Epson India Pvt. Ltd. Versus COMMISSIONER OF CUSTOMS (IMP.), CHENNAI>2014(07)LCX0219

2014(07)LCX0219

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri P.K. Das, Member (J) and R. Periasami, Member (T)

Epson India Pvt. Ltd.

Versus

COMMISSIONER OF CUSTOMS (IMP.), CHENNAI

Final Order Nos. 40757-40758/2014, dated 14-7-2014 in Appeal Nos. C/459/2004

Cases Quoted -

Commissioner v. Hewlett Packard (I) Ltd. - 2003(06)LCX0202 Eq 2003 (156) ELT 0716 (Tribunal)
- Referred [Para 6]
Commissioner v. Hewlett Packard India Ltd.
- 2006(03)LCX0015 Eq 2006 (199) ELT 0317 (Tribunal) - Followed [Paras 4, 5, 7]Hewlett Packard India Pvt. Ltd. v. Commissioner
- 2005(07)LCX0215 Eq 2006 (193) ELT 0490 (Tribunal) - Referred [Para 4]

Advocated By -

Shri S. Murugappan, Advocate, for the Assessee.
Ms. Indira Sisupal, JC (AR),for the Department.

[Order per : R. Periasami, Member (T)]. -

Both the Revenue appeal and appellant's appeal are arising out of one OIA order passed by the Commissioner (Appeals) therefore, both are taken up together for disposal.
2. The brief facts of the case are that the appellants imported Inkjet printer with printer software and ink cartridges under the Bill of Entry No. 618553, dated 21-4-2004 and classified under separate chapter headings, claimed concessional rate of duty under the exemption Notification No. 21/2002. The appellants requested the Customs for reassessment of the goods under question. The Dy. Commissioner of Customs vide his order No. 2622/2004, dated 30-7-2004, denied the concessional rate of duty under the exemption Notification No. 21/2002 and classified the impugned goods together under CTH 8471 60 as printer, in terms of Section 19 of the Customs Act, 1962 and Accessories (Condition) Rules, 1963. Aggrieved by this order, the appellants preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) in his order partly allowed their appeal and held that Ink cartridges and ribbon cartridges are specifically and separately classifiable under CTH 8473.30 50 and allowed the benefit of the exemption Notification No. 21/2002 to Ink cartridges and ribbon cartridges and partly upheld the Order of the adjudicating authority in respect of printer software and held that the value of software to be added to the printer and assessed as printer. The appellants preferred appeal only in respect of assessment of inclusion of value of software with printer.

3. On the other hand, the Revenue also filed appeal against the impugned order against the classification of Ink cartridges and ribbon cartridges, and extending the benefit of notification.

4. The Id. Advocate on behalf of the appellants submits that the goods in question are classifiable as per the respective description given in the Customs Tariff. There is no rule or regulation, if different goods are imported under one Bill of Entry to be classified under one heading. These goods are specifically classifiable under CTH 8524, the printer without software continues to be a printer. Both in the Bill of Entry and in the invoices, separate description and individual prices are indicated. Invoking Section 19 of the Customs Act is not justified. He relied upon the jurisdictional Commissioner of Customs order dated 13-8-2003 passed in their own case, where the Commissioner has categorically held that the application of Section 19 is not required in the present case and the goods viz. software and ink cartridges have to be assessed under CTH 8524 and 8473 and benefit of exemption Notification is available to the printer software. The Commissioner (Appeals) on one hand accepted separate classification for ink cartridges and ribbon cartridges, and other side held that the value of software to be included with printer and assessed as printer, which is contradictory. He relied upon the Tribunal's decision in the case of CC, Mumbai and Hewlett Packard India Ltd. - 2006(03)LCX0015 Eq 2006 (199) ELT 0317 (Tri.-Mum.) and in the case of Hewlett Packard India Ltd. v. CC (I & G), New Delhi - 2005(07)LCX0215 Eq 2006 (193) ELT 0490 (Tri.-Del.).

5. As regards the Revenue's appeal, the Id. Advocate submits that the Commissioner (Appeals) has rightly allowed their appeal in so far as ink cartridges and ribbon cartridges, under CTH 8473.30. He relied upon the decision in the case of CC, Mumbai and Hewlett Packard India Ltd. (supra).
6. On the other hand, the Id. AR for the Revenue reiterated the findings of the Order-in-Original and submits that the software to be classified along with the printer under CTH 8471. She further submits that the goods imported are sets for retail sale. The main article is printer, which gives the essential character and these articles are sold as one set. She submits that Section 19 of Customs Act is rightly invokable for classifying the goods imported as a set of articles and even if these items are described under separate chapter heading, all should be assessed as printer under Heading 8471 as printer as the main item. She relied upon the Tribunal's decision in the case of CC, Mumbai v. Hewlett Packard (I) Ltd. -2003(06)LCX0202 Eq 2003 (156) ELT 0716 (Tri.- Mum.).

7. We have carefully considered the submissions made by both the sides and also perused the records. Prima facie, the issue in this case relates to whether ink cartridges and ribbon cartridges and printer software are classifiable under single Heading 8471.60 as a printer or separately classifiable under 8473.30 50 and 8524.99. The Commissioner (Appeals) in her impugned order held that ink cartridges and ribbon cartridges are classifiable under CTH 8473.30 50 against which the Revenue preferred the appeal. Whereas, the appellant preferred the appeal against the impugned order clubbing the value of software with the printer. On perusal of the said Bill of Entry and the invoice No. 080404-7, dated 8-4-2004, we find that the goods are described as 1) Stylus, C43SX (inter) Inkjet printer 2) software, 3) Ink cartridges and 1) LQ-2090 Impact printer 2) software and 3) Ribbon cartridges with separate unit price for each item. There is no dispute on the fact that ink cartridges, ribbon cartridges and software are separately classified under headings 8473 and 8524 of CTH. In this regard, the Hon'ble Tribunal in the case of CC, Mumbai and Hewlett Packard India Ltd. (supra), discussed the classification of the printer software. The relevant paragraph is reproduced as under :-

"8. The next issue to be addressed is the correct classification of printer driver software. Section 12 of the Customs Act provides for levy of duty of Customs on goods imported into India at the rates specified under the Customs Tariff Act, 1975, Section 2 of which provides that the rates at which duties of Customs shall be levied under the Customs Act are specified in the first and second schedules thereto. The Schedule to the Customs Tariff consists of -

(a) General Rules for Interpretation of the Customs Schedule
(b) Section Notes
(c) Chapter Notes.

Rule 1 of the General Rules for Interpretation stipulates that "Classification of goods in this Schedule shall be governed by the following principles :

1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings, and any relative Section or Chapter Notes and, provided such Headings or Notes do not otherwise require, according to the following provisions :"

By virtue of Note 6 to Chapter 85 which provides that "Records, tapes and other media of Heading No. 85.23 and 85.24 remain classified in those headings, whether or not they are presented with the apparatus for which they are intended", the software recorded in a media ivillfall under CTH 85.24 which covers "Records, tapes and other media for sound or other similarly recorded phenomena, including matrices and masters for the production of records, but excluding products of Chapter 37." The HSN Explanatory Notes to Heading 85.24 provide that "Media recorded with sound or similar recording, whether or not presented together with the apparatus for which they are intended or assembled with constituent parts of machines of Heading 84.69 to 84.72 (e.g. disc packs) are in all cases to be classified in this heading." Therefore, even going by the HSN Explanatory Notes, the imported printer driver software is classifiable under CTH 85.24 and during the period in dispute, software falling under this heading was exempt by virtue of notification 17/2001-Cus., dated 1-3-2001 as per Serial No. 285 of the table to this notification. In the case of Sprint RPG - 2000(01)LCX0171 Eq 2000 (116) ELT 0006 (S.C.), the Apex Court held that hard disk containing software is classifiable under CTH 85.24 by virtue of Note 6 to Chapter 85, and not a part of computer under Heading 84.73. The same view was expressed by the Apex Court in Barber Ship Management - 2002(04)LCX0246 Eq 2002 (144) ELT A293 while affirming the Tribunal's decision 2000 (117) ELT 456, relating to software residing in the hard disk of the imported computer.

9. In the case of Acer India Ltd. cited supra, the assessee claimed deduction from the invoice value of the computer, and the value of software loaded thereon and cleared from the factory. The Apex Court held that by virtue of Note 6 to Chapter 85, software is liable to be classified under Heading 85.24 and the value of software cannot be included in the value of hardware, i.e. computer. The Apex Court also held that computer and software are two distinct commodities classifiable separately.

10. In view of the above decision, duty of Customs cannot be levied on software which is exempt from duty merely on the ground that the value of the software is not separately available or separately indicated in the invoice.

11. We also note that in Final Order No. 693/2005~Cus., dated 4-7-2005 [2005(07)LCX0215 Eq 2006 (193) ELT 0490 (Tribunal)] in HP India's own case, the Tribunal has held that printer driver software imported along with printer was classifiable under C.T.H. 85.24 and the invoice value of US$ 2.70 for the software was accepted. Some other decisions taking the same view as above are in the case of PSI Data Systems v. CCE -1996(12)LCX0035 Eq 1997 (089) ELT 0003 (S.C), ORG Systems v. CCE, Vadodara - 1998(07)LCX0050 Eq 1998 (102) ELT 0003 (S.C), Digital Equipment (I) Ltd. v. CCE, Bangalore - 1997 (070) ECR 0326 (Tri.-LB) and the Tribunal's order reported in 2000 (116) ELT 667 in the case of the same importers. This would show that the value indicated by the importers for software in the present case is correct.

8. In the present case, the impugned goods are described separately with separate unit price for software and ink cartridges and filed Bill of Entry accordingly. By respectfully following the above decision, we hold that the printer software imported by the appellants are rightly classifiable under CTH 8524 and not under 8471.60. We also hold that in the impugned order the ink cartridges and ribbon cartridges are rightly classified under CTH 8473.30 50 and allowed the exemption benefit. In view of the above, the appeal filed by the Revenue is dismissed and the appeal filed by the appellant is allowed with consequential relief.
(Order pronounced in the open Court on 14-7-2014)

Equivalent 2015 (318) ELT 0476 (Tri. - Chennai)