ANIL JAIN Vs. CC

JUDGEMENT

(1.) SHORT facts necessary for the disposal of these appeals are as follows:

(2.) M /s. Kailash Ribbon Factory Ltd. imported one set of design workstation with flat bed scanner, floppy disc, etc. from M/s. Viable Systems Inc., USA. The breakup price shown in the invoice was US 22,500.00 for hardware and US 60,000.00 for software. That worked out at Rs. 7,16,974.00 for hardware and Rs. 19,11,930.00 for software. Officers of the customs department raided the premises of the importer. One of the documents seized was a proforma invoice dated 27.12.1994. It showed a total price of US 82,500.00 and discount of US 39,325.00. The breakup value of hardware and software was not separately given. Commissioner of Customs by his order dated 31.5.1995 rejected the discount of US 39,325.00 and enhanced the value of the imported goods to US 1,21,825.00. He confiscated the goods under Section 111(m) of the Customs Act, 1962 and gave an option to redeem them on a fine of Rs. 15 lakhs. Penalties of Rs. 5 lakhs and Rs. 3 lakhs were imposed on M/s. Kailash Ribbon Factory Ltd. and Shri Anil Jain of M/s. Beta Woven Labels Pvt. Ltd. who had forwarded the suppliers invoice to the importer. That order of the Commissioner was challenged before this Tribunal in appeal Nos. C/480 -481/95 -A. Those appeals were disposed of by a common order dated 4.4.1996. This Tribunal determined the value of the imported goods as US 1,21,825.00. Regarding the assessment to duty, the Tribunal found that duty on software should be at the rate applicable to software and that should be applicable to hardware. For that purpose the matter was remitted back to the Commissioner. For a proper understanding of the direction we read that part of the order where this aspect was dealt with:

(3.) IT is common case that the imported good consisted of hardware as well as software. In PSI Data System Ltd. v. Collector of Central Excise it was specifically stated that value of software sold along with the computer cannot be included in the assessable value of the computer for the purpose of excise duty because what is subject to excise duty under the relevant tariff entry is the computer and not the computer system. It is admitted case that hardware and software are assessable to duty at different rates. Note 6 to Chapter 85 of Customs Tariff specifically provides that records, types and other media of heading No. 85.23 or 85.24 remain classified in those headings, whether or not they are presented with the apparatus for which they are intended. In disregard to the specific direction given by this Tribunal in the earlier decision referred to, the decision of the Supreme Court cited and the note 67 of Chapter 85, Commissioner in the impugned order states : "the entire goods require to be assessed at the highest rate of duty i.e. the rate of duty applicable to hardware". We are at a loss to understand how the Commissioner came to such a finding. It appears that the Commissioner has not only not understood the provisions of law but also refused to accept the binding decisions of the CEGAT and the Supreme Court.