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TMI Blog2003 (6) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... masters for the production of records, but excluding products of Chapter 37." 2. The Commissioner has noted that Invoice No. 6619289, dated 19-1-2000 covering value of springware software relating to the PPCBs of the Bill of Entry No. 194258, dated 1-2-2000 and the Invoice No. 669248, dated 21-3-2000 covering value of springware software related to PPCBs imported under Bill of Entry Nos. 197878, dated 17-2-2000 and 197879, dated 17-2-2000 is totally attributable to the voice boards and fax boards. The Commissioner has ordered for confiscation of the goods under the respective Bills of Entry stated in the order but has granted release of the same on payment of a fine of Rs. 3 lakhs. A further duty amount of Rs. 26,73,161/- has been confirmed and Rs. 5 lakhs has been adjusted which has been paid by the appellants. Appellants have been imposed a further penalty of Rs. 30,87,209/- under Section 114A of the Customs Act, 1962. 3. We have heard ld. Counsel Shri A.K. Jain for the appellants and Smt. R. Bhagya Devi, ld. SDR for the respondent-revenue. 4. Ld. Counsel has filed the written prepositions and the said written propositions are noted herein below :- (A) Even whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Cromptron Engineering v. Commissioner of Customs, Madras (Page 44). (F) If splitting of value was done in accordance will established practice of the department and when the department itself did not ask any further information in the form of product manual or detailed write up before doing assessment, extended limitation would not be invocable. 1. 2000 (117) E.L.T. 252 (Tri.) in the case of Tata Infotech Ltd. v. Commissioner of Customs, Mumbai/New Delhi (Page 46). 2. 2000 (68) ECC 74 (Tri.) in the case of Kirloskar Electric Company Ltd. v. Commissioner of Central Excise, Bangalore (Page 53). (G) Catalogue that too obtained from some undisclosed source could not be used in the Order-in-Original when the same has not relied upon in the SCN. 1. 2002 (146) E.L.T. 152 (Tri.) in the case of Pure Metal Exports v. CC, Kandla (Page 55). 2. 2003 (154) E.L.T. 370 (Bom. - DB) in the case of Jhonson & Jhonson Ltd. v. Deputy Chief Controller of Imports & Exports (Page 56). (H) Commissioner could not ignore CBEC Circular 87/95-Cus., dated 31-7-1995 (Page 93 despite being sited) to refer the matter to the agencies like NIC for their views on the issue involved in this case (which has now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Board's circular, the department was bound to have obtained the technical clarification from NIC which they have failed to do so. He submitted that even otherwise the opinion of BSNL and that of South Central Railways was before the Commissioner and the Commissioner having referred to the same in the order has ignored it and has not given any finding on it. He contended that the Commissioner has wrongly interpreted the catalogue and the catalogue was never referred to in the show cause notice. Therefore, the order is beyond the allegations made in the SCN and requires to be set aside on this ground also. Ld. Counsel filed a copy of the catalogue and pointed out that even in terms of the catalogue, it is very clear that the item imported was not embedded in the voice board/fax board. It is his contention that even in the judgment rendered by the Apex Court in Sprint RPG India Ltd. v. CC-I, Delhi (supra), the same facts were available and even in that case spring software was embedded in the hard disk and yet the Apex Court held that it did not form as a computer software. He submitted that they are parts of computer and software was required to be considered as computer software a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correspondence of the appellants with the supplier who have clearly stated that the item cannot be considered as part of the machinery but is required to be classified as a 'software'. The letter issued by M/s. Intel at page 91 of the paper book is referred to by them, wherein it was clearly answered that dialogic voice and fax boards do not have springware software embedded on to them, when it was supplied to the appellants. They also stated that CD contains springware software. They also clarified that springware is not embedded software but what was given in the data book is more of a jargon and it is not technically correct. The data book also calls springware as downloadable firmware. Springware is definitely not embedded on to the voice/fax processing boards such as d41/h, VFX, D 160/SC etc. at the time selling those boards. They also clarified as to why they were given separate pricing for hardware and software as a marketing strategy and it was not specific to the appellant alone. The pricing policy was decided by the manufacturer M/s. Dialogic and it was not customer's specific. It was also clarified that springware software on its own cannot carryout any function. The use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed the same and had cleared for home consumption except for a few of the software which had been kept in the warehouse. Subsequently, the department took up the investigation and proceeded to issue show cause notice on the ground that they are all parts of line telephony instrument classifiable under sub-heading 85.17 as electrical apparatus for line telephony or line telegraphy etc. and proposed to deny the benefit of Notification Nos. 20/99 and 23/98 (Sl. No. 206) in which the item had been declared with Nil rate of duty. The further ground was that total package value was bifurcated/split as Hardware/Software value for the purpose of evading customs duty to the extent of 70% of the total FOB value. It was also alleged that subject hardwares were declared as PPCBs of Personal Computer and claiming CTH 8473.30 as a part of computer which is not correct while the item is required to be used for processing the voice in conjunction with line telephone and thus are to be classified under 8517.90 as part of line telephony instruments. The appellants had given various judgments in their support including the technical data and opinion to sustain the argument that there is no misdecla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Development Manager of Intel to the appellants in respect of goods have already been brought out by the Counsel in the arguments and noted down supra which clearly described that the item springware is not embedded software and what is given in the data book is more of a jargon and it is not technically correct. The data book also calls springware as downloadable firmware and that it is definitely not embedded on to the voice/fax processing boards. Further clarification given by M/s. Intel was that the pricing for hardware and software was more than as a marketing strategy and the pricing policy was decided by the Management of Dialogic and it was not a customer's specific. There are various clarifications given to show that this item is computer software and not part of line telephony instrument. The Commissioner ought to have taken the certificates produced by the party, while recording the findings. The details furnished in the catalogue was not relied in the show cause notice and the Commissioner ignored these two pieces of evidences which were before her which clearly shows that the impugned order is not at all correct one and the order requires to be set aside. The opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore Telecom District the following clarifications are offered : 1. Can the Dialogic Voice/Fax Boards work without a PC? Ans : Dialogic Voice/Fax boards are PC add on cards. The power supply itself is derived only from the PC and the interface connector is a PC bus connector. The card has to be plugged into the PC for working. There is no way the Cards can work without a PC. 2. Does the Dialogic Voice/Fax boards come with software embedded on to the board itself? Ans : The software comes on the CDs. Once the card is plugged into the PC and software is installed from the CD, on appropriate command the software gets downloaded on to the RAM of the board. Since the board does not have any permanent storage device, the software cannot be embedded on to the board. 3. Can the Dialogic Voice/Fax Boards work without the software (Springware) given in the CDs? Ans : No, the boards cannot work without the springware software on the CDs. The entire intelligence to the board is provided in the software, which come in the CDs. 4. Does the Springware a software gets downloaded when the PC is powered ON and appropriate command given? Ans : Yes, the software gets downloaded when the PC is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whenever PC is powered ON along with Dialogic Card present in it, the software gets downloaded into RAM present on the board itself. The software thus loaded will be lost when the board is powered off. 13. On a cumulative reading of technical details furnished, it is clear that the item is a computer software and parts thereof which are required to be classified under the heading provisionally assessed by the department as claimed by the party. They are not parts of Line Telephony Instrument. The same item came up for consideration before the Apex Court in the case of Sprint RPG India Ltd. v. CC-I, Delhi (supra). In that case also the valuation on the entire software had been assessed at a very high value so also in the present case. The Apex Court has gone into great detail on all aspects of the matter and upheld the classification as claimed by the party and held that the item cannot be classified as part of the hardware. 14. So also in the case of Barber Ship Management India Pvt. Ltd. v. CC, ACC, Mumbai (supra) which has since been approved by the Apex Court, the Tribunal has clearly held that storage device with software recorded thereupon is classifiable under H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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