TMI BlogApplicability of indirect taxes on packaged software - regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... y of indirect taxes on packaged software - regarding The undersigned is directed to state that 'Packaged Software' is a type of IT software which caters to the needs of a variety of users and is capable of being used for variety of hardwares. IT software is fully exempt from basic customs duty being covered under Information Technology Agreement. So far as excise duty/CVD is concerned, while customised software is fully exempt, the packaged software attracts duty @ 8%. 2. Shrink wrap software is a type of packaged software which consists of a box containing software or software upgrade on media (i.e. CD/DVD), users manual and end-user licence agreements, which is shrink wrapped in plastic cover and is always sold as a set (without rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Rules) by the Customs authorities, the service tax authorities would charge service tax on the same value (i.e. on right to use) considering it to be import of ITSS. 6. Accepting their plea, in Budget 2009, two parallel notifications were issued on the excise and customs side. Vide notification no.22/2009-CE dated 07.07. 2009 , partial exemption from excise duty was provided to packaged or canned software on that portion of the value which represents the consideration for the transfer of the right to use for commercial exploitation, as on this portion, service tax would be leviable under the ITSS. Similar exemption from CVD was provided vide notification No. 80/2009-Customs dated 07.07.2009 on such software. These exemptions were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of the notification. 9. In another case in Chennai, where fully packed product (FPP) was imported by a company which produced split value (i.e., one value for media CVD and other for right to use software) in a single invoice shown separately, the jurisdictional authorities have refused to accept such split value for the purpose of claiming notification No.80/2009-Customs and taken the view that CVD should be charged on entire amount. 10. The above instances show that the field formations have failed to appreciate the scope of the said notification. In the first case, the view taken by officers is legally untenable because the phrase used in notification No.80/2009-Cus is inclusive in nature and it is a well-known princ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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