2019 (9) TMI 80 - AT - Customs

Classification of imported goods - IT Software license with part No. 452158 B21 HP ILO Select NM 1 Ser 24x7 Support, 452141 B21 HP ILO ADV NM1 Ser 24x7 Support, 436747 B 22 HP IC Environment BL No. Media Licenses - whether classified under Tariff Heading 49070030 of the CTA or under heading 8471? - HELD THAT - In the present case, the appellants have only imported paper licences which are documents of title conveying the right to use software loaded in the HP ILO Proliant Serve -. Further, the CBEC has also clarified vide Circular 15/2011 that documents conveying the right to use software do not merit classification under CTH 8523 8020 but merits classification under CTH 4907. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of imported IT software license under Tariff Heading, Benefit of NIL rate of duty under Customs Notification, Interpretation of documents conveying the right to use software, Applicability of relevant Board Circulars and judicial precedents.

Classification under Tariff Heading:
The appellants, importers and traders of IT products, imported IT Software licenses and sought classification under Tariff Heading 49070030 to claim the benefit of NIL rate of duty under Customs Notification No. 21/2002. The assessing officer, however, classified the goods under a different heading with a duty structure. The appellant contended that the imported goods were paper licenses conveying the right to use software and should be classified under a specific heading based on relevant Circulars and judicial precedents.

Benefit of NIL rate of duty under Customs Notification:
The appellants claimed the benefit of NIL rate of duty under Customs Notification No. 21/2002 for goods falling under specific headings. The dispute arose when the assessing officer did not accept the classification sought by the appellants, leading to the rejection of the claim by the Commissioner (Appeals). The issue revolved around the correct interpretation of the notification and its applicability to the imported IT software licenses.

Interpretation of documents conveying the right to use software:
The crux of the matter was the interpretation of the imported goods as paper licenses conveying the right to use software loaded on HP ILO Proliant Server. The appellant argued that such documents should be classified under a particular heading as clarified by relevant Board Circulars. The Tribunal examined the nature of the imported goods and their classification based on the content and purpose of the documents.

Applicability of relevant Board Circulars and judicial precedents:
The appellant relied on Board Circular No. 15/2011, which clarified the classification of documents conveying the right to use software. Additionally, judicial precedents such as the decision by the Chennai Bench in a similar case were cited to support the appellant's argument. The Tribunal considered these Circulars and precedents while analyzing the classification of the imported paper licenses and ultimately ruled in favor of the appellant based on the interpretation and application of the relevant legal provisions and precedents.