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TMI Blog2003 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... on magnetic tapes and converted to digital form and thereafter processed at the Processing Centre of the ONGC by using a software applications named Seismos. The Central Processing Centre is located on Indian territory, and these tapes in the form of cartridges were imported by each of these appellants, who claimed exemption from customs duty in terms of the entry in the exemption notification referred to above. 2.The department, after consulting software professionals, was of the view that the goods were not IT software as defined in the Explanation to the notification and hence not entitled to the exemption contained in it and proposed to recover duty of Rs. 49.69 crores from ONGC Ltd. and Rs. 2.12 crores from Tullow India Operations Ltd. The Commissioner did not accept the contentions in the reply of these importers that the tapes were software within the meaning of the definition contained in the notification and came to the conclusion that the benefit of exemption would not be available. He also declined to accept the claim made by Tullow India Operations Ltd. for the benefit of the exemption contained in Entry 184 read with list 11, item 23 of Notification No. 20 of 1999. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acteristics of recorded data files for the header to enable the data to be recognized and decoded by the computer on which such data is to be used by the system software. Neither the data nor the header information on the ONGC imported data cartridges can be classified as software or computer or automatic data processor. These data are also not capable of manipulating some other information but are being manipulated by the software of computer system at ONGC. In other words, the information in the data cartridges is not software at all by itself. 5.The understanding of the term software in the field of computer engineering and software engineering is that it is a complete programme that is used to manipulate or process data. The Dictionary of Computing Multimedia, and the Internet by the Hutchinson defines "software" as follows : "A collection of programs and procedures for making a computer perform a specific task, as opposed to hardware, the physical components of a computer system. Software is created by programmers and is either distributed on a suitable medium, such as the floppy disc, or built into the computer in the form of firmware. Examples of software include operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It must include source code and object code and must be recorded in machine-readable form; - It must be capable of being manipulated or providing interactivity to user by means of an automatic data processing machine. 8.The Random House Webster's Computer and Internet Dictionary has this to say about source code (at page 521) and object code (at page 5.386). "Source code Program instructions in their original form. The word source differentiates code from various other forms that it can have (for example, object code and executable code)." "Initially, a programmer writes a program in a particular programming language. This form of the program is called the source program or, more generically, source code. To execute the program, however, the programmer must translate it into machine language, the language that the computer understands. The first step of this translation process is usually performed by a utility called a compiler. The compiler translates the source code into a form called object code; sometimes it needs to be translated into machine language by a utility called an assembler." "Source code is the only format that is readable by human. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore seeing any of the results, while with interactive processing the user can decide how to handle each item on the basis of the results obtained with earlier items. The software such as telephone director etc. that the appellant manufacture red is clearly interactive. The user has necessarily to communicate with the computer while the program is running, in order to locate the number of a particular subscriber among many with a similar name, to give an example." 11.Let us now examine whether the data under consideration satisfies each of these requirements. It has satisfied the first clause, being the representation of instructions, data, sound or image. The material on the tape is by definition "data." It has not satisfied the second requirement that it must include a source code or object code. Such data does not contain any source code nor is it disputed that it contains source code or object code. It would only contain source code if it were written by a human programmer. The data on the source is nothing other than the response to the seismic waves which have been generated, which has been digitized, i.e. converted into zeros and ones. It is far from being a programme wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only be transferred to other objects using software which is not part of the imported consignment. It is significant that the goods imported do not consist of a programme which would enable the manipulation of the files. In that sense, in the condition in which they have been imported, they are not capable of being manipulated but remain mere information. Thus, even though files contain data in a machine readable form they are not capable of manipulation. They also do not provide interactivity to the user, as it is only a data and no programme or set of instructions contained in the cartridge." The Tribunal has relied, to a considerable extent, upon the difference between the definition of software contained in the Explanation to Notification 23/98 and that contained in the Explanation contained in Notification 20/99. It had noted that the Explanation to Notification 20/99 omitted the words "occurring in Notification 23/98 to the following extent "but does not include software required for operation of any machine performing a specific function other than data processing, and incorporating or working in conjunction with an automatic data processing machine." 14.The result of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the data that was imported. These aspects are not seen to have been considered in CCE v. Novapan Industries Ltd. - 2001 (137) E.L.T. 662 (T) and Pentafour Software Exports Ltd. v. CCE - 2001 (130) E.L.T. 110 which must therefore be confined to the facts of the case. 16.The Tribunal's decision in Multimedia Systems Pvt. Ltd. v. CCE is again of no assistance to the appellant and it also does not help the appellant's case. In that decision, the Tribunal was concerned with whether the compact disc that contained such material as encyclopaedias were interactive or not within the meaning of the Explanation Entry 231 of Notification 23/98 and it concluded, after considering the meaning of the term "interactive", that such were files of interactive and therefore were interactive. The Tribunal in that case was concerned with applications software. We do not find anything in that decision that would lead to the conclusion that data does not contain source code or object code and is not capable of manipulation or being interactive can be considered to be software. 17.It has therefore to be concluded that the goods imported by the two appellants were not software as defined in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be produced at the time of importation or it did not contain this requirement. The majority has held, relying upon various judgments of the Courts and the Tribunal, that such certificates are only in the nature of evidence to show that the goods are entitled to exemption and that production of such evidence is a procedure requirement which cannot be considered to be the substantive condition of the notification. That ratio, in our opinion, applies equally to the notification under consideration by us as it did to the notification under consideration by the Bench which passed that order. The delay in production, subsequent to importation of the certificate from the Directorate General of Hydrocarbons, therefore is no bar for applying the exemption. It was also contended before us that the notification does not provide for issue of the other certificate to the effect that any foreign exchange shall remitted to be issued by any specified official of the Government and that therefore the certificate to this effect by the importer would suffice. The Commissioner has not has the benefit of these certificates and we think that it is he who, in the first instance, is to satisfy that they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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