TMI Blog2022 (9) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Unit letter dated 10.07.2014 clarify that BCD on specified telecommunication products not covered under the ITA was being increased from NIL to 10%. As WAP is an Information Technology product and is specifically covered under the ITA as Network Equipment in Attachment B, the intention was clearly not to exclude WAP imported by Ingram Micro - 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. 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. WAP imported by the appellant works on technology and does not support LTE standard. Ingram Micro was, therefore, justified in claiming exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. There is, therefore, no infirmity in the order dated 23.12.2019 passed by the Additional Director. Appeal dismissed - decided against Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncreases the capacity and speed using a different radio interface together with core network improvements. 4. The issue in this appeal pertains to the availability of exemption from the whole of the customs duty by Ingram Micro under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014. The relevant Serial No. 13, as it stood during the relevant period is as follows: Exemption to goods of specific heading, from customs duty (ITA Bound). In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the following goods of the description as specified in column (3) of the Table below and falling under the heading, sub-heading or tariff-item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table when imported into India, from the whole of the duty of customs leviable thereon under the said First Schedule, namely:- Sl. No. Heading Sub Heading or Tariff Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts, 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 technology OR (ii) LTE products with MIMO technology 7. Secondly, the show cause notice notes that between the words MIMO and LTE , and is placed but it is not followed by a comma. The show cause notice places reliance on the judgment of the Supreme Court in Shree Durga Distributors vs. State of Karnataka [ 2007 (212) E.L.T. 12 SC ]. 8. The show cause notice also invokes the extended period of limitation contemplated under section 28(4) of the Customs Act, 1962 [ the Customs Act ], apart from the proposals for confiscation of imported goods under section 111 (m), penalties u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ology 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 Information Technology device and as the exclusion clause is meant to cover only telecom equipment and devices, WAP cannot be excluded from the exempted category is misconceived; (vii) WAP is at the terminal point of the radio communication systems, which is both external and internal to a building or large spaces etc., in its spread. It is very much a part of the radio communications systems; and (viii) TRAI, in its recommendations on Telecom Equipment Manufacturing Policy dated 12.04.2011 has regarded Wi-Fi WAP as a broad band equipment under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 extended; (v) India is a signatory to the Information Technology Agreement dated 13.12.1996 by the World Trade Organization. The Information Technology Agreement requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement. India signed the Agreement on 01.07.1997. Pursuant to Information Technology Agreement, India introduced the notification. At the time of introduction, all goods falling under Customs Tariff Heading17 85 [ CTH ] were exempted from payment of duties. In 2014, on specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 the scope of Serial No. 13. 17. The contention of the Department is that and should be read as or in clause (iv) so that it would cover MIMO products or LTE products. The contention advanced on behalf of Ingram Micro is that since the exclusion clause (iv) uses the conjunction and its scope would be restricted to those products that have both MIMO and LTE. Thus, according to Ingram Micro a product that has only MIMO technology would not be covered by the exclusion clause a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 individually MIMO products and LTE products. Learned special counsel, therefore, contended that as there are only two types of products at Serial No. 13 (iv), the conjunctive and has been used without using the term products twice. There is, therefore, no ambiguity and the expression Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products denotes Multiply Input/Multiple Output (MIMO) products on the one hand and Long Term Evoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sense. It appears to be fairly well settled that the context and intention of legislature are the guiding principles. In that regard reliance may be placed on the judgment of Hon ble the Supreme Court in the case of Mazagaon Dock Ltd. v. CIT (1958) 34 ITR 368. By necessary intendment the expression a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner contemplates only one person rendering service as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding 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 Sweets and Biscuits versus Commissioner of Trade Tax, U.P., Lucknow [ 1998 (10) TMI 452-Supreme Court ], wherein the Supreme Court observed: 10. The notification further discloses that the object of declaring exemption from payment of sales tax was to increase industrial activity within the State by encouraging setting up of new industrial units or expansion, diversification or modernization by the existing industrial uni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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