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2016 (5) TMI 989 - CESTAT CHENNAI

2016 (5) TMI 989 - CESTAT CHENNAI - 2016 (344) E.L.T. 614 (Tri. - Chennai) - Eligibility for exemption benefit of Customs Notification No.21/2005-Cus. dt. 1.3.2005 - Import of various parts, such as PCB, Plastic casings etc. for the manufacture of Fixed Wireless Terminal - Held that:- Apex Court has settled the issue once and for all that the equipments working on FWT technology can be considered to be on par with cellular phones. This decision has also been followed by this Tribunal in many of .....

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revenue - Appeal No. C/401/2011 - FINAL ORDER No.40795/2016 - Dated:- 19-5-2016 - SHRI D.N. PANDA, JUDICIAL MEMBER AND SHRI V. PADMANABHAN, TECHNICAL MEMBER For the Appellant : Shri Veerabhadra Reddy, JC (AR) For the Respondent : Shri S. Sankaravadivelu, Advocate ORDER PER V. PADMANABHAN Revenue being aggrieved by the appellate order dt. 26.8.2011 holding that the goods imported by the appellant were the parts, components and accessories of the Fixed Wireless Terminal (FWT) which was compliment .....

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ng of main PCB, G3 fax PCD, Plastic casings top etc. and claimed exemption of the Additional Duty of Customs thereon in terms of Notification No.21/2005-Cus. dt. 1.3.2005. But such benefit was not available to the respondent. Revenue agitates the matter before Tribunal praying to hold that the goods manufactured by the respondent was neither mobile handsets nor cellular phones since Fixed Wireless Terminal (FWT) is neither mobile handsets nor cellular phone. Accordingly, respondent is not entit .....

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upport Revenues contention that respondent should have carried out manufacture of mobile phones or cellular phones making use of the goods imported. According to him, Ld. Adjudicating authority has properly characterized the goods on the basis of technical aspect of the manufacture carried out by the respondent, in para-19 of adjudication order, which reads as under :- * they do not have any devices such as handset, * They do not have microphones for accepting sound signals, * They are not fitt .....

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jack provided in the terminals, to enable use. * In the alternative they may be connected to a computer and after programming the detailed instructions given, they may be used in conjunction with the computer and microphone/speaker headset etc. on the computer. [Emphasis supplied] 2.2 According to ld. D.R, in para-20 of his order, learned adjudicating authority further deals with Fixed Wireless Terminal (FWT) manufactured by the respondent and its different aspects. For convenience reading, that .....

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rformed by the land telephone attached to the equipment, including transmitting electric radio signals from the Cell tower (the base Transceiver station) and receiving radio signals from it. Thus the goods are primarily a transceiver for electric radio signals and cannot receive or reproduce sound signals, this function of converting sound signals to electric impulses and vice versa is carried out by a telephone connected to the terminal. [Emphasis supplied] 2.3. Considering the characteristic .....

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ed by the ld. Adjudicating Authority has been ignored by learned Commissioner (Appeals). He relied on the Supreme Court judgement in the above case and allowed the appeal of respondent holding that using the parts, components and accessories imported, respondent manufactured FWT which is a mobile phone under CDMA technology. 2.4. Ld.D.R categorically says that end product of the respondent should be either mobile phone or cellular phone to grant notification benefit. Such predominant condition o .....

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27 was enacted in the Notification No.26/2003 dt.1.3.2003 to grant exemption to Routers, Modems and Fixed Wireless Terminals (FWT) if such goods are imported. But respondent imported only parts of FWT not the complete FWT. When FWT was manufactured using the parts, components, accessories imported, respondent s case is no manufacture of mobile handsets or cellular phone. Entry No.427 having allowed exemption of Additional Duty of Customs in respect of Routers, Modems and Fixed Wireless Terminals .....

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ant exemption to FWT, the respondent manufacturing FWT should not take advantage of the Notification No.21/2005-Cus. dt.1.3.2005 under the plea of FWT is same as mobile handsets or cellular phones. 2.6. Revenue s further contention is that the clarification of the BSNL (Ref.page 105 of the respondent s paper book and copy of literature at page 134 thereof) is of no consequence to the respondent for the reason that there is conflict of interest of BSNL being buyer of the goods from the respondent .....

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HSN classification in respect of tariff heading 85.17 to support its case stating that the goods manufactured by the respondent falls therein without granting any exemption to the goods imported. Ld. D.R supported the order of adjudicating authority going through the decision of the Chief Commissioners Conference as has been recorded in para-21 of the adjudication order. He further relied on the decision of Bangalore Bench of the Tribunal in the case of VuppalamrithaMagnetic Components Ltd. Vs .....

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ar phones by respondent which is not its case. 3. On behalf of the respondent, learned advocate submits that the grant of the Notification No.21/2005-Cus. dt. 1.3.2005 is to exempt parts, components and accessories of mobile handsets/cellular phones. The object of the notification is clear from the wordings used therein. Earlier government had granted exemption to the complete goods i.e. FWT imported since such goods were not manufactured in India. But when technology was developed to manufactur .....

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ble wire. He explained that the goods imported were used to manufacture Fixed Wireless Terminal (FWT) and such FWT are used along with telephone sets in remote areas where cable laying is not possible, to capture signals and serve the purpose of mobile handsets. Therefore, it cannot be said that telephone used along with WTP were not mobile handsets. The only dispute being whether FWT serving the purpose of mobile handset and that being answered by Apex Court in the aforesaid judgement in para-1 .....

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being specified description of goods and were used in the mobile handsets of the nature described aforesaid, the respondent is covered by the scope of the grant of exemption. It is his further submission that CBEC amended its circular No.57/2003 dt. 27.6.2003 as appearing on page 118 of the paper book and informed to field formation that Apex court s decision in TATA Teleservices Ltd. explains the situation to resolve the disputed issue. It was also submitted that page 105 of paper book read wi .....

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goods manufactured by the respondent is not disentitled to the benefit of exemption notification. 3.4 Drawing attention to the Revenues submission which was relying on the decision in the case of ACD Communication Pvt. Ltd. & Others Vs CC Chennai (supra), respondent explained that this decision rather supports the case of the respondent on the ground that FWT is nothing but mobile handsets. Relying on page 102 of the paper book which deals with Notification No23/2010-Cus.Dt. 27.2.2010, it w .....

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ogy used was GSM technology which was prevalent in all parts of the world other than the North American continent. Subsequently, CDMA technology, which was widespread in use in the North American continent, was also adopted in India. Later on, it was found by BSNL, that CDMA technology can be usefully made use of for last mile connectivity through Wireless in local loup (WLL) system. This system made use of the same technology as the CDMA cellular telephone system. The Fixed Wireless Terminal (F .....

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es. The respondent imported, through several Bills of Entry, various parts, such as PCB, Plastic casings etc. for the manufacture of Fixed Wireless Terminal and claimed the benefit of Notification No.21/2005-Cus. dt. 1.3.2005. For ready reference, this notification is extracted below :- In exercise of the powers conferred by sub section (1) of the section 25 of the Customs Act, 1962 (52 of 1962) the Central Government, on being satisfied that it is necessary in the public interest to do so, here .....

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sable goods) Rules, 1996. This notification exempts parts, components and accessories of mobile handsets including cellular phones from Customs duties when imported. The various parts imported were to be assembled into model FWT WF 836F . The entire dispute centers around the question whether this equipment described as Fixed Wireless Terminal can be considered as a "mobile handset including cellular phone". The original authority decided, after considering the salient features of the .....

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n several other important features. However, the respondent made out its case explaining that the very same dispute has arisen time and again in the context of direct import of FWTs in the context of eligibility of exemption under the erstwhile Customs Notification No.21/2002-Cus., as amended by Notification No.26/2003-Cus. dt. 1.3.2003. It was also submitted that the Revenue initially held the view that such FWTs cannot be considered on par with mobile handsets/cellular phones. However, the vie .....

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