2006 (5) TMI 90 - SC - Customs

Whether the imported goods, i.e. Motion Capture Animation Files will come under the purview of Customs Notification No. 29/99 as information technology software for claiming exemption from payment of duty? Held that - Random House Compact Unabridged Dictionary refers to software as anything that is not hardware and is used with hardware. Encyclopaedia Britannica refers to software to designate non-hardware items, namely internal programmes or routines and programming aids. Thus the programming aids are also known as software and thus the goods in question would fail within the meaning of the word software . The goods under import are admittedly data recorded on tapes. Under the existing Notification No. 20/99 any kind of data in a machine readable form and capable of being by means of an automatic data processing machine would be covered by the term Information Technology Software The goods under import are computer software recorded in a machine readable form and capable of being manipulated by means of an automatic data processing machine. We do not find any infirmity in the impugned order of the Tribunal. Appeal dismissed.

Summary

Issues:
Whether 'Motion Capture Animation Files' qualify as 'information technology software' under Customs Notification No. 29/99 for duty exemption.

Analysis:
The case revolved around the classification of imported 'Motion Capture Animation Files' under Customs Notification No. 29/99 as 'information technology software' for duty exemption. The Respondent imported these files and claimed exemption under Notification No. 20/99-Cus. The assessing authority denied the benefit, stating that the files were not capable of manipulation. The Commissioner of Customs (Appeals) upheld this decision, emphasizing that the files did not enable manipulation or provide interactivity. However, the Customs Excise and Gold (Control) Appellate Tribunal overturned this decision, citing the expanded scope of the amended notification, which now covered any data capable of manipulation by an automatic data processing machine.

The Revenue argued that the imported files were merely data and not a set of instructions, thus not covered under the notification. They contended that the files were not capable of manipulation by an automatic data processing machine. Conversely, the Respondent's counsel highlighted the broader scope of the amended notification, asserting that the files were indeed software recorded in a machine-readable form and capable of manipulation. Expert opinions from Prof. S. Raman and references to dictionaries supported this argument, defining software as non-hardware used with hardware, including programming aids.

Prof. S. Raman's expertise confirmed that 'Motion Capture Animation Files' were considered software in the industry, capable of being manipulated and modified. The files were recorded in a machine-readable form and could be interactively modified for various industry requirements. The Tribunal's decision was supported by the understanding that any data capable of manipulation by an automatic data processing machine fell under the term 'information technology software' in the amended notification. The Court agreed with this interpretation, concluding that the imported files qualified as computer software and were entitled to duty exemption under Notification No. 20/99-Cus.

In summary, the Court upheld the Tribunal's decision, stating that the imported 'Motion Capture Animation Files' were indeed computer software recorded in a machine-readable form and capable of manipulation by an automatic data processing machine. The judgment dismissed the appeal, with each party bearing their own costs.