9911796707
TMI Blog2005 (2) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... riod involved is from 1-4-1994 to 1-6-1998. The Adjudicating Authority confirmed a demand of Rs. 3,37,85,494/- being the duty on the clearances of software for DCS under Rule 9(1) of the Central Excise Rules read with Proviso to Section 11A(1) of the Central Excise Act, 1944. Duty was also demanded by including the Factory Acceptance Test charges and Systems Engineering charges. Interest under 11AB was demanded. Penalty under Section 11AC was levied equal to the duty liability with effect from 29-9-1996 i.e. the date of enactment of Section 11AC/11AB. A penalty of Rs. 10 lakhs under Rules 9(2), 173Q and 226 of the Central Excise Rules, 1944 was levied on M/s. ABB Ltd. M/s. ABB has strongly challenged the findings of the Adjudicating Authority. 4. Shri G. Shiva Dass, the learned Advocate appeared for M/s. ABB and Shri N.K. Bajpai, the learned Advocate and Shri L. Narasimha Murthy, the learned SDR appeared for the Revenue. 5. Shri G. Shiva Dass, the learned Advocate made the following submissions : (1) The learned Advocate, at the outset explained the functioning of DCS. The DCS manufactured by M/s. ABB is used in various industries like c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; The investigation into the classification of software was in pursuance to the issue of Circular No. 7/98-Cus., dated 10-2-1998 in connection with exemption granted from customs duty under Notification No. 11/97, dated 1-3-1997 as amended by Notification No. 3/98-Cus. clarifying the scope of expression Computer Software. (4) The application software supplied by the appellants is only Computer Software. The application software is admittedly used only in the computer or the workstation at the customer's site. This software works on the operating software already loaded in the computer and which functions as a platform to enable further operations. The application software cannot be etched as such on EPROM. Thus, the application software supplied by M/s. ABB is to be considered as Computer Software only. (5) Computer software has not been defined in the Central Excise Tariff. The Central Excise Tariff does not make any distinction between Computer Software to be used with computers classifiable under Chapter Heading 84.71 and any other software which is to be used elsewhere. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; [Affirmed by S.C. in 2002 (146) E.L.T. A317] (iii) CC v. Secure Meters Ltd. - 2002 (149) E.L.T. 884 [Affirmed by S.C. in 2003 (156) E.L.T. A209] (iv) Pentafour Software & Exports Ltd. v. CC - 2001 (130) E.L.T. 110 (v) Hutchison Max Telecom Ltd. v. CC - 2001 (132) E.L.T. 774 (vi) CC v. Malvika Steel Ltd. - 2003 (151) E.L.T. 390 (vii) Bay Talkitec Pvt. Ltd. v. CC - 2003 (156) E.L.T. 980. (9) The entire demand is barred by limitation as the appellants filed declaration from time to time declaring both DCS and the software. The functioning of the goods in question has also been fully explained to the authorities. The department has approved the CL/declaration all along. Both the appellants and the department were under the belief that the application software in question was nothing but Computer Software. But for the issue of Board's Circular dated 10-2-98, there would have been no change in the view of the department. Therefore the allegation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Data Acquisition System (b) Software for Operator Interface Sub-system (c) Software for engineering interface (d) Foreign Device Interface Software (e) Software to meet all functional requirement of the DCS, PLC etc., Since M/s. ABB were claiming the exemption, they were duty bound to give the correct description in the CL so that the Authorities could have examined whether the goods were actually Computer Software. (3) Since DCS was not to be classified under sub-heading 84.71 which is the entry for Automatic Data Processing Machines (Computers), the software used in DCS could not, by the same logic, be treated as Computer Software. In fact, DCS is classifiable under sub-heading 90.32. (4) Since Systems Engineering charges are towards certain activities related to and incidental to the manufacture and supply of DCS, they should form part of the assessable value as rightly concluded by the adjudicating authority. (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake advantage of the ability of the machine to perform a wide variety of tasks like word processing, calculations, spreadsheets, data desk management etc. In simple words, the various physical components of a computer are known as hardware. In order that the computer functions, what is required is software. Software is always associated with computer. Nowadays, all the English dictionaries contain the word 'software' as computers have invaded all aspects of our lives in the present century. The Oxford Advance Learners' Dictionary defines Software as programmes used to operate a computer. The Wikipedia, a free encyclopaedia on Internet gives very useful information on Computer Software. According to the above encyclopaedia, Computer Software (or simply software) refers to one or more computer programmes and data held in the storage of a computer for some purpose. Software is divided into two big classes. System Software and Application Software. All other sub-classes belong to these two classes. System Software helps run the computer hardware and computer system. It includes operating systems device, drivers, programming tools servers, windowing systems, utilities and more. Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatic data processing machine. More specifically, software for telecom, medical or other applications is not eligible for exemption from duty. However, software containing encyclopaedia, games, books, etc. will be eligible for the exemption wherever they satisfy the interactivity criterion." 8. We do not want to have a detailed discussion on the scope of Computer Software as per Board's Circular because the same is confined to customs purposes only. Moreover the learned Advocate Shri Bajpai said that he is not pressing much on the clarification issued on the customs side. In the Show Cause Notice, there is a constant refrain that the DCS software cannot be used on a general purpose computer. The Central Excise Exemption Notification does not say that softwares used on general purpose computer only are entitled for exemption. Hence, the fact that the DCS software cannot be used in our home computers does not disentitle the same for exemption. From the statements given by the officers of M/s. ABB, it is very clear that they were also under the bona fide belief that DCS software is included in computer software and, therefore, is entitled for the exemption. While filing the clas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
