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Issues involved: Interpretation of Notification 11/97 for exemption of imported software under specific categories and the scope of the term 'computer' in relation to automatic data processing machines.
Summary: The Appellate Tribunal CEGAT, Mumbai considered four appeals regarding the entitlement of imported software to the benefits of Notification 11/97. The software in question was to be used for various functions by different sectors of a mobile telephone service provider. The Tribunal analyzed a circular dated 10-2-1998 of the Ministry of Finance which defined 'Computer Software' for the purpose of exemption under the notification. The circular emphasized that the exemption applied strictly to 'Computer Software' used in automatic data processing machines under heading 84.71. However, the Tribunal accepted that the term 'computer' encompassed various data processing machines beyond those specified in the circular. The Tribunal referred to previous cases and literature to support the broader interpretation of the term 'computer,' including microprocessors as computers. It highlighted that the Ministry's circular's restriction to heading 84.71 was arbitrary and not supported by the notification's wording. The Tribunal also noted correspondence between Customs and the Department of Electronics confirming that software for various applications, including telecom, could be considered computer software for exemption purposes. Furthermore, the Tribunal discussed the classification of machines incorporating data processing machines and emphasized that software for such machines would qualify as software for data processing machines. It clarified that the notification was amended to exclude software for specific functions of data processing machines, but this exclusion was not applicable to the software in question. Consequently, the Tribunal allowed the appeals and set aside the previous orders denying the exemption. In conclusion, the Tribunal's decision expanded the scope of 'computer software' under Notification 11/97 beyond the limitations set by the Ministry's circular, allowing for a broader interpretation that includes various data processing machines beyond those classified under heading 84.71.
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