LexSPRINT R.P.G. INDIA LTD. versus COMMISSIONER OF CUSTOMS-I, DELHI
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A SPRINT R.P.G. INDIA LTD. v. COMMISSIONER OF CUSTOMS-I, DELHI JANUARY 20, 2000 B (B.N. KIRPAL A."ID M.B. SHAH, JJ.J Customs Tariff Act, 1975: Headings 85.24 and 84.71. Customs Tari~omputer software loaded on a hard disk drive-Clas- e sification of-Heading 85.24 or 84.71-Held : Classifiable under Heading 85.24 and not under Heading 84.71-Hence, assessable @ 10% and not @ 25o/u--General Rules for Interpretation of Sch. [, Rr. 2(b ), 3 and 4--Chapter 85 Chapter Note 6- Notification No. 59(95-Cus dated 16.3.1995. Chapter 84--Chapter Note 5(B)(b) and (c)-Applicability of-Held: D Not applicable if a specific Heading covered the goods in question. The appellant-assessee imported seven pieces of hard disk drive loaded with software. The customs duty on hard disk drive is leviable under Chapter Heading 84.71 of the Customs Tariff Act, 1975 at the rate of 25% and on a computer software It is at the rate of 10% as per the tariff E Heading 85.24 read with notification No. 59/95-Cus dated 16.3.1995. The respondent- Revenue sought to classify the said goods under tariff Head- ing 84.71 by relying on Rules 2(b), 3 and 4 of the Generat Rctes for Interpretation mentioned in the First Schedule to the Act. The Central Excise, Customs and Gold (Control) Appellate Tribunal held that the p goods would be taxable under the Heading 114.71 and not under the Heading 85.24. Hence this appeal. The following question arose before this Court : "Whether custom duty on imported computer software loaded on a G 'hnrd dis!t drive' is to be levied on the basis of 'hard dis!t' simplicitor or 'computer software'? Allolling the appeal, this Court HELD : 1. Hard disk is a refined form of Ooppy and serves the same H purpose of recording material in a more efficient way. The moot difference 332 1 ' I SPRINT R.P.G. INDIA LTD. v. COMMR. OF CUSTOM-I 333 betv;een the hard disk and the software is that a hard disk is a hardware A whereas software is a representation of any type of data and which can be stored in the hard disk. Admittedly, a floppy on which software is stored would be taxable under Tariff Heading 85.24 of the Customs Tariff Act, · 1975. Instead of storing the software on the floppy if it is stored on a hard disk drive, it would not cease to be a software. [337 ·G] "Modem All About Hard Disk Drive" (BPB Publications) and Stephen !. Dougherty; "PC Power Boosting Your PC's Performance·; referred to. 2. As per Item 2 of Notification No. 59/95-Cus dated 16.3.1995 the B c rate of duty is 25% for hard disk drive or floppy disk drive covered by Heading 84.71. As against this, for computer software, if it falls under Chapter 49 or under Heading No. 85.24, the rate would be 10%. If simplicitor hard disk drive is imported, it may be taxable under the Heading 84.71. However, in a case where essentially a software is imported which is loaded on a hard disk drive, it would be computer software material and in that set of circumstances, it would be taxable under D Heading 85.24. This is also made clear in Chapter Note 6 of Chapter 85. [338-G·H] 3. Testing the case from Rules 2, 3 and 4 of the General Rules for Interpretation of Schedule I to the Customs Tariff Act, 1975 it would be clear that the disk or floppy on which computer data is recorded, would be covered by Heading 85.24. i''urther, con~idering imported goods to be a mixtcre of two substances namely 'bard disk drive' and 'software' as per Rule 3(b) they can In classified under the Heading which gives them their essential character. In the present case, considering its price factor it would be computer software. The price of the imported consignment was ap· proximately Rs. 68 Iakhs. As against this, value of the seven bard disk drives would be roughly Rs. 60,030; that is to say, value of the computer sofrnare is hundred times more than its containers hard disk. Hence, the essential character of the imported goods is computer software. [340-C·E] E F 4. The consignment in question is essentially a computer software G covered by a specific Heading No. 85.24 and, therefore, clauses (b) and (c) of Chapter Note 5(B) of Chapter 84 of the Act are not applicable. (347-B] 5. The computer software imported by the appellant on a bard disk drive is assessable at the rate of 10% as per Heading 85.24 read with the Exemption Notification No. 59/95-Cus dated 16.3.1995 because what was H 334 SUPREME COURT REPORTS [2000] 1 S.C.R. A Imported by
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