Lakshmi Access Communications Systems Pvt. Ltd. Vs Commissioner of Customs (CESTAT Bangalore)
Conclusion: Since value of preloaded software to be included in assessable value of imported navigation devices and was liable to customs duty as software licences imported separately were already preloaded/embedded in the devices and Notification 21/2002-Cus. exemption was applicable only for independent software, not when preloaded/etched in hardware.
Held: Assessee was engaged in the sale and service of navigation systems in India. It had declared import quantity as 20,000 numbers (in fact 20150 numbers) of touch media device, its classification under CTH 85437099 and total assessable value as Rs.3,71,58,148/- in the Bill of Entry No.227023. Later imported paper software licence against Bill of Entry No.227446 declaring its value as Rs. 1,89,13,883/- without payment of duty availing exemption under Notification No.21/2002-Cus. dated 01.03.2002. In the impugned order, Commissioner adding the value of software licence declared in the Bill of Entry to the assessable value of the imported hardware viz. touch media device, enhanced the value to Rs.5,60,72,031/- and confirmed differential customs duty and imposed penalties on assessee. The crux for assessee was that the value of the software which had been imported separately could not be added to the value of the touch media device imported earlier. Revenue’s contention was that the software imported along with touch media device had been etched pre-loaded; affixed with serial number of the licence in the device, hence, ought to be included in the value of the device since the software was a part of the device itself. In support, they had referred to the judgment of the Hon’ble Supreme Court in the case of Anjaleem Enterprises Pvt. Ltd. Vs. CCE, Ahmedabad [2006(194) ELT 129 (SC)] later followed by the Larger Bench decision of this Tribunal in the case of Bhagyanagar Metals Ltd. Vs. CCE, Hyderabad-II [2016(333) ELT 395 (Tri. Bang.)]. On appeal. It was held that assessee had imported 20,150 navigation systems but declared only 20,000 units. Software licences imported separately were already preloaded/embedded in the devices, confirmed by Director’s statement. Notification 21/2002-Cus. exemption was applicable only for independent software, not when preloaded/etched in hardware. Larger Bench in Bhagyanagar Metals (2016) settled that such software value must be included in hardware valuation. Misdeclaration of value and suppression of facts established. There was no reason to interfere with the order of the Commissioner enhancing the value of the touch media device by including the value of the licence software imported subsequently and confirmed the differential duty demanded with interest and imposition of penalty.
