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TMI Blog2017 (3) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... item - Held that: - The item imported being beta software, one cannot be allowed to state that the said item is not “goods” in terms of Section 2(22) of the Customs Act. The item is a kind of moveable property which has been put into a media-CD/DVSs and is being transacted/ passed over/ traded as such - matter is remanded to the original adjudicating authority to decide afresh the valuation in the light of the observations made here u/r 9 of CVR, 2007 read with Section 14(1) of CA, 1962. Appeal allowed by way of remand. - C/364/2009-Cu(DB) - C/A/52101/2017-Cu(DB) - Dated:- 3-3-2017 - Hon ble Mr. Justice (Dr.) Satish Chandra, President And Hon ble Mr. Ashok K. Arya, Member (Technical) Shri B.L. Narsimhan, Advocate for the Applicants Shri Govind Dixit, DR for the Respondent ORDER Per Ashok K. Arya 1. M/s Microsoft Corporation (India) Private Limited is in appeal against the Commissioner (Appeals) order dated 25.05.2009, whereunder it is held that valuation of Time Bound Software and Beta Software is to be determined under Rule 4 of the Customs Valuation Rules, 2007. 2. The appellant has been represented by Shri B.L. Narsimhan, ld. Advocate and Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st) alone is to be taken as the transaction value. Reliance is placed on Hon'ble Tribunal s case of Atul Kaushik Vs. Commissioner of Customs 2015(330)ELT 417 (Tri. Del), wherein the loading of the cost of media with the license fee for the software was held to be unsustainable in cases of non-commercial shipments i.e. cases where no licenses fee was actually paid the media was provided free of cost. Similarly, in the present case, as the time bound software is meant for free distribution and use, the same is to be valued at the cost of the CD/media (including replication cost). d. Valuation as per Rule 4, CVR, is not sustainable as the goods are not identical considering the life span: Time bound software without the restriction are not identical in order to apply Rule 4, CVR. This is for the reason that the life span is not the same. In determination of identical goods, one key consideration is the life span of the goods. Reliance is placed on order of the Hon'ble Tribunal in the case of Selected Creations Vs. CC, 2001 (135) ELT 333 (Tri-Del.), wherein it has been held, in the context of import of lamps, that life span is an important consideration in the pricin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason that there is no final version of the software existing at the time of import of beta software on CD/media. The beta version itself from the developers, etc. Thus, the two cannot be considered to be identical. Thus, the application of Rule 4, CVR, is erroneous. e. Proposal to continue provisional assessments till release of final version of software is erroneous: In the impugned order, the CCA has proposed to keep the assessments for the beta software provisional till the time the final version is not released. This understanding is erroneous and is liable to be set aside. For instance, in case the final version of the software is never released and is scrapped, then the assessments of the beta version will be provisional in perpetuity. 4.2. The appellant also cites additionally the following case laws in support: a. Gajra Bevel Gears Vs Collector of Customs, Bombay, 2000 (115) ELT 612 (S.C.) b. Indian Drugs Manufacturer s Association Vs. Union of India, 2008 (222) ELT 22(Bom.) c. Cadila Pharmaceuticals Ltd Vs Commissioner of Central Excise Ahmedabad-II, 2008(232) ELT 245 (Tri.-LB) 5. Ld. AR reiterates the findings given by the lower Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation purpose free of cost for a specified time period; such software does not have any identical or similar goods for the price comparison; Time Bound Software cannot be compared with the finished and released product known as Fully Packaged Products (FPP), which is full version software i.e. after the software that has passed successfully through testing and development phase and it is a commercially valuable product; FTP comes in a factory sealed retail boxes with software and CD/DVD along with perpetual software licence (specifying the rights granted in respect of a such software and products-use rights); thus, Time Bound Software is physically different from Fully packaged Product (FPP) in terms of character, content and usage. 8. When the importer appellant explains the features of the product namely Time Bound Software and makes a mention that Time Bound Software is not a fully packaged product and its price is equivalent to the media cost only (the media here could be CD/DVSs) and when the import transaction is between the related parties, where supplier or exporter to the Indian importer is located in USA and Singapore, the assessment value of the said goods c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of the proper officer the order of application of Rule 7 8 of these Rules shall be reversed. Rule 7 talks about Deductive value but with reference to sale of identical or similar import goods to unrelated buyers in India and talks about certain deductions. Rule 8 talks about Computed value where the elements for computation are cost or value of materials and fabrication or other processing employed, and amount or profit and general expenses and also the cost or value of all others expenses. 10. From the facts or record, submissions of both the sides and the case laws cited, it appears that the elements required for arriving at Deductive value under Rule 7 or for arriving at Computed value under Rule 8 of the said Rules are not present for the imported item namely Time Bound Software . Therefore, the valuation is to be decided under Rule 9 of CV Rules, 2007. Rule 9 says that subject to the provisions of Rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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