunal also distinguished the case of Anjaleem Enterprises Pvt. Ltd. Vs. Commissioner, which dealt with read-only memory, from the present dispute involving customized software. The Tribunal further considered the judgment in CCE, Pondicherry Vs. Acer India Ltd., where it was held that operational software does not form an essential part of hardware.

Ultimately, the Tribunal concluded that the impugned order could not be sustained and needed to be set aside. The appeals were allowed with consequential relief, if any, as per the law. The decision was based on the analysis that software supplied separately for loading and linked to the device for data retrieval and monitoring should not be considered part of the machinery for duty assessment purposes.