2007 (10) TMI 47 - AT - Customs

CDMA-WLL telephone On basis of technical material, judicial decisions, authenticated websites, CBEC circular etc. CDMA WLL is based on digital technology therefore classifiable as cellular phones under heading 85.25 Exemption cannot be denied under notifications 6/02, 21/02 and 21/05

Summary

Issues Involved:

1. Whether CDMA WLL telephones qualify as "Cellular Phones" under the relevant exemption notifications.
2. Classification of CDMA WLL telephones under the Central Excise and Customs Tariff.
3. Applicability of extended period of limitation.

Detailed Analysis:

1. Whether CDMA WLL telephones qualify as "Cellular Phones" under the relevant exemption notifications:

The primary issue was whether CDMA WLL telephones can be classified as "Cellular Phones" to avail the benefit of exemption under Notification No. 6/2002-CE and Notification No. 21/2002-Cus. The department argued that CDMA WLL phones are not cellular phones because they operate on CDMA technology, not GSM technology. The Commissioner concluded that CDMA WLL phones are "basic phones without wires" and not cellular phones, relying on advertisements, website information, and orders from TRAI and TDSAT.

However, the Tribunal found that CDMA is a standard in digital cellular communication technology, similar to GSM. Technical literature, certificates from Qualcomm, opinions from IIT Bombay, and clarifications from the Department of Telecommunications (DOT) and BSNL confirmed that CDMA WLL phones work on cellular technology. The Supreme Court in Tata Teleservices Ltd. vs. CC affirmed that fixed wireless telephones operating on CDMA technology are cellular phones and entitled to exemption. The Tribunal held that the phones in question work on cellular technology and are thus eligible for the exemption.

2. Classification of CDMA WLL telephones under the Central Excise and Customs Tariff:

For the period prior to March 2005, there were no sub-headings under Heading 85.25, so the Commissioner classified the phones under this heading. Post-March 2005, the Commissioner classified the phones under tariff item 852520.19, disregarding the specific tariff item 852520.17 for "cellular telephone." The Tribunal noted that the technical books, Board circulars, and Supreme Court decisions stated that any phone working on cellular technology is a cellular phone. The Tribunal held that for the period after March 2005, the phones should be classified under tariff item 852520.17.

3. Applicability of extended period of limitation:

The Tribunal did not record any finding on the plea of limitation raised by the appellants, as the appeals were allowed on merits.

Conclusion:

The Tribunal concluded that CDMA WLL telephones are cellular phones eligible for the benefit of exemption under Notification No. 6/2002-CE and Notification No. 21/2002-Cus. The impugned orders were set aside, and the appeals were allowed. The Tribunal did not address the issue of limitation due to the findings on the merits.