2005 (8) TMI 208 - AT - Central Excise

Summary

Issues:
Classification of application software for process control instruments under the Central Excise Tariff.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal (OIA) passed by the Commissioner of Central Excise (Appeals), Bangalore. The case involved the classification of 'Distributor Control System' (DCS) under Chapter 90.32 of the Central Excise Tariff. The DCS, along with application software, is used in various industries for process control. The software is supplied separately and loaded onto data processing machines at the customer's site. The Revenue contested the classification of the software under Chapter Heading 85.37, claiming it should be classified under 8524.20. The Revenue argued that the software is an integral part of the DCS and should be included in the assessable value of the hardware equipment. However, the Original Authority and the Commissioner (Appeals) classified the software under 8524.20 and held that its value should not be included in the value of the DCS.

The learned Advocate for the respondents argued that the software should be classified under Chapter Heading 85.24, as it is intended only for the DCS. He cited a Board's Circular and a previous judgment to support this argument. He also highlighted that the software is supplied separately on floppies and CDs, not etched or loaded onto the hard disk. The Tribunal examined the case records and noted that the software is distinct from the hardware, supplied separately on physical media. The Tribunal agreed with the classification under 8524.20 and rejected the Revenue's appeal. The Tribunal held that there was no infirmity in the Original Order-in-Original (OIO) and the Order-in-Appeal (OIA), affirming the classification and exclusion of the software value from the DCS value.

In conclusion, the Tribunal upheld the classification of the application software under 8524.20 for the process control instruments. The Tribunal emphasized the separate nature of the software from the hardware equipment and rejected the Revenue's appeal regarding the inclusion of the software value in the assessable value of the DCS. The judgment clarified the correct classification and treatment of the software in the context of Central Excise Tariff regulations.