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2022 (9) TMI 594 - AT - CustomsBenefit of exemption from Import duties - Classification of imported goods - Wireless Access Points WAP - to be classifiable under Customs Tariff Item CTI 8517 62 90 or otherwise? - period 11.07.2014 to 30.06.2017 - exemption under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - HELD THAT - India is a signatory to the Information Technology Agreement ITA dated 13.12.1996 by the World Trade Organization. The ITA 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 ITA, India introduced the notification. At the time of introduction, all goods falling under CTH 8517 were exempted from payment of duties. In 2014, on specified telecommunication products that were not covered under the ITA, the Government imposed customs duties by notification dated 11.07.2014. The Finance Minister's Budget Speech for the year 2014-15 and Tax Research 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 Revenue.
Issues Involved:
1. Classification of Wireless Access Points (WAP) under Customs Tariff Item (CTI) 8517 62 90. 2. Eligibility for exemption from Basic Customs Duty (BCD) under the notification dated 01.03.2005, as amended by the notification dated 11.07.2014. 3. Interpretation of exclusion clause (iv) under Serial No. 13 of the notification. 4. Invocation of the extended period of limitation under section 28(4) of the Customs Act, 1962. 5. Proposals for confiscation of imported goods and imposition of penalties under sections 111(m), 112, and 114AA of the Customs Act. Issue-wise Detailed Analysis: 1. Classification of Wireless Access Points (WAP) under Customs Tariff Item (CTI) 8517 62 90: - The respondent, Ingram Micro India Pvt. Ltd., classified the imported WAP under CTI 8517 62 90, which was accepted by the Additional Director General (Adjudication), Directorate of Revenue Intelligence (DRI). The WAPs were imported for trading purposes and worked on Multiple Input/Multiple Output (MIMO) technology but did not support Long Term Evolution (LTE) standards. 2. Eligibility for exemption from Basic Customs Duty (BCD) under the notification dated 01.03.2005, as amended by the notification dated 11.07.2014: - The exemption from BCD was claimed under Serial No. 13 of the notification, which exempts all goods under heading 8517 except those specified in clauses (i) to (iv). The relevant clause (iv) excludes "Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products." The Additional Director held that the WAPs, being MIMO-enabled but not LTE-supported, were entitled to the exemption. 3. Interpretation of exclusion clause (iv) under Serial No. 13 of the notification: - The primary dispute was whether the exclusion clause (iv) covered products having only MIMO technology and not working on LTE standards. The Department argued that 'and' should be read as 'or,' thus excluding both MIMO products and LTE products. However, the Tribunal accepted the respondent's contention that 'and' should be interpreted conjunctively, meaning only products having both MIMO and LTE would be excluded. This interpretation was supported by dictionary definitions and previous legal precedents, including the Supreme Court's judgment in British Health Products and the Punjab and Haryana High Court's judgment in Kulcip Medicines. 4. Invocation of the extended period of limitation under section 28(4) of the Customs Act, 1962: - The show cause notice invoked the extended period of limitation, alleging willful suppression of information by Ingram Micro. However, the Tribunal found no willful suppression, noting that Ingram Micro had disclosed the presence of MIMO technology in all Bills of Entry, and thus, the extended period of limitation was not applicable. 5. Proposals for confiscation of imported goods and imposition of penalties under sections 111(m), 112, and 114AA of the Customs Act: - The show cause notice proposed confiscation of imported goods and penalties on Ingram Micro and its Director, Blase D'Souza. The Additional Director dropped these proposals, finding that Ingram Micro had not willfully suppressed any information and had satisfactorily discharged the onus for its claim. Conclusion: - The Tribunal concluded that WAP imported by Ingram Micro, which works on MIMO technology and does not support LTE standards, was entitled to exemption from the whole of the customs duty under Serial No. 13 (iv) of the notification. The appeal filed by the Department was dismissed, affirming the order dated 23.12.2019 passed by the Additional Director. The Tribunal also noted that the exclusionary clause in an exemption notification should be strictly construed and given a narrow meaning to not frustrate the intention behind the exemption.
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