Case Note & Summary
The dispute arose between M/s Sprint RPG India Ltd. and the Commissioner of Customs-I, Delhi regarding the classification of imported goods for customs duty purposes. The appellant imported seven hard disk drives loaded with software, and the customs department sought to classify them under Chapter Heading 84.71, imposing a 25% duty, while the appellant argued for classification under Heading 85.24, which would impose a 10% duty on the software. The total value of the consignment was Rs.67,75,119, with the hard disks valued at approximately Rs.60,000. The Tribunal concluded that the goods should be classified as hard disk drives under Heading 84.71, rejecting the applicability of a precedent case. The court examined the nature of hard disk drives and software, noting that the hard disk serves as hardware while the software is a representation of data. The court referenced the Customs Act, 1962, and the relevant exemption notification, determining that the essential character of the imported goods was that of computer software due to its significantly higher value compared to the hard disks. The court quashed the Tribunal's order and held that the imported software was assessable at 10% duty under Heading 85.24, allowing the appeal without costs.
Headnote
A) Customs Law - Classification of Imported Goods - Duty on Imported Software - Customs Act, 1962, Section 25 - The court held that the imported goods were essentially computer software, assessable at 10% duty under Heading 85.24, rather than as hard disk drives under Heading 84.71, due to the significant value difference between the software and the hardware. The Tribunal's decision was quashed, affirming the software's classification (Paras 1-6).
Issue of Consideration
Whether custom duty on imported computer software loaded on a hard disk drive is to be levied on the basis of hard disk simplicitor or computer software.
Final Decision
The Supreme Court quashed the Tribunal's order and held that the imported software was assessable at 10% duty under Heading 85.24, allowing the appeal without costs.
Law Points
- Customs duty classification
- imported goods
- software
- hard disk drive
- tariff headings
- exemption notification
