Wipro (Infotech Group) Vs Commissioner of Customs (CESTAT Chennai)
The appeal arose against an Order-in-Appeal dated 30.09.2015 confirming the Order-in-Original dated 19.12.2012, which rejected the declared value of networking equipment imported during July 2006 to April 2010 and re-determined the assessable value. The adjudicating authority confirmed a differential customs duty demand of ₹39,77,717 under the proviso to Section 28(1) of the Customs Act, 1962, along with interest, ordered confiscation under Section 111(m), and imposed a penalty equal to the differential duty under Section 114A. An amount of ₹40,00,000 already paid during investigation was appropriated towards the confirmed liabilities.
The appellant had imported networking equipment from Radware Ltd., Israel, declaring hardware under CTH 8473 and software separately under CTH 85238020/85238090, paying duty accordingly. The Department issued a Show Cause Notice dated 03.02.2011 alleging undervaluation on the ground that the software was embedded/etched firmware forming an integral part of the hardware, making the product a single composite item classifiable wholly under CTH 8473. The Department contended that the equipment was supplied as ready-to-use systems and could not function without the software, and therefore the transaction value could not be bifurcated.
The appellant contended that the software was preloaded on the hard disk and not embedded or etched in ROM, EEPROM, or flash memory. It distinguished firmware from embedded software, stating that firmware is retrieved from non-volatile hardware memory, whereas embedded software is intricate and multifunctional. The appellant asserted that the valuation was based on bona fide legal interpretation and that split values were transparently disclosed in Bills of Entry and customer documents, negating suppression or wilful misstatement.
