 "HC partly allows Aircel's plea on customs duty row")
Earlier, the tribunal had directed Aircel Cellular to pre-deposit Rs 10.21 crore and Aircel Ltd to deposit Rs 24.68 before admitting their pleas.
Hearing an appeal against the tribunal’s decision, a division Bench of the court said, “Considering the point raised and bearing in mind the interest of revenue, we deem it fit to direct the assessees to pay 50 per cent of the demand of duty made in each case, pending an appeal before the tribunal. The assessees are directed to deposit the amount within eight weeks of the date of receipt of a copy of this order. On the deposit being made within the time stipulated, there will be a stay on the remaining amount payable by the assessees. With this, both these appeals are allowed in part.”
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An email to Aircel seeking comment on the order did not elicit a response till the time of going to press.
According to the court, the companies had imported mobile telecom service equipments such as mobile switching centre, base station controller and base transceiver station. Parts of these and the software required for these were preloaded in the equipment. The companies also imported media said to contain software. In some cases, this was in the same consignment as the equipment, in others, as separate consignments.
However, the telecom service provider did not furnish separate values for each piece of equipment and software. At that time, the software was exempted from customs duty.
After the goods were cleared, the revenue department contended the separate import of software was a dummy transaction and that the value of the equipment should have been assessed by including the value of software, adding the duty on both software and hardware should have been paid at the rate applicable to the hardware.
A show-cause notice was issued to the company in this regard. Following this, the telecom firm approached the tribunal for a stay and a waiver on the pre-deposit.
Before the tribunal, the company argued in the case of Vodafone Essar Gujarat and the Commissioner of Customs, the tribunal had said the revenue department’s contention that the value of the software be clubbed with the value of the hardware and a duty applicable to hardware be charged wasn’t sustainable. It said while there was a contrary order on a dispute between Bharti Airtel Ltd and the customs department, the tribunal should rely on the Vodafone Essar order.
It argued compact discs or optical discs containing software had been imported and these imports were ignored by the department. Besides, when an intangible item was loaded in a tangible medium, it was to be treated as separate, with separate value and there was no way in which the value of the software be could be considered that of the hardware, too, it added.
The revenue department challenged the claim, arguing the dispute was about the valuation of goods, not classification.
The tribunal said the company hadn’t disclosed the software was pre-loaded in the system and there was an attempt to show separate import of software in media when such software was not put to use. Prima facie, the tribunal found the revenue department’s argument acceptable and directed both companies to deposit the entire duty amounts.