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TMI Blog2022 (9) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The demand of customs duty for the period from 11.07.2014 to 30.06.2017 has, therefore, been dropped. The penalty imposed upon Ingram Micro as also its Director Material, Blase D'Souza have also been dropped. 2. Ingram Micro is a distributor of Information Technology products. It imported WAP from various suppliers such as Cisco Systems International BV, Aruba Networks International Ltd., Fortinet Singapore Pvt. Ltd, Ruckus Wireless, Symbol Technologies LLC, Juniper Networks (Hong Kong) Ltd. for trading purpose in India and it classified the imported WAP under CTI 8517 62 90 during the period 11.07.2014 to 30.06.2017. According to the appellant, WAP works on Multiple Input/Multiple Output [MIMO] technology, but does not support Long Term Evolution [LTE] standard. 3. It would, therefore, be necessary to state briefly about WAP, MIMO and LTE: (i) WAP: It is a networking device used for wireless communication within the Local Area Network [LAN] . It helps in connecting wireless enabled devices such as Laptops, Smartphone, Tablets etc., to a wired network; (ii) MIMO: It is a technology wherein multiple antennas are used simultaneously for transmission and multiple antennas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Differential Customs Duty Demanded (INR) Demand within normal period of limitation (in Rs.)(21.12.2016 to 23.06.2017) 1. Air Cargo Complex, Chennai 673 16.07.2014 to 23.06.2017 4,85,37,039 6,640,402 2. Air Cargo Complex, Sahar, Andheri (E), Mumbai 375 26.07.2014 to 31.05.2017 3,54,42,995 6,334,383 3. Air Cargo Complex, New Delhi 74 13.08.2014 to 20.06.2017 70,94,472 411,599 TOTAL 1122 16.07.2014 to 23.06.2017 9,10,74,505 1,33,86,384 6. The show cause notice states that exclusion under Serial. No. 13(iv) applies to either of the products, namely MIMO products or LTE products for the reason that from a plain reading of the notification, it is clear that exemption has been denied on two types of products i.e. MIMO products and LTE products. As there are only two types of products at Serial No. (iv) of the notification, the conjunctive 'and ' has been used without using the term 'product' for both the items. Further, if the purpose was to apply the said condition on products having both MIMO technology and LTE standards, then Serial No. 13(iv) would have read as follows: (i) LTE products having MIMO technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing before 'and' does not by itself mean anything. Since the exception carved out has to be 'goods', this expression has to be interpreted to connote products based on MIMO technology; (ii) The expression 'products' appearing after LTE has to be read with 'MIMO' to mean and cover MIMO products. Futher, 'products' being the common factor for both MIMO technology and LTE, the expression 'and' has been used in a conjunctive way to cover individually MIMO products and LTE products; (iii) Accordingly, WAP being MIMO products, by virtue of use of MIMO technology in them, would fall within the exclusion clause; (iv) The expression 'and' is sought to be interpreted by Ingram Micro as if it is a conjunctive between a technology and a standard and accordingly, the products arising out of such a combination alone would be hit by the exclusion clause. If this was the intent behind the said exclusion clause, then the expression used would have simply been 'LTE products with or having MIMO technology'; (v) MIMO technology is a sub-set technology of LTE architecture, protocols and system. Further, it is not mandatory to have both MIMO and LTE; (vi) Argument that WAP is essentially an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the subject period, excludes only products having both MIMO as well as LTE; (iii) MIMO is a technology and, therefore, cannot be treated as an independent product. Thus, if the intention was to exclude even products having only MIMO technology, then the word 'products' should have been used after MIMO as well as after LTE. Therefore, the scope of products currently excluded by entry (iv) would be products which use MIMO and LTE. Thus, the term 'Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) products' means products which contain both MIMO and LTE; (iv) A Bench of the Tribunal of Chennai in M/s. Ingram Micro India Private Ltd. vs. The Commissioner of Customs [Customs Appeal No. 41694 of 2019 decided on 26.10.2020], has confirmed the classification of identical product (i.e. WAP) under CTI 8517 62 90 and extended the benefit of the subsequent notification dated 30.07.2017. The Department has accepted the decision of the Tribunal. Therefore, once the benefit has been granted to Ingram Micro in the subsequent notification for the identical product, the benefit under the notification dated 01.03.2005, as amended on 11.07.2014, should also be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal is regarding the availability of the exemption from the whole of the customs duty claimed by Ingram Micro under the notification. The Central Government, by the said notification, exempted the goods described in column (3) of the Table when imported into India, from the whole of the duty of customs leviable thereon. Serial No. 13 of heading 8517 exempts all goods, except those mentioned in (i), (ii), (iii) and (iv). Ingram Micro had claimed exemption under Serial No. 13 (iv) which is: "(iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products." (emphasis supplied) 16. A bare perusal of the exclusion clause (iv) under Sl. No. 13 of notification shows that it covers MIMO and LTE products. The sole dispute in this appeal is whether this exclusion clause covers products having only MIMO technology and not working on LTE standard. Exclusion clause (iv) uses the conjunction 'and' and, therefore, it can be urged that the scope of clause (iv) can be restricted to those products that have MIMO and LTE both and that the product that only has MIMO technology may, therefore, not be covered by this exclusion clause and, therefore, may not be excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry (iii) of the same Serial No. 13 of notification, every technology is followed by the word 'products': "Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching- transport Profile (MPLS-TP) products;" 21. Learned special counsel for the appellant contended that clause (iv) would effectively mean and cover two categories of products, namely, (i) Multiple Input/Multiple Output (MIMO) products and (ii) Long Term Evolution (LTE) products and that MIMO products and LTE products are products which have distinct identities. Learned special counsel also contended that the expression 'Multiple Input/Multiple Output (MIMO)' appearing before 'and' does not, by itself, mean anything unless it is followed by expressions like 'technology' or 'products'. Since the exception carved out has to be 'goods', this expression has to be interpreted to connote products based on MIMO technology. Thus, the expression 'products', appearing after 'LTE' has to be read with 'MIMO' to mean and cover MIMO products. Further, 'products' being the common factor for both MIMO technology and LTE standard, the expression 'and' has been used in a conjunctive way to cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the expression "milk and cream" in the second portion of the Tariff Heading 19.01 would mean that both milk and cream should be present in the food preparation classifiable under the said heading. We do not agree with the plea of the ld. JDR that by use of "whole milk powder" and "cream" being necessarily contained in the whole milk powder, the preparation should be deemed to have contained both milk and cream. The two products, viz., "milk" and "cream" are commercially known differently. When the Tariff heading uses names of two different commercial commodities joined by a conjunctive word, the preparation must contain those commodities in their natural form as available in the market. There are preparations which are made of both milk and cream. One of the examples given by the ld. Advocate, is, `Gulab Jamum' being a preparation of milk and cream." (emphasis supplied) 25. The Punjab and Haryana High Court in Kulcip Medicines also observed as follows: "11. The question which falls for consideration is whether word 'and' used after the word 'clearing' but before the word 'forwarding' at two places in clause (j) be considered in a conjunctive sense or dis-injunctive sens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WAP imported by Ingram Micro. The Network Equipment as defined in Annexure-B includes LAN and Wide Area Network [WAN] apparatus, including those products dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input or output units - including adapters, hubs, inline repeaters, converters, concentrators, bridges and routers, and printed circuit assemblies for physical incorporation into automatic data processing machines and units thereof. Imported WAP is a networking equipment working in LAN connecting Wi-fi enabled devices such as laptops, smartphones, tablets, etc. to a wired network. Thus also, imported WAP is entitled to the exemption from the whole of the customs duties under the ITA. 28. It is also well settled law that an exclusionary clause in an exemption notification should be strictly construed and must be given a narrow meaning so as to not frustrate the intention behind the exemption notification. In this regard, reliance can be placed on the decision of Supreme Court in Pappu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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