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TMI Blog2015 (9) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of that case clearly indicate that what was brought in by the appellant therein was "CD ROM", is an indicator that the CD containing the designs and drawings of engineering goods was on a "read only memory"; in computer language ROM, that is to say the information on the CD Can only be read and is non-manipulatable. The judgment and the ratio of the Apex Court in the case of LML Ltd. [2010 (9) TMI 12 - Supreme Court of India] was considering the peculiar facts of that case; while in the case in hand before us, it is undisputed that the information contained on the CD is manipulatable and interactive with the user. Designs and drawings contained in the CD were correctly classifiable under Heading 85238020 and attracts 'nil' rate of duty as per Customs Tariff. The requirements of supplementary note to Chapter 8523 are therefore satisfied. Since designs and drawings in paper form as well as in the CD form attract nil rate of duty, the finding of the Commissioner about the applicability of section 19 of the Customs Act, 1962 becomes irrelevant since the rate of duty applicable to both goods even assuming them to be constituting a set, is 'nil' in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they had placed an order for design and drawings in CD form, even if the classification as claimed by the revenue is correct then also benefit of supplementary note to chapter 85 will apply as imported goods i.e. CD will fall under the category of information technology software , there was no intention to misdeclare the goods as the purchase orders were placed specifically for the designs and drawings in printed form only and that they be allowed to re-export the CD back to the supplier. The adjudicating authority after following the principles of natural Justice, did not agree with the contentions raised by the appellant, holding against the appellant confirmed the demand of Customs duty interest thereof and also imposed penalties. Aggrieved by such an order appellant is before the Tribunal. 3. Learned advocate appearing on behalf of the appellant would take us through the entire case records. He would draw our attention to the purchase orders placed by the appellant and submit that the said orders were for supply of design and drawings in hand copy for construction of vessel. He would submit that the appellant had never placed the order for the supply of design and drawi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the data being manipulatable. He would submit that the adjudicating authority has erred in relying upon the ratio of the case of LML Ltd. - 2010 (258) ELT 321. He would submit that in that case what has been imported in the CD was an image of drawing which was not capable of being manipulated or providing interactivity using an automatic data processing machine. It is his submission that case of the appellant squarely covered by the decision of the Supreme Court in the case of pentamedia graphics limited - 2006 (198) ELT 392 and draw our attention to the same. He would submit that the decision of the Tribunal in the case of Gayatri Impex Ltd - 2007 (215) ELT 397 is directly on the same issue. 4. Learned Special Counsel appearing on behalf of the would draw our attention to the impugned order. He would submit that the entire case of the Department is that appellant had imported designs and drawings in paper form as well as in CD and the duty liability arises as the appellant are ineligible to avail benefit of the exemption notification as the product cannot be construed as information technology software. He would submit that the valuation as has been arrived is in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 18.6.2012 issued by the appellant clearly stipulate as under:- Drawings need to be dispatched in hard copy by Air Cargo mode only and relevant Airway Bill to be presented for negotiations. The description of goods as per the LC as well as the supplier's invoice also clearly state that designs and drawings covered by these documents are those as per appellant's order dated 18.6.2012 which, as mentioned above, specifically states that the drawings are to be hard copies. As such, the claim of the appellant that they had not ordered for a CD and that it had been supplied without their knowledge is not disproved by the department. We also note that the designs and drawings in printed format are not liable to Customs duty as they are exempted or applicable rate of duty is nil. 7.4 Even though the evidence on record proves that the CD was never ordered for, even if the position had been otherwise as held by the Commissioner, the duty liability on such a CD would be 'nil' as such a CD would satisfy the requirements of being information technology software falling under Heading 85239010, which attracts 'nil' rate of duty as per the tariff itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, codes, computer programs, software and data basis and microfilm or computer generated Micro fiche. 7.6 Secondly, the 2 nd limb of the definition of information technology software requires that the representation of instructions, data, sound or image is capable of being manipulated. In the course of the hearing, it was demonstrated before us that the drawings contained in a CD form, when used in conjunction with AUTOCAD software provides interactivity to the user and the data in such a CD is also capable of being manipulated. The printed literature pertaining to AUTOCAD software, as extracted in the synopsis filed by the Appellant, shows that a user can change a drawing i.e manipulate it by giving different commands. These commands are extracted below: It was also demonstrated that the feature of 'zooming' is not merely a feature of magnifying an image as one usually understands, but includes features like displaying only all the graphics in a drawing; redrawing the graphic area of the screen and displaying in two rectangles; selecting a particular object and view on that object, etc. The features of zooming, as extracted in the synopsis are set out be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atic data processing machine, by a software known as AutoCAD . The manipulation to data on CD that could be undertaken as was demonstrated to us indicates that after the manipulations, the automatic data processing machine culls out immense information with respect to so many aspects of the vessel. The drawings and the designs on the CD is in a software form as stated above and can be manipulated to suit to the requirements of appellant's customer or the user. The interactivity of the information on the CD can be also gauged from the fact that the appellant can entirely change the design and use the new design and use the new design and also work of the minutest detail, a fact undisputed by the lower authorities. The adjudicating authority seeks to deny the benefit to the appellant only on the ground that the CD does not have any source code or on object that would have inherent capability/feature of manipulated; and relied upon the definition of word manipulation. We find that these findings of the adjudicating authority are without any basis. The definition of information technology service talks about including of source code and object code; which we find is not required i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Apex Court, we find that the case of LML Ltd., the issue was of classification of CD ROM containing images of drawing and designs of engineering goods. Their Lordships are in paragraph 18 after considering the meaning of the work software applied the same in the facts and circumstances of the case of LML Ltd - 3764 of 2003 and in paragraph number 20 and 21 held as under: 20. In the light of the aforesaid background, the question that arises for our consideration is whether the data in a compact disk falls within the meaning of the term software. It is needless to reiterate that data at issue in this case are images of drawings and designs intended to be used for engineering projects, therefore, the core issue to decide is whether such drawings, designs intended to be used for engineering projects be termed software so as to entail the benefit of the aforesaid Notification 17 / 2001 Cus dated 1.3.2001. 21. There can be no doubt that such engineering drawings and designs do not provide instructions for the computer hardware to perform. At best, the said drawings and designs can be said to be are by-products and outputs of the computer software, which generate the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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