Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

ABG Shipyard Ltd. Versus Commissioner of Customs, (ACC And Import) , Mumbai

2015 (9) TMI 714 - CESTAT MUMBAI

Import of designs and drawings - import in printed form as well as in CD - Benefit of exemption under serial number 271 of notification number 12/2012-CUS - Held that:- Appellants had in fact ordered for designs and drawings in hardcopy. Purchase orders placed clearly indicate for the supply of designs and drawings in hardcopy. When the goods were examined it was noticed that in addition to hardcopy, CD was found in the package. The said CD was opened on a laptop before the Customs authorities a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or vessel will appear to a purchaser.

The facts and circumstances of that case clearly indicate that what was brought in by the appellant therein was "CD ROM", is an indicator that the CD containing the designs and drawings of engineering goods was on a "read only memory"; in computer language ROM, that is to say the information on the CD Can only be read and is non-manipulatable. The judgment and the ratio of the Apex Court in the case of LML Ltd. [2010 (9) TMI 12 - Supreme Court o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

form attract nil rate of duty, the finding of the Commissioner about the applicability of section 19 of the Customs Act, 1962 becomes irrelevant since the rate of duty applicable to both goods even assuming them to be constituting a set, is 'nil' in view of the classification determined by us. The question whether a separate value could be attributed to the CD also becomes irrelevant in view of the classification under Heading 85238020 of the Tariff. - mpugned order is unsustainable and is liab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a bill of entry number 752 0979 dated 28/07/2012 for the clearance of goods declared as "designs and drying (sic) is for Hull number 398 and 397" through the CHA. The said bill of entry was facilitated by the risk management Sistine (RMS) where no assessment and examination was prescribed. The "appellant importer had declared the said goods as classifiable under CTH49060000 claiming benefit of exemption under serial number 271 of notification number 12/2012-CUS. The Customs author .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

designs and drawings for construction of ship and had not placed any order for supplying designs and drawings on CD. Customs authorities not convinced with the explanation given conducted an investigation and after recording various statements came to a conclusion that appellant had tried to evade duty by mis-declaring the description of the goods imported. A show cause notice was issued for classification of the CD under CTH 8523 8020 as liable for duty, show cause notice also sought to claim .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urchase orders were placed specifically for the designs and drawings in printed form only and that they be allowed to re-export the CD back to the supplier. The adjudicating authority after following the principles of natural Justice, did not agree with the contentions raised by the appellant, holding against the appellant confirmed the demand of Customs duty interest thereof and also imposed penalties. Aggrieved by such an order appellant is before the Tribunal. 3. Learned advocate appearing on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

laced were for the supply of the designs and drawings in hardcopy only. He would submit that the appellant was not aware that supplier and had also despatched the designs and drawings in CD form. It is his submission that the designs and drawings which are received in printed form are correctly classifiable under heading number 4911 9920 and eligible for nil rate of duty, a finding as recorded by the adjudicating authority is not disputed or challenge by the revenue. It is his submission that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n information technology is correctly answered by the CD which is found in the consignment. He would then submit, the statement of Shri Vipul Shrivastava very clearly brings on record that the CD can be manipulated provides interactivity to the user in an automatic data processing machine. He would also demonstrate before us the manipulation that can be resorted to the data on the CD by using software "AutoCAD". It is his submission that entire data on the CD viewed in different dimens .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reased either for length and or breadth, machineries can be rotated, moved, mirrored and trimmed for redesigning the vessel if required. It is also submission that the entire drawings could be transmitted in a soft copy interdepartmentally is in itself an example of the data being manipulatable. He would submit that the adjudicating authority has erred in relying upon the ratio of the case of LML Ltd. - 2010 (258) ELT 321. He would submit that in that case what has been imported in the CD was an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aring on behalf of the would draw our attention to the impugned order. He would submit that the entire case of the Department is that appellant had imported designs and drawings in paper form as well as in CD and the duty liability arises as the appellant are ineligible to avail benefit of the exemption notification as the product cannot be construed as information technology software. He would submit that the valuation as has been arrived is in accordance with the provisions of the Customs Act. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bmit that the judgement of the Apex Court in the case of LML Ltd (supra) will directly apply and read the ratio of the judgement more specifically paragraph number 16, 20 and 28. 5. Learned Advocate in rejoinder would submit that the valuation as adopted by the adjudicating authority is erroneous. It is his submission that attributing the entire value to the CD is incorrect as appellant had in fact placed an order for designs and drawings in hardcopy hence application of section 19C of the Custo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndisputed facts are that appellants had in fact ordered for designs and drawings in hardcopy. Purchase orders placed clearly indicate for the supply of designs and drawings in hardcopy. When the goods were examined it was noticed that in addition to hardcopy, CD was found in the package. The said CD was opened on a laptop before the Customs authorities and it contained the designs and drawing in machine readable format. 7.3 It is a case of the revenue that appellant has mis-declared the consignm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t Airway Bill to be presented for negotiations." The description of goods as per the LC as well as the supplier's invoice also clearly state that designs and drawings covered by these documents are those as per appellant's order dated 18.6.2012 which, as mentioned above, specifically states that the drawings are to be hard copies. As such, the claim of the appellant that they had not ordered for a CD and that it had been supplied without their knowledge is not disproved by the depar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cts 'nil' rate of duty as per the tariff itself. This takes us to the issue of classification and the duty liability on the CD which came along with the consignment. It is a case of the revenue that the designs and drawings which has come in the form of CD will fall under the Chapter heading number 8523 8090 and benefit of supplementary note of chapter heading 8523 is not applicable. It is also the finding of the adjudicating authority that the said note is not applicable in the case in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icating authority for the confirmation of the Customs duty interest thereof and imposition of penalty is incorrect for more than one reason. 7.5 Firstly, in order to appreciate whether the claim of the appellant that the information on the CD is nothing but information technology software or otherwise, we have to consider the supplementary note to chapter heading number 8523 which is as under. Supplementary Note: For the purposes of heading 8523, "Information Technology software" means .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

D is not machine readable. The date on the CD if is read in an automatic data processing machine would mean that the data on the CD is machine readable. The CD containing the designs and drawings is definitely satisfying the first limb of the definition of information technology software. The term "information" has been defined in section 2(1)(v) of the information technology act, 2000 to include data, message, text, images, sound, voice, codes, computer programs, software and data bas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erature pertaining to AUTOCAD software, as extracted in the synopsis filed by the Appellant, shows that a user can change a drawing i.e manipulate it by giving different commands. These commands are extracted below: It was also demonstrated that the feature of 'zooming' is not merely a feature of magnifying an image as one usually understands, but includes features like displaying only all the graphics in a drawing; redrawing the graphic area of the screen and displaying in two rectangle .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted literature pertaining to AUTOCAD, as extracted in the synopsis filed by the appellant, which is as under: It is an admitted position in the Commissioner's order that the data contained in the CD is "soft" and it was possible to even view a cross section area. The relevant finding of the Commissioner in this regard is in para 47.4 which reads thus: "Also admittedly the CD has been supplied by the supplier to provide the following supporting/enabling features to the customer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are consistent with the evidence on record. We find considerable substance in the argument that a drawing in a "soft" form which enables a user to view cross section when used to in conjunction with AUTOCAD software is information technology software, providing interactivity to the user as well as being capable of manipulation. 7.7 We find that the data on the CD imported is capable of manipulation as was demonstrated before us. We find that the design and drawings of the vessel on the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssing machine, by a software known as "AutoCAD". The manipulation to data on CD that could be undertaken as was demonstrated to us indicates that after the manipulations, the automatic data processing machine culls out immense information with respect to so many aspects of the vessel. The drawings and the designs on the CD is in a software form as stated above and can be manipulated to suit to the requirements of appellant's customer or the user. The interactivity of the informatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

indings of the adjudicating authority are without any basis. The definition of information technology service talks about including of source code and object code; which we find is not required in the case in hand, inasmuch that when the CD is capable of being manipulated without having a source code or and object code would in itself mean that the said codes are built in the designs and drawings as found in the CD. The definition of manipulation, as per black law dictionary also talks about alt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x Court in the case of Pentamedia Graphics Ltd. (supra) is directly on the point. Their Lordships the said judgment in paragraph number 14 and 15 held as under: "14. Random House Compact Unabridged Dictionary refers to "software" as anything that is not hardware and is used with hardware. Encyclopedia Britannica refers to "software" to designate non- hardware items, namely internal programmes or routines and programming aids. Thus the programming aids are also known as s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

machine readable form and capable of being manipulated by means of an automatic data processing machine. We do not find any infirmity in the impugned order of the Tribunal." We find that the above ratio has been followed by this bench in the case of Gayatri Impex Ltd. (supra). 7.9 The adjudicating authority as well as the special Counsel for the revenue has heavily relied on the judgment of the Apex Court in the case of LML Ltd. (supra) to hold against the appellant. On the first blush, we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

held as under: "20. In the light of the aforesaid background, the question that arises for our consideration is whether the data in a compact disk falls within the meaning of the term software. It is needless to reiterate that data at issue in this case are images of drawings and designs intended to be used for engineering projects, therefore, the core issue to decide is whether such drawings, designs intended to be used for engineering projects be termed "software" so as to enta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

efore held that the engineering drawings and designs contained in a CD ROM will not be covered Heading 85.24 of the Tariff." 7.10 The facts and circumstances of that case clearly indicate that what was brought in by the appellant therein was "CD ROM", is an indicator that the CD containing the designs and drawings of engineering goods was on a "read only memory"; in computer language ROM, that is to say the information on the CD Can only be read and is non-manipulatable. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version