L.M.L. Ltd. Vs. Collector of Customs

1. The issue for decision in this case relates to the eligibility of goods described as "advanced designer/mould designer package III" imported by the appellants herein to the benefit of exemption from duty in terms of Sl. No. 173 of the Table annexed to Notification 11/97-Cus., dated 1-3-1997 as amended by Notification 3/98-Cus., dated 11-2-1998. Under Sl. No. 173, exemption is available to computer software falling under Chapter 49 or Chapter 85.24 of the First Schedule to the CTA, 1975. The amendment adds an explanation defining computer software as "any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine falling under Heading No. 84.71, but does not include software required for operation of any machine performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine". The benefit has been denied on the ground that the software was also working on a system which was performing a function (generation of miniature modules) other than data processing.

2. We have heard Shri R. Santhanam, learned Counsel who contends that the imported software only produces design and it is used for operation of machine which performs the specific function of data processing and the data given by the machine using the imported software is used as input by stereo lithography machine which has its own software, for giving a miniature sample of the end product and is hence not excluded by the explanation and Shri Ashok Kumar, learned DR who reiterates the findings of the authorities below.

3. We have carefully considered the rival submissions and perused the records.

4. From the technical literature on record, it is seen that the imported PRO/Engineer Software is used to develop 3 dimensional objects on computer screen and is used mainly for giving a clear cut idea to the designer or customer what the product is going to look like. The machine on which the software is loaded and run is an automatic data processing machine; but for specific applications, this will interface with the machines which are performing functions other than data processing. The stereo lithography interface is one such application.

This machine generates miniature modules of plastic having surface features of final out put. The SLA machine has its own software which is used for generation of miniature samples of the end-product and the SLA machine does not use the software imported by the appellants. The software imported by the appellants only produces designs for new products in the form of print-outs on the paper and it cannot be used for manufacturing purposes. Therefore, the imported software is only required for operation of the machine performing a specific function of data processing, and is covered by Sl. No. 173 of the Table annexed to Notification 11/97. The impugned order is, therefore, set aside and the appeal is allowed.