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2015 (6) TMI 188 - CESTAT MUMBAI

2015 (6) TMI 188 - CESTAT MUMBAI - 2015 (329) E.L.T. 908 (Tri. - Mumbai) - Classification of goods - Classification under sub-heading 8524.00 or under sub-heading 8524.90 - Nil Rate of duty or duty @16% - appellant is manufacturing Panasonic MP3 CD-ROM - Held that:- MP3 CD-ROMs contain only audio songs which can be played on any MP3 CD player, these discs are neither interactive nor it is possible to manipulate the details in such CDs. In view of the said position, we have no hesitation in holdi .....

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ry return. In fact, from seeing the statutory return, one would conclude that CD-ROM contains some software and would, therefore, be classifiable under Heading 8524.20. In view of the said fact, we have no hesitation in holding that there was suppression of facts with a wilful intention to evade duty. Therefore, in our view, the extended period of limitation has been correctly invoked - Decided against assessee. - Appeal No. E/210/11-Mum - Final Order No. A/1043/2015-WZB/EB - Dated:- 31-3-2015 - .....

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of duty. The said sub-heading covers "software". The Revenue, on the other hand, is of the view that the said goods are classifiable under sub-heading 8524.90 and are chargeable to duty @16%. The said sub-heading is a residuary sub-heading and covers "Other". 2. The learned counsel for the appellant's main contention was that the goods being manufactured are nothing but software. Heading 85.24 covers Gramophone records which are used for recording the sound. This also cov .....

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are. It was further submitted that compact disks are not magnetic and Heading 8524.20 would be preferred over 8524.90 since it is more specific. It was also submitted that CD-ROM disc with MP3 files is not an audio CD but it is a software. The said CD-ROM disc contains audio songs in a MP3 format and the files are structurally and technologically different and the data can be manipulated and in view of the said position, it has to be considered as software. It was also submitted that the impugne .....

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ed counsel also relied upon the following case laws:- (i) Multimedia Frontiers Ltd. vs. CCE reported in 2003 (156) ELT 272 (Tri. - Mum.); (ii) ITI Ltd. vs. CCE, Cochin reported in 2004 (168) ELT 115 (Tri. - Bang.), and (iii) CC, Chennai vs. Pentamedia Graphics Ltd. reported in 2006 (198) ELT 164 (SC). 3. The learned AR, on the other hand, submitted that MP3 format is only a format of recording audio songs and under the said format, the songs are recorded in the compressed format and can be playe .....

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d AR further submitted that the Hon'ble Supreme Court in the case of LML Ltd vs. CC reported in 2010 (258) ELT 321 (SC), has discussed in detail the scope of software and the essential thing in any software is that the software is a computer programme which enable computer to function. Further, such a software functions manipulating the data. The learned AR also submitted that it is very interesting to note that in all the ER-1s, the appellant was not indicating the goods as MP3 CD-ROM but w .....

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period of limitation is applicable. Keeping in view the conduct of the appellant, penalty imposed is in line and the appeal needs to be rejected. 4. We have considered the submission of both the sides. To appreciate the lis, the tariff description at the relevant time is reproduced below:- "85.24 Records, tapes and other recorded media for sound or other similarly recorded phenomena, including matrices and masters for the production of records, but excluding products of Chapter 37 8524.10 .....

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re recorded with audio songs and there is no dispute that the goods will be covered by the Heading 85.24. The dispute is only whether these would be classifiable under Heading 8524.20 or 8424.90. It would be seen that 8524.20 covers software while sub-heading 8524.90 is residuary heading relating to recorded media. If one analyses the scope of the term 'software' in the background of various sub-classifications, it would be evident that 8524.20 covers the software which is interactive in .....

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so of no consequence as it is obvious that the format of the recorded media as also the player should be similar, otherwise no data can be retrieved. 5. We have gone through the three case laws mentioned by the learned counsel for the appellant and find that in all the cases, the basic thing was that the recorded information was interactive in nature. In the case of Multimedia Frontiers Ltd. (supra), this Tribunal has found that the CD-ROMs manufactured in that case were interactive in nature an .....

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e. In the case of Pentamedia Graphics Ltd. (supra), the Hon'ble Supreme Court has observed that the data recorded was capable of being manipulated by means of an automatic data processing machine and hence came to the conclusion that the said goods are software. 6. We also note that in the case of LML Ltd. (supra), the Hon'ble Supreme Court has observed as under:- "18. The term software is defined by the Advanced Law Lexicon (3rd Ed.) as "distinct from hardware, the computer pr .....

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computer system; specifically computer programs. 19. The aforesaid definitions, therefore, make it crystal clear that software is the set of instructions that allows physical hardware to function and perform computations in a particular manner, be it a word processor, web browser or the computer's operating system. These expressions are in contrast with the concept of hardware which are the physical components of a computer system, and data, which is information that performs no computation .....

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intended to be used for engineering projects be termed "software" so as to entail the benefit of the aforesaid Notification 17 / 2001 Cus dated 1.3.2001. 21. There can be no doubt that such engineering drawings and designs do not provide instructions for the computer hardware to perform. At best, the said drawings and designs can be said to be are by-products and outputs of the computer software, which generate the designs and drawings. Therefore, such engineering drawings or designs d .....

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