Per T.K. Jayaraman:

M/s. Dell Computer India Pvt. Ltd. (hereinafter referred to as 'the appellant'), a 100% E.O.U. under the Software Technology Park Scheme of Government of India, are aggrieved over the fact that the impugned Order-in-Appeal denies the benefit of exemption Notification No. 52/2003-Cus. dated 31.3.2003 in respect of 'Master Key for Security Lock'.

2. Shri Prarmod Banthia, learned Chartered Accountant and Shri S. Madhavan, learned Advocate appeared on behalf of the appellants and Shri R.V. Ramakrishnappa, JDR appeared on behalf of the Revenue.

3. We have gone through the records and also heard the parties. The Commissioner (Appeals) in his order has clearly recorded that the imported item is mentioned in the Annexure to the Notification. Further, he has stated that the item cannot be said to be used in the manufacture for development of software, data entry and conversion, data processing, data analysis, etc. On this ground, the benefit of the exemption notification has been denied. We have gone through the technical literature. There are different types of security system. The following extract from the technical literature gives an idea about the function of the security lock:-

"UNIVERSAL TAB LOCK

Manufacturer Part No.: NGTABI

Ingram SKU: 954531 (Keyed Alike), 628625 (Master Key)

MSRP: $ 32.95

Your Price: $ 19.95

Compatibility: All Dell desktops

Components: 1 stainless steel tab lock, 2 keys

The Universal Tab Lock is for all Dell OptiPlex GX50, GX150, GX240, GX260., Dell Precision Workstations and Dimension Desktops. The universal lock helps to protect internal components. Keyed Alike or Master Keying available. Aesthetically elegant solution helps to protect internal components. Locks without a key, seconds to install at any location. No adhesives or modifications are required to the PC."

The appellants submitted that they are engaged in the development of software and call center activities. The desktop computers are the backbone of appellant's business. These computers incorporate some expensive and key components like processors, mother boards, hard disk, floppy disk, CD drive etc. and which are prone to theft in case not safeguard through proper computer security locks. Further, various important information and data are stored in the hard disk of these desktop computers. In order to protect and prevent these information and data from theft by both internal and external agencies, the appellant is necessarily required to put locks to safeguard computers. It can thus be seen that security locks are important part of the capital goods used for manufacture or development of software and call center activities. They contented that the Commissioner (Appeals) has failed to appreciate the above facts while disallowing the benefit of customs duty exemption under the Notification dated 31.3.2003. The impugned order is therefore patently erroneous and is liable to be set aside. The appellants further relied on the decision of the Tribunal in the case of Wipro Ltd. Vs. CC, Bangalore, 2005 (66) RLT 69 (CESTAT-Ban.) and DSL Software India Ltd. & Ors. Vs. CC, Bangalore, Final Order Nos. 1864-1867/2004 dated 29.11.2004 [reported in 2005 (68) RLT 374 (CESTAT-Ban.)]. It is surprising that the appellate authority has not appreciated the importance of security system in the development of software. Computers have invaded all aspects of life in the modern world. Unless proper steps are taken to have effective security, criminal minds can play havoc. Under these circumstances, the necessity of the computer lock or security system should be viewed in totality in the development of software. In our view, the items imported which are security system mentioned in Annexure 1 of the notification are rightly entitled for the benefit of Notification No. 52/03-Cus. dated 31.3.2003. The appellant is entitled for the relief as prayed for. However, before granting refund, the original authority should satisfy himself regarding the unjust enrich