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2015 (9) TMI 317 - AT - CustomsValuation - Import of Oracle packaged software - condition of sale or condition of use - Whether the licence fee paid by OIPL to its parent company Oracle USA is includible in the assessable value of imported media packs the licence fee has actually been collected from the customers and a part of it (56%) remitted by OIPL to Oracle USA. Ld. counsel has strenuously argued that the licence fee remitted by OIPL to Oracle USA was not a condition of sale and only a condition of use. - Held that:- licence fee is includible in the assessable value only if it is paid or required to be paid as a condition of sale. As stated earlier, it is a settled legal position with which both sides also agree and therefore we do not need to refer to each of those judgements/opinions. As it is, whether the licensee fee paid or was required to be paid as a condition of sale is essentially more a question of fact than of law. In every case of commercial imports, Oracle USA and Oracle Ireland were fully aware that the order has been uploaded/scanned into Oracle Order Management System only after the customer agreed to pay the licence fee for the software and this information was available to Oracle USA as well as Oracle Ireland before the shipment was made. OIPL was incorrect when it claimed initially that it was a case of stock and sale and that the software imported from Ireland could be given to any customer, commercial or non-commercial. It comes out clearly that each software which was shipped was in the knowledge of Oracle USA and each shipment came for a particular Indian customer identified by the unique order number generated. - In the wake of the factual matrix of the case, we hold that in respect of commercial imports of media packs, the licence fee remitted by OIPL to Oracle USA was includible in the assessable value. - Decided against the assessee. However, any subsequent (post importation) increase in the number of users of the software imported in the form of physical media packs was neither known at the time of import nor was it a condition of sale and therefore licence fee remitted on that account cannot be said to be a condition of sale and hence would not be includible in the assessable value and customs levy thereon would also be hit by the absence of collection mechanism - Decided in favor of assessee. Non commerical use of Media pack - inclusion of notional licence fee - Held that:- Clearly stated in Software Duplication and Distribution Licence Agreement between Oracle and company that Royalty/sub-licence fee shall not accrue on licences put to internal use as trial/ demonstration licences Thus, no licence fee was payable Therefore demand cannot be sustained. - Decided in favor of assessee. Levy of custom duty on softwares downloaded electronically whether software downloaded electronically will be liable to customs duty on same lines as duty leviable on such software imported as media packs Held that:- Supreme Court in case of Tata Consultancy Services [2004 (11) TMI 11 - Supreme Court] held that software even in its intangible form are goods and therefore electronic download of software from server located abroad would get captured in scope of import of goods From provisions of Customs Act, 1962, it is evident that entire Customs Act provides mechanism/procedure for levy and collection of duty only in respect of tangible goods Software is intangible, can be downloaded anywhere, from anywhere, at any time and none of provisions of Customs Act, 1962 are capable of being applicable/ enforceable in respect of such downloads Thus, electronically downloaded software is not liable to customs duty Decided in favour of assessee. Extended period of limitation - Mis-Statement of facts Whether there was wilful mis-statement of fact on appellants part with intention to evade payment of duty Held that:- Company had made complete disclosure regarding its commitment to remit 56% of licence fee to Oracle in its FIPB application is certainly indicative of fact that it did not have any intention to hide this fact Seizure took place when customs could hardly claim that company had not disclosed facts about remittance of licence fee to Oracle Further fact that appellant had followed same system, procedure and practice of declaring assessable value even during prior periods when there was no duty to be evaded at all There is evidence on record that company submitted details about their relationship with Oracle to Customs and so allegation that company suppressed fact stands negated No evidence to sustain charge of wilful mis-statement / suppression of facts, therefore allegation of wilful mis-statement/suppression of facts is not sustainable Impugned demands, redemption fines and penalties on appellants set aside Demand set aside on the ground of period of limitation - Decided in favour of assessee.
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