1992 (9) TMI 193 - AT - Customs

Summary

Issues:
- Benefit of Project Import to "Wang Vs-80 Computer System"
- Classification of computer software development as "specialist support services"
- Scope of concessional assessment under Heading 84.66
- Recognition of software servicing and data processing as an industrial activity
- Registration of contract under Project Imports Regulations
- Development of computer software as an industrial plant
- Tribunal's interpretation of service industries under Project Import

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi pertained to the extension of the benefit of Project Import to a "Wang Vs-80 Computer System" imported by the respondents. The Collector of Customs (Appeals), Bombay had allowed the benefit, which was contested by the Revenue. The Assistant Collector had initially rejected the application for registration of the contract under Project Imports Regulations, citing that computer software development was considered "specialist support services" and not a manufacturing activity falling within the scope of industrial plant under Heading 84.66 of the Customs Tariff Act, 1975. However, the Collector (Appeals) overturned this decision, stating that the concessional assessment under Heading 84.66 would cover service industries as well, leading to the appeal.

During the hearing, it was revealed that the Managing Director of the respondent company, a Non-Resident Indian, had planned to set up an industrial unit for computer software manufacture upon returning to India. The Ministry of Industry had recognized software servicing and data processing as an industrial activity in a press note. The Department of Electronics had approved the import scheme for a computer system under Project Import, and an import license was issued accordingly. The respondents applied for registration of the contract as a project import, supported by necessary documentation and provisional registration from the Department of Electronics.

The Revenue contended that computer software development did not qualify as an industrial plant under the Project Import Regulations. However, the Tribunal relied on previous decisions, including the Saraswati Stores case and the DPS India P Ltd. case, to support the inclusion of service industries in the scope of Project Import. Citing these precedents, the Tribunal upheld the Collector (Appeals) decision, rejecting the Revenue's appeal. The Tribunal's interpretation confirmed that service industries were not excluded from the ambit of Project Import, thereby affirming the benefit extended to the "Wang Vs-80 Computer System" under Heading 84.66.