Import through e-mail, internet

Software imported by e-mail/downloaded

As per Section 12 of the Customs Act, 1962 duties of customs are levied on goods imported into India. As per Section 2(22) of the Customs Act ‘goods’ includes vessels, aircraft, vehicles, stores, baggage, currency, negotiable instruments and any other kind of movable property. To be a movable property, software should be recorded in a media. As per Section 2(23) of the Customs Act, ‘import’, with its grammatical variations and cognate expressions, means bringing into India from a place outside India. Therefore, custom duty is levied on the software recorded in a media is brought from abroad. However, if software is transmitted through E-mail or downloaded from the internet, whether such acquisition of software can be called as import of software is required to be analysed. The CESTAT in the case of Digital Equipment (India) Ltd vs Commissioner of Customs [2001 (135) ELT 062 (T)], while analyzing identical situation observed as below:

“3 (f) we find that there is no force in the findings of the learned Adjudicator to hold the “information transmitted via E-mail about the other PAK’s” to be akin to import of recorded media under 85.23. In para 24 of the Supreme Court decision in the case of Associated Cement Companies (supra), it has been laid down, after reading the definition of goods in Customs Act, 1962 under Section 2 (22) as follows -

Para   24 - “..... Whether movable article comes as a part of baggage, or is imported into the country by any other manner, for the purposes of Customs Act, the provision of Section 12 would be attracted. Any media whether in the form of books or computer disks or cassettes which contain information technology or ideas would necessarily be regarded as goods under the aforesaid provisions of the Customs Act......”

following the same, we find, since in an E-mail transfer, no media as movable article, is crossing the international boundaries, no movable property movement is involved, the transfer of information and/or ideas, knowledge on E-mail transfers would, therefore, not be covered under the terms “goods” of the Customs Act. Therefore, once such transfers are not ‘goods’, there classification cannot be effected, merely because they have value. Therefore, we set aside the findings as regards the classification of the E-mail transfers as arrived at by the Adjudicator. We find that the learned Advocate has relied on The Geneva Ministrial Declaration on global electronic commerce document WT/MIN (98)/DEC/2, dated 25 May 1998 (98-2148) which is declaration of intent by Members of WTO that they would continue their current practice of not imposing of Customs Duties on electronic transactions. Since it is only a declaration of intent and indicator of current practice, and nothing contrary is shown by learned SDR for Revenue, we find in it, an echo of our view, that E-mail transfers are not dutiable under Customs Act, 1962.”

In view of the above judgment, it is a settled matter that there is no duty on e-mail transfers of software or downloading of software from the internet.