HEWLETT PACKARD INDIA SALES (P) Vs. CC

JUDGEMENT

(1.) THE department has demanded Customs duty of over Rs. 5.9 crores from the appellants by classifying the goods imported by them under Heading 84.71 of the First Schedule to the Customs Tariff Act and denying them the benefit of Exemption Notification No. 21/2002 -Cus. dated 1.3.2002 (as amended). The application seeks waiver of predeposit and stay of recovery in respect of this amount of duty. After examining the records and hearing both sides, we have found prima facie case for the assessee in view of the Tribunal's decision in the case of Barber Ship Management (I) Pvt. Ltd. v. Commissioner as well as the decision in the assessee's own case reported in 2005 (126) ECR 124 (Tri. -Del) and, accordingly, we have dispensed with predeposit of the duty amount. Further, having heard both sides at length and having regard to the high stake involved in the case, we have also taken up the appeal for final disposal.

(2.) THE appellants are engaged in the manufacture of, and trading in, computers including Laptops (otherwise called 'Notebooks') falling under Heading 84.71 of the CTA Schedule. They imported Notebooks (Laptops) with Hard Disc Drives (Hard Discs, for short) pre -loaded with Operating Software like Windows XP, XP Home etc. These computers were also accompanied by separate Compact Discs (CDs) containing the same software, which were intended to be used in the event of Hard Disc failure. The Bills of Entry filed by the importer declared the value of Laptop and the value of Software separately, the software value including the Hard Disc value also. The Bills of Entry classified the Software -loaded Hard Discs under Heading 85.24 of the CTA Schedule and claimed exemption in terms of Sl. No. 157 of Notificaton No. 21/2002 -Cus. ibid. These Bills of Entry were filed with the Chennai Air Customs authorities in July 2005. Long before this, by a letter dated 7.10.2003; the appellants had informed the Addl. Commissioner of Customs, Chennai that they would be filing Bills of Entry for separate assessment of Computers and Software -loaded Hard Discs in view of the Tribunal's decision in Barber Ship Management case (supra). It was also informed that the appellants would claim duty exemption under Sl. No. 157 of Notification No. 21/2002 -Cus. ibid. Subsequently, under cover of letter dated 11.10.03, the appellants had also supplied to the Addl. Commissioner the OEM pricelist for the various models of 'Notebooks' imported by them. They had also provided a worksheet indicating separately the value of Hard Disc, value of Operating Software and the CD and replicating charges.

(3.) IN the meanwhile, at Delhi, they had imported Laptop computers with Hard Discs preloaded with Software and claimed classification of the Software -loaded Hard Disc Drives under Heading 85.24. The department issued a show -cause notice for demanding duty on these goods in terms of Heading 84.71. This demand was confirmed by the original authority, against which the company preferred appeal to the Commissioner (Appeals), who sustained the decision of the lower authority. But the appeal preferred to this Tribunal was allowed and it was held that the Hard Disc Drives preloaded with software required to be assessed separately in terms of SH 8524.91 of the CTA Schedule by virtue of Note 6 to Chapter 85 of the said Schedule vide Final Order No. 380/2005 -NB -A dated 18.3.05 reported in 2005 (126) ECR 124(Tri -Del).