Per Gowri Shankar :

The appeals C/1838 to 1841/98 are by Tata Infotech (earlier Tata Unisys) and three of its office bearers against the order of the Collector of Customs, Mumbai. By the order the Collector has demanded differential duty on the software imported by Tata Infotech Limited (hereinafter the importer) on the grounds that the value was wrongly declared during importation, imposed penalties on Aroskar, Khanna and Doshi, who were Managing Director, Business Manager and Senior Finance Manager respectively. Appeals C/259 & 260/97 are by the same importer Tata Infotech Limited and Khanna, its Business Manager against the order of the Commissioner of Customs, New Delhi. By this order the Commissioner has held that the software seized from the premises of the appellant liable to confiscation under Section 111 (m) of the Act on the grounds that its value was misdeclared and permitted its release on payment of fine. He has imposed penalties on the company and Khanna for the under valuation for rendering the goods liable to confiscation.

2. The importer imported software mainly from M/s. Microsoft Corporation and M/s. Santacruz Operations, USA. The goods supplied by these two consisted of floppy discs in which the software was actually recorded and of manuals intended for optimum utilisation of the software. The importer received the goods under one invoice for each of the consignment, which quoted one price for the whole package i.e. for the combined value of the software contained in of floppy discs and for the manuals. However, the importer declared in the bills of entry the software in the form of floppy discs and the manual separately; the first was classified under heading 85.24 (recorded media) of the tariff and the second under the heading 49.01 (printed books and manuals). The value of each consignment was split up in the ratio of 60:40 for the software in discs and for manuals respectively. By doing this the importer was not required to pay duty on the 40% of the value of the entire consignment which is held to be the value of the printed books. Those goods were exempted from duty at the relevant time. The duty paid was therefore limited to 60% of the value of the consignment.

3. Notice to show cause, both at Mumbai and at Delhi, was issued beyond six months after the goods were cleared and invoked the extended period contained in the proviso to Section 28 of the Act. The Collector at Mumbai has held the extended period to be available for the reason that the importer suppressed the fact that the value of the consignment was integral and wrongly showed split up value. The Commissioner at Delhi agrees that the period of limitation contained in the proviso would not be applicable for the reason that there was existing practice in the department of assessing such consignment of computer software on the basis of their constituents, the media on which the software is recorded and the manual. He therefore rules out the applicability of the extended period. He however, says that since value of goods, which was seized at Delhi, has been wrongly declared they were liable to confiscation under clause (m) of Section 111.

4. The advocate for the appellants relies heavily upon this order of the Commissioner at Delhi to show the extended period will not apply. He points to various observations where the Commissioner has made to show that it was a practice in all the Custom House to assess the goods on the basis of its constituents comprising the total package and that it was only by a decision taken by the conference of the Collectors in 1991 that the practice of assessments was changed. He also relies upon the fact that the importer had declared to the Special Valuation Branch of the Bombay Custom House in its letter dated 5.9.89 that the retail price of the goods supplied by M/s. Microsoft Corporation, indicated that these goods had been supplied at 50% of the retail US price which were shown to be for the two items together.

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