2005 (9) TMI 349 - AT - Central Excise

Summary

Issues:
- Interpretation of Customs Notification No. 11/97-Cus regarding exemption for imported software for ATM
- Classification of the imported software as eligible for exemption under the customs notification

Analysis:
The case involved an appeal by the Revenue against the Order-in-Appeal passed by the Commissioner of Customs (Appeals), Chennai, regarding the exemption claimed by the respondents for importing ATM on-line pace application software under Customs Notification No. 11/97-Cus. The Revenue contended that the software, meant for ATM functioning, did not qualify as mere computer software for data processing and thus should not be exempted.

The Revenue referred to Circular No. 7/98-Cus. by the Government of India, which clarified the scope of computer software for exemption under the said notification. The circular specified that software for specific functions other than data processing, such as telecom or medical applications, were not eligible for exemption. However, software providing interactivity to a user through automatic data processing machines could qualify for the exemption.

Upon careful review of the case records, it was established that the imported pace application software was designed for user interactivity through a personal computer to operate ATM machines. The software, in the form of floppy disks or CD-ROM, was not intended for specific machine functions but for communication between personal computers. The software was loaded onto a standard processor inside the ATM for security purposes, indicating its nature as computer software for user interactivity.

The Tribunal concluded that the software imported by the respondents did not fall under the category specified in the Board's Circular cited by the Revenue. Therefore, the Tribunal upheld the Commissioner (Appeals)'s decision, ruling in favor of the respondents and rejecting the Revenue's appeal. The judgment was pronounced on 15-9-2005.