M/S. ETA General Pvt. Ltd vs Commissioner Of Customs

Sulekha Beevi C.S., Member (J)

Brief facts are that the appellant placed a purchase order on SAP India Pvt. Ltd., Bangalore, for the supply of SAP Standard Software and also signed the End Users License Agreement (EULA) dated 26.06.2006 with SAP, India, which is a 100% subsidiary of SAP AG Germany. Based on such Agreement, SAP software was supplied to the appellant for a total value of Rs.27,00,000/- which the appellant had paid to SAP India Pvt. Ltd. fully.

Subsequently, the said software was imported vide courier import and sent to the appellant directly. Investigations initiated by Department, revealed that the appellant being the importer has to pay Countervailing Duty (CVD) on the goods imported by them. Show Cause Notice was issued invoking the extended period to the appellant and many others who had imported the SAP software through SAP India Pvt. Ltd. After due process of law, the Original Authority confirmed the CVD of Rs.2,25,027/- along with interest and also imposed penalties against the appellant. Aggrieved by such order, the appellant filed appeal before the Commissioner (Appeals) who upheld the same. Hence this appeal.

2.1 The Ld. counsel Shri M.N. Bharathi appeared and argued for the appellant. It is submitted that in the proceedings before the Adjudicating Authority as well as before the Commissioner (Appeals), the appellant had contended that they are not the importer and therefore is not liable to pay the duty. However, the issue as to whether the appellant is an importer in regard to the courier import of the software has been decided by the Tribunal in the case of Avenue Supermarket Pvt. Ltd. Vs. Commissioner of Customs, New Delhi [2018 (360) ELT 177 (Tri.-Del.)]. In the said case, which is an import made by a similar party from SAP India Pvt. Ltd., the Tribunal held that the appellant has to be considered as an importer of the software. The Ld. counsel thus fairly conceded that the issue on merits is decided against them.

2.2 The Ld. counsel argued that there is no ground for invoking the extended period and therefore the demand cannot sustain on the ground of limitation. In any case, if the appellant pays the CVD, they would be eligible to take CENVAT credit of the same. The situation being revenue neutral there is no ground for invoking the extended period. So also, the issue as to whether the appellant can be considered as an importer when the software has been imported by SAP India Pvt. Ltd. was contentious and reached before the Tribunal, and for this reason, it can concluded that the issue is interpretational in nature. The Ld. counsel prayed that the demand may be set aside on limitation.

2.3 The Ld. counsel also prayed that in any case the interest on CVD cannot be demanded as per the decision of the Hon’ble Apex Court in the case of Union of India Vs. Mahindra and Mahindra Ltd. [2023 (386) ELT 11 (SC)] as confirmed and upheld by the Supreme Court.

The Ld. Authorised Representative Shri R. Rajaraman appeared and argued for the Department. The decision in case of Avenue Supermarket Pvt. Ltd. (supra) was relied by the Ld. AR to submit that the very same issue has been considered by the Tribunal and it has been held that the appellant is liable to pay CVD on the software imported. The contention raised by the appellant before the Adjudicating Authority as well as the Commissioner (Appeals) was that they are not the importers of the software and the same has been held to be not tenable. The non-payment of duty would not have come to light but for the investigations conducted by DRI. Therefore, the invocation of extended period is legal and proper. The Ld. AR prayed that the appeal may be dismissed.

Heard both sides.

5.1 From the facts narrated above, it can be seen that the issue on merits has been decided in favour of the Revenue and against the appellant.

5.2 The Ld. counsel has argued only on the ground of limitation. If the appellant pays CVD on the goods (software imported by them) they would be able to avail credit of such CVD paid by them. The entire situation is revenue neutral and there cannot be any intent to evade payment of duty. Further, the appellant was under bona fide belief that they have not imported the goods as they have only entered into an agreement with SAP India Pvt. Ltd. for purchase of the software. The issue as to whether they can be considered as the importer was contentious and had travelled upto to the Tribunal. Taking these aspects into consideration, the issue is also interpretational in nature. We find that by the Department has not established any positive act on the part of the appellant in regard to suppression of facts with intent to evade Customs duty. For these reasons, we find that there are no grounds for invocation of extended period. The demand of CVD along with the interest and the imposition of penalties cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside on the ground of limitation. The appeal is allowed with consequential relief, if any, as per law.