2018 (5) TMI 1682 - AT - Customs

Levy of CVD - import of Customised Software - denial of benefit under Notification No. 6/2006-Central Excise dated 01.03.2006 to Customised Software produced by the appellant - difference between Packaged software and Customised Software Held that - In all the Packaged Software no rights such as copyright, trade mark or any other intellectual property rights, patent copy right etc. are transferred to the buyer. Similarly source code is also not transferred. The right to use Packaged Software is also a nonexclusive right. However just existence of these factors do not make any software Packaged Software . Even in the Customised Software by virtue of contract between parties that all the rights can be retained by the supplier of the software. Conclusion reached on this ground is not proper. Non-exclusive right to use the software - Held that - Even in Packaged software the rights transferred, if any, are nonexclusive right to use the said software. Even in Customised Software it is possible that parties may agree to the same conditions. It is to the contracting party to decide the manner in which the right are to be transferred. These issues do not determine the nature of software . The difference between Packaged software and Customised Software has not been examined with respect to exact nature of the software of imported. The importer is claiming the benefit of exemption N/N. 6/2006-Central Excise dated 01.03.2006 - the matter remanded to the original Adjudicating Authority to examination all the documents submitted by the appellant and give a clear finding on the Customised or Packaged nature of software depending of the features of software itself and other data submitted by the importer - appeal allowed by way of remand.

Summary

Issues:
Denial of benefit under Notification No. 6/2006-Central Excise dated 01.03.2006 to "Customised Software" produced by the appellant.

Analysis:
The appeal was filed against the denial of benefit under the mentioned notification for the "Customised Software" imported by the appellant. The appellant argued that the software was tailored specifically for the petro-card programs of ICICI Bank and Hindustan Petroleum Corporation Limited. They claimed the software should be exempt from levy of CVD as per the notification. The appellant paid duty under protest and requested a speaking order for appeal, which was rejected. The High Court ordered a fresh assessment, and the Customs relied on a previous order to deny the benefit, considering the software as packaged/canned.

The appellant contended that the imported software was customized, not packaged, as it was tailored to specific user requirements and not for general use. They highlighted the unique nature of the software, emphasizing that it couldn't be resold or used for other customers. The Customs argued that the supplier retained all rights and the importer lacked the source code, leading to the conclusion that it was not customized software. The Tribunal noted that the rights retained by the supplier do not determine the nature of the software, and it is the contracting parties who decide the transfer of rights.

The Tribunal found discrepancies in the assessment, noting that the difference between packaged and customized software was not properly examined. The matter was remanded to the Adjudicating Authority for a detailed examination of the software's nature based on the features and data submitted by the importer. The Tribunal emphasized the need for a clear finding on whether the software was customized or packaged, allowing the appellant a chance for further examination.

In conclusion, the Tribunal set aside the impugned order and remanded the matter for a thorough examination to determine the nature of the imported software as either "Customised" or "Packaged," based on the specific features and data submitted by the appellant.