Duty on Software preloaded / etched or cleared in CD form along with main computers.
Manufactures' Association for Information Technology had requested the government to clarify
Whether operating software/customized software, either loaded or accompanied with the machine has to be levied with duty at the rates applicable to the equipment/machines for which the software is meant? i.e. Whether Software like Windows XP, Linux, Free Dos cleared along with any computer system should suffer duty at 12% on the value thereof from 01.01.2007?
What does the government do?
The Board by a letter dated August 3, 2007, wanted the field to report whether the computers which are being imported are including the value of software or not specifically after 1.1.07 and which is the present practice undergone by the customs authorities on such import. Board wanted a report by 15th August 2007. Don't they know that 15th August is a holiday?
By another letter, Board wants the field to
1. Offer their comments on the issue and also to inform the practice of assessment followed in the Commissionerates before and after 1.1.07 in respect of such software.
2. Clarify whether from 1.1.2007 the software which is pre-loaded or cleared/imported separately along with the machine/equipment/computes is being classified as machine/equipment/computer and charged to same rate of duty or whether the software is classified separately under heading 8523/8524 and machine/equipment/computer is classified separately.
3. Clarify whether the erstwhile practice of classifying the software separately by inserting a chapter note should be reintroduced specially keeping in mind the commercial realities of the manner of clearances from the factory or manner of import of these items.
4. clarify whether the system of classifying the software along with main machine/equipment/computer may help Department in reducing the valuation disputes or under valuation cases.
What happens to the Association which has asked for the clarification? They have to wait till all the Commissioners in the country give their views!
F.No. and F.No. 167/32/2007-CX.4 of CBEC.