1999 (11) TMI 706 - AT - Central Excise

Summary

Issues Involved:
- Duty confirmation on imported softwares
- Consideration of additional arguments and evidences
- Classification of softwares as system software or application software
- Charge of countervailing duty (CVD) on imported items
- Remand of the matter to the original authority for reconsideration

Duty Confirmation on Imported Softwares:
The appeal arose from an order confirming duty on certain imported softwares. The Tribunal considered the appeal and additional submissions from both the Revenue and the appellants. The issue revolved around whether the imported softwares, Sparrow/Sparrow POS and Hawk, were necessary to operate the computer system or if they were application software related to business activities. Due to insufficient evidence during the initial hearing, additional submissions and evidences were allowed for a clearer conclusion.

Consideration of Additional Arguments and Evidences:
Both the Revenue and the appellants submitted additional arguments and evidences during the proceedings. The Revenue sought parawise comments from the Custom House, which were allowed in the interest of justice. Similarly, the appellants requested to introduce technical reports and expert opinions, which were also accepted. These additional submissions were deemed crucial in determining the classification of the imported softwares.

Classification of Softwares as System Software or Application Software:
The main issue in the appeal was whether the imported softwares were system software necessary for computer operation or application software for business activities. The appellants argued, supported by technical opinions, that the softwares were application software and not system software. Detailed technical literature and opinions from the Head of Computer Science Deptt., Indian Institute of Technology, Chennai, were presented to support this claim. The Tribunal acknowledged the complexity of the technical facts involved and deemed a reevaluation necessary by the original authority.

Charge of Countervailing Duty (CVD) on Imported Items:
The appellants contended that since the duty rate on software under the Central Excise Tariff Act was NIL, no CVD should be levied on the imported items. They referenced a Supreme Court judgment in the Hyderabad Industries case to support their argument. The Tribunal noted this argument and directed the original authority to reconsider the matter, taking into account the absence of CVD on software under the Act.

Remand of the Matter for Reconsideration:
Considering the detailed technical nature of the case and the significance of the additional submissions, the Tribunal decided to remand the matter to the original authority for a fresh evaluation. The original authority was instructed to conduct a de novo reconsideration, including the additional evidences and arguments, along with the issue of CVD. The orders confirming duty were set aside, and the original authority was directed to expedite the reconsideration process due to the high revenue implications involved.