Case Law Details
Commissioner of Customs Vs NCR Corporation India Pvt. Ltd. (CESTAT Bangalore)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Bangalore, in the case of Commissioner of Customs vs NCR Corporation India Pvt. Ltd., addressed the classification dispute regarding the importation of software licenses. The crux of the dispute lay in whether “Software Licenses” should be classified under Chapter Tariff Heading (CTH) 49070030, as contended by NCR Corporation India Pvt. Ltd., or under CTH 85238020, as argued by the Commissioner of Customs. The primary contention revolved around the nature of the software licenses, whether they were mere paper documents or possessed intellectual value warranting classification alongside the software itself.
NCR Corporation India Pvt. Ltd. argued for the classification of software licenses under CTH 49070030, citing that these licenses, imported in paper form, convey the right to use IT software and thus, should be considered distinct from the software (classified under CTH 85238020). They supported their claim by referring to the general exemption notification No.21/2002 dated 01.03.2002, which provides a NIL rate of duties for documents of title conveying the right to use Information Technology software under Sl. No.157.
The Tribunal, upon reviewing the arguments, supporting documents, and relevant legal provisions, concluded that the software licenses do not merely represent high-value documents but are essentially documents of title conveying the right to use Information Technology software. It distinguished between the physical medium of software (the tangible disc or tape) and the intellectual property rights conveyed through a licensing agreement. As such, the Tribunal upheld the classification of software licenses under CTH 49070030, aligning with the respondent’s perspective that these licenses are distinct entities from the software itself, thus meriting separate classification under the Customs Tariff.
This decision underscores the Tribunal’s acknowledgment of the unique nature of software licenses, distinguishing them from the software based on their purpose and form. It also reflects the Tribunal’s adherence to the interpretative guides provided by customs notifications and the Tariff’s explanatory notes, ensuring that the classification accurately represents the nature and purpose of the imported items. By dismissing the appeal, the Tribunal reaffirmed the principle that the classification of goods for customs purposes must closely align with their descriptions and the legal definitions provided within the Customs Tariff and related notifications.
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