2025 (6) TMI 696 - AT - Customs

Classification of imported Wireless Access Points ( WAPs ) - to be classified under Customs Tariff Item ( CTI ) 8517 6990 as Other apparatus for transmission or reception of voice images or other data including apparatus for communication in a wired or wireless network ( such as a local or wide area network ) or not - benefit of nil rate of duty as provided for under Sl. No. 13 of Notification No. 24/2005-Cus. dated 01.03.2005 - HELD THAT - After going through the decision of Hon ble Delhi High Court in COMMISSIONER OF CUSTOMS AIR CHENNAI-VII COMMISSIONERATE VERSUS M/S. INGRAM MICRO INDIA PVT. LTD. 2025 (1) TMI 797 - DELHI HIGH COURT it is found that the Appellant is right in submitting that the issue is covered by the judgement of the Hon ble Delhi High Court in Ingram Micro s case where it was held that the phrase MIMO and LTE Products in Serial No. 13 (iv) of the amended Notification No. 24/2005 applies solely to products combining MIMO technology and LTE standards. The exclusion clause cannot be stretched to encompass products featuring either one of the two technologies. Accordingly the WAPs imported by the respondent which employ MIMO technology but not the LTE standards are entitled to the exemption from Basic Customs Duty. Considering that the Revenue s contentions in response to the points which have already been decided by the Hon ble Delhi High Court it is not open to consider these submissions on their merits. The Revenue s reliance on the order of the Co-Ordinate Bench in Ingram Micro is also misplaced in as much as it is not open to us to rely on a decision of a Bench of this Tribunal in preference to a judgement of a Hon ble High Court particularly when the judgement of the Hon ble High Court directly covers the question. Conclusion - The Commissioner was not justified in denying the benefit of Notification No. 24/2005. The impugned order is set aside - appeal allowed.

Summary

The core legal question considered by the Tribunal was whether the denial of the benefit of exemption under Notification No. 24/2005-Cus., specifically Sl. No. 13(iv), by the Commissioner was justified in respect of Wireless Access Points (WAPs) imported by the appellant. The issue centered on the interpretation of the exclusion clause relating to "Multiple Input Multiple Output (MIMO) and Long Term Evolution (LTE) Products" and whether this exclusion applied to products employing either MIMO technology or LTE standards individually, or only to products combining both technologies.

The Tribunal's detailed analysis focused on the interpretation of the phrase "MIMO and LTE Products" in Serial No. 13(iv) of Notification No. 24/2005-Cus. The relevant legal framework involved the Customs Tariff classification and the exemption notification, with particular attention to the language used in the exclusion clause. Precedents considered included authoritative judgments from the Hon'ble Delhi High Court and the Appellate Tribunal, notably the decision in Commissioner of Customs (Air) Chennai VII Vs M/s. Ingram Micro India Pvt. Ltd., affirmed by the Delhi High Court.

The Court examined the Commissioner's interpretation that the exclusion clause was disjunctive, applying if a product employed either MIMO technology or LTE standards. The Commissioner had held that since the WAPs used MIMO technology, they fell within the exclusion and were not entitled to the nil rate of duty. The appellant contended that the exclusion applied only to products combining both MIMO technology and LTE standards conjunctively.

In interpreting the phrase, the Tribunal relied heavily on the linguistic and statutory interpretation principles elucidated by the Delhi High Court. The Court observed that if the intention were to exclude products having either MIMO or LTE, the phrase "MIMO or LTE Products" would have been used. The use of the conjunction "and" is traditionally conjunctive, indicating that both conditions must be satisfied simultaneously. The absence of commas or alternative phrasing supported a conjunctive reading.

The Tribunal noted that earlier entries in the same notification employed "or" to denote alternatives and used commas to separate distinct product categories, reinforcing that the wording in clause (iv) was deliberate and specific. The Court further highlighted that MIMO is a technology, whereas LTE is a standard, and that products exist which embody both. Therefore, the exclusion clause was intended to cover only those products combining both MIMO technology and LTE standards.

The Tribunal also considered the amendments introduced in 2021 via Notification No. 25/2005 and Notification No. 57/2017-Customs, which replaced the phrase "MIMO and LTE Products" with separate entries "(i) MIMO products; (ii) LTE products." These amendments were clarificatory and applicable only from their date of enforcement, not retrospectively. Hence, disputes arising prior to the amendments had to be adjudicated based on the original language.

The Court emphasized that the amendment itself indicated an inherent ambiguity in the original phrasing, which necessitated clarification. However, the Tribunal was bound to interpret the original notification as it stood at the time of importation, applying established rules of statutory interpretation, particularly in taxation matters. The plain and ordinary meaning of "and" was conjunctive, and no ambiguity or absurdity arose from this interpretation.

Applying these principles to the facts, the Tribunal concluded that the WAPs imported by the appellant, which employed MIMO technology but did not conform to LTE standards, did not fall within the exclusion clause. Therefore, they were entitled to the nil rate of duty under the exemption notification.

The Tribunal addressed and rejected the Revenue's reliance on a coordinate Bench decision that had taken a contrary view, holding that a High Court judgment directly on point must prevail over a Tribunal order. The Tribunal declined to reconsider the merits of the Revenue's arguments in light of the authoritative judicial pronouncement.

In conclusion, the Tribunal set aside the impugned order denying the exemption benefit and allowed the appeal, granting consequential relief as per law.

Significant holdings include the following verbatim excerpt from the Delhi High Court judgment, which the Tribunal adopted:

"If the intention of the Central Government was to include products utilizing either MIMO technology or LTE standard or both, the phrase 'MIMO or LTE Products' could have been used. The use of the conjunction 'or' would have naturally encompassed all products with either of the two technologies/standards, and also those products which combine both. There would have been no need to use 'and' in place of 'or', as the latter would inherently fulfill the purpose of including all such categories."

"The word 'and' is to be read in conjunctive manner only, and the phrase 'MIMO and LTE Products' would refer to only those products which have both MIMO technology and LTE standard."

"The amendments introduced in 2021, whereby 'MIMO and LTE products' were changed to '(i) MIMO products; (ii) LTE products', and the word 'and' was removed, confirm that the original phrase was intended to be conjunctive."

"The WAPs imported by the respondent, which employ MIMO technology but not the LTE standards, are entitled to the exemption from Basic Customs Duty."

The core principle established is that in the context of customs exemption notifications, the conjunctive "and" must be given its natural and ordinary meaning unless ambiguity or absurdity demands otherwise. Exclusion clauses listing combined technologies or standards exclude only products embodying all listed features conjunctively, not those featuring any single element alone.

Final determination: The denial of exemption under Notification No. 24/2005-Cus. Sl. No. 13(iv) was not justified. The WAPs employing MIMO technology but lacking LTE standards are entitled to the nil rate of duty benefit. The impugned order rejecting this benefit was set aside, and the appeal allowed accordingly.