CBEC Sets Right Issue of Double Taxation on I T Software

The Central Board of Excise & Customs (‘CBEC’) has issued a Circular F.No.354/189/2009-TRU dated 4.11.2009 clarifying that the exemption under notifications no. 22/2009-CE dated 07.07. 2009 and no.80/2009-Customs dated 07.07.2009 issued in respect of the manufacture or import of packaged software respectively would be available even if one of the activities mentioned in the expression ‘right to reproduce, right to distribute, right to sell’ is carried out. It further clarified that splitting of the value for media and ‘right to use’ in the invoice should be accepted by the department in so far as no evasion is intended by such splitting.

This clarification comes in the wake of several customs houses denying the benefit of the customs notification on the ground that all the activities mentioned in the notification such as ‘right to reproduce, right to distribute, right to sell’ were not carried out and they also did not accept separate values for media and right to use shown in the invoice.

However, if the right to use is not for commercial exploitation then the exemption notification will not be applicable and full additional duty of customs would be chargeable on the import of packaged software.