ORDER
P.G. Chacko, Member (J)
1. The lower appellate authority has demanded a total amount of Customs duty of above Rs. 16 lakhs from the appellants in respect of “Router” and “Computer Software” imported by them under six Bills of Entry during Oct.’97 to Mar.’98. It has classified all the items under sub-heading 8473.30, as against the claim of the assessee to get the first item classified under Heading 84.71 and the second item under Heading 85.24. After hearing both sides and considering their submissions, we find that, in relation to the first Bill of Entry covering both the items, Customs duty of Rs. 1,59,429/- has been demanded. Similarly, in respect of the second Bill of Entry covering both the items, duty of Rs. 1,15,648/- has been demanded. No break-up of the duty amount for the two different goods covered by each Bill of Entry is forthcoming from the impugned order. It however appears that, in respect of ‘Router’ covered by each of the two Bills of Entry, the assessee paid duty at the rate of 20% + 2% + 13%, the rate adopted in the impugned order in respect of the said item (Heading 8473.30). Hence, apparently, no differential duty need be paid by the assessee on ‘Router” covered by the said two Bills of Entry. It would follow that the impugned order has not quantified the amount of differential duty to be paid by the party on ‘Computer Software’ covered by the said two Bills of Entry. Hence there appears to be no need for waiver of pre-deposit or stay of recovery in respect of the duty demanded on ‘Router’ covered by the first two Bills of Entry. For want of quantification of duty on ‘Computer Software’ covered by the said Bills of Entry, we grant waiver and stay.
2. As regards the remaining four Bills of Entry, the impugned order has demanded Customs duty of Rs. 13,38,989/- on ‘Computer Software’, classifying the item under sub-heading 8473.30. Ld. Counsel has claimed classification of the item under Heading 85.24 (sub-heading 8524.99). On the other hand, ld. JCDR has argued in favour of the classification done by the lower authorities under sub-heading 8473.30. We have heard both sides elaborating their respective points. It appears to us that the item imported was meant for use with “Automatic Data Processing Machines” falling under Heading 84.71. Ld. Counsel has relied on Note 6 to Chapter 85, which reads as under :
6. Records, tapes and other media of Heading No. 85.23 or 85.24 remain classified in those headings, whether or not they are presented with the apparatus for which they are intended.
and has claimed that the ‘software’ in question would remain classified under Heading 85.24 in terms of the said Chapter Note. Reference has also been made to Note 5 to Chapter 84, which explains the expression “Automatic Data Processing Machines” falling under Heading 84.71. Clause (E) of this Note has been specially mentioned to us and the same reads as under :
(E) Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings.
Ld. Counsel has endeavored to link this Note with the description of goods given in the Table annexed to Notification No. 11/97-Cus., dated 1-3-1997. This description of ‘Computer Software’ contains an “explanation”, which reads as under:
Computer software means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine falling under Heading No. 84.71, but does not include software required for operation of any machine performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine.
The appellants have claimed exemption from payment of duty on the goods in question under the above Notification by pointing out that the item does not fall within the scope of the exclusionary part of the above explanation. The factual basis of this claim is that the ‘software’ was not required for operation of any machine performing specific function other than data processing and incorporating or working in conjunction with an ‘Automatic Data Processing Machine’. It is claimed that the ‘software’ was required for operation of ‘Automatic Data Processing Machine’. In this connection, it has also been pointed out that the ‘Routers’ are, by themselves, ‘Automatic Data Processing Machines’ within the meaning of this expression under Chapter 84 and further that the data from the computer was meant to be transmitted through ‘Router’ to other ‘Automatic Data Processing Machines’ in a network. In this connection, it is further argued that such transmission of data from one computer to another by the ‘Router’ is also ‘data processing’. After consulting the various Chapter Notes, we find substance in these arguments of Id. Counsel. Ld. Counsel has also relied on the Supreme Court’s judgment in Sprint R.P.G. India Ltd. v. Commissioner of Customs-I, Delhi , wherein ‘Computer Software’ loaded on hard disk drive was held to be classifiable under Heading 85.24 and not under Heading 85.71. ‘Computer Software’ classifiable under Heading 85.24 was exempted from payment of duty under Notification No. 11/97 ibid. Hence there seems to be prima facie case for the appellants against the denial of the benefit of the Notification and consequential demand of duty. Hence there will be waiver of pre-deposit and stay of recovery in respect of the duty demanded on Computer Software covered by the remaining four Bills of Entry as well.
(Dictated and pronounced in open Court)