Classification

Classification

In case of software other than embedded, it is required to be loaded on the machine. Once the software is loaded, the program or a set of instruction allow the machine to perform or carry out specific tasks. Generally, software are stored in a storage media or recorded in a floppy, diskette or CD-Rom. Tariff heading 8524 of the Customs Tariff Act, 1975 deals with records, tapes and other recorded media. Relevant classification is reproduced hereunder:

- Discs for laser reading systems:

8524 31 --For reproducing phenomena other than sound or image :

--- Software:

8524 31 11 ---- Information Technology software

8524 31 19 ---- Other

8524 40 - Magnetic tapes for reproducing phenomena other than sound or image:

--- Software :

8524 40 11 ---- Information Technology software

8524 40 19 ---- Other

- Other :

8524 91 -- For reproducing phenomena other than sound or image :

--- Software:

8524 91 11 ---- Information Technology software on floppy disc or cartridge tape

8524 91 12 ---- Information Technology software on disc or on CD ROM

8524 91 13 ---- Information Technology software on other media

8524 91 19 ---- Other

As can be seen from the above, classification of software will depend on the media on which it has been recorded. However, as on today, statutory rate of customs duty for all tariff items, as listed above is NIL. Therefore, whether, particular software is ‘information technology software’ or not is immaterial for the purpose of levy of customs duty and only of academic relevance.

As stated above, automated machines need software. Software can be supplied along with the machine or separately. As per Chapter Note 6 of the Chapter 85 of the Customs Tariff Act, records, tapes and other media of heading 8523 or 8524 remain classified in those headings, when they are presented with the apparatus for which they are intended. It does not apply to such media when they are presented with articles other than the apparatus for which they are intended. Central Board of Excise and Customs, vide Circular 51/2002 dated 12 August 2002 has clarified that the reference to “those headings” refers to headings “85.23 or 85.24” and not to the headings of the equipment/apparatus. Therefore, software supplied along with equipment/apparatus for which it is intended still remains classified under the heading 85.24. If medical equipment is supplied along with operation software (not embedded), medical equipment will be classified in the Tariff heading 9018 whereas operation software will be classified under 8524.