2024 (6) TMI 1422 - AT - Customs

Entitlement for benefit of exemption from BCD under N/N. 25/2005-Cus. dated 01.03.2005 as amended by N/N. 15/2012-Cus. dated 17.03.2012 on the imported Nikon brand digital still image video camera - period February 2014 to March 2015 - true meaning and scope of the third parameter/function - HELD THAT - The exemption N/N. 25/2005-Cus. dated 01.03.2005 has been issued pursuant to the said commitment of India in lowering the rate of duty on import of various Information Technology products including the goods in question. Therefore, the argument that Exemption N/N. 25/2005-Cus. dated 01.03.2005 is general in nature and issued in a routine manner cannot be acceptable - It has been issued with an objective, that is, lowering of import duty as committed under the said International Agreement, hence, ascertaining the true meaning and scope of the said Notification keeping in view the understanding of the meaning, scope and classification of the said goods in the International arena may not be out of context. The alignment of the classification of digital cameras and video camera recorders in the year 2007 was more or less in line with Harmonised System of Nomenclature (HSN), lends support to the aforesaid understanding of the subject. Initially, the Digital Still Image Cameras and Video Cameras were classified under a common Chapter Subheading 8525 40 00 and accordingly, the exemption N/N. 25/2005-Cus. dated 01.03.2005 also made applicable to the said Tariff Entry to all Digital Still Image Video Cameras . In the present case, the imported digital cameras are capable of functioning both as still image cameras and to a limited extent as video cameras. It is capable of recording videos for a limited time restricted by the firmware installed by the manufacturer in the camera. It cannot be denied, also nowhere disputed by the Revenue, that the primary function of the imported digital cameras is for recording still images and recording videos for a limited time of 29 minutes 59 seconds in a single sequence, is an additional feature. Reading the catalogue enclosed with the paper-book which indicates that continuous recording at a specified resolution and frames per second for more than the specified time would heat up the camera or automatically recording would be terminated. Consequently, we agree with the interpretation recorded by the Referral Bench that recording of video for 30 minutes in a single sequence using maximum storage capacity be construed not to exhaust the entire memory or leaving no space for further recording video or still images laying equal emphasis to the phrase in in a single sequence . The aforesaid interpretation is in line with the International practice of understanding of the meaning of Digital still cameras and video cameras as reflected in the European Union Explanatory Notes and also the Circular issued by the Board. In the present case, there is no ambiguity in reading the Explanation of the N/N. 25/2003-Cus. dated 01.03.2005 as amended, in as much as, a literal interpretation of the said Explanation, reveals that all the three parameters/functions of a digital camera should be cumulatively read so as to ascertain whether all the characteristics are above the threshold limit; in that event, the digital camera would not be eligible to the exemption from BCD under the said Notification. In the event any one of the parameter/characteristic is below the threshold limit e.g. recording time is less than 30 minutes in a single sequence using the maximum storage (including expanded) capacity, then the cameras would be eligible to the benefit of the said Notification - The appellant in the present case also fairly established that their case falls within the four corners of the said Notification by adducing evidence. It can fairly be inferred that the appellants are eligible to exemption from BCD under the said N/N. 25/2005 CE dated 1.3.2005 as amended. The digital still image video cameras would be entitled to BCD exemption under N/N. 25/2005-Cus. dated 01.03.2005 as amended by N/N. 15/2012 dated 17.03.2012 - The interpretation of the Explanation by the Division Bench of the Tribunal in Sony India Pvt. s case denying the benefit of exemption is a result of incorrect interpretation of the Explanation of the said Notification. The Reference is answered; accordingly, the appeal is now be listed before the Division Bench for hearing.

Summary

Issues Involved:

1. Eligibility of 'digital still image video cameras' for Basic Customs Duty (BCD) exemption under Notification No. 25/2005-Cus. as amended by Notification No. 15/2012-Cus.
2. Interpretation of the 'Explanation' in the Notification regarding the conditions for exemption.
3. Whether the Tribunal's previous decision correctly interpreted the scope of the 'Explanation'.

Issue-wise Detailed Analysis:

1. Eligibility for BCD Exemption:

The core issue was whether the 'digital still image video cameras' imported by the appellant were entitled to BCD exemption under the specified notifications. The appellant argued that their cameras, which could record videos for less than 30 minutes in a single sequence, met the exemption criteria. The Tribunal concluded that the cameras were eligible for exemption as they did not fulfill all three conditions specified in the 'Explanation' of the Notification.

2. Interpretation of the 'Explanation':

The 'Explanation' in the Notification specified that to qualify for exemption, a digital camera must not be capable of recording video with a minimum resolution of 800 x 600 pixels, at a minimum speed of 23 frames per second, for at least 30 minutes in a single sequence using maximum storage capacity. The appellant contended that if any one of these conditions was not met, the exemption should apply. The Tribunal agreed, emphasizing that all conditions must be cumulatively met to deny the exemption. The Tribunal rejected the Revenue's argument that exceeding any one condition disqualified the cameras from exemption.

3. Tribunal's Previous Decision:

The previous Tribunal decision in the Sony India Pvt. Ltd. case denied exemption based on an interpretation that the cameras' capability to record for more than 30 minutes was restricted by firmware, rendering the conditions redundant. The Referral Bench disagreed, stating that the explanation's intent was not to exhaust the camera's entire storage capacity within 30 minutes. The Tribunal emphasized that the interpretation should align with international practices and the purpose of the exemption, which was to promote trade in IT products under the Information Technology Agreement (ITA).

Conclusion:

The Tribunal concluded that the 'digital still image video cameras' imported by the appellant were entitled to BCD exemption under the Notification, as the cameras did not meet all the conditions cumulatively. The Tribunal found the previous interpretation by the Division Bench in the Sony India case to be incorrect and emphasized the need for a literal interpretation of the 'Explanation' to avoid absurd results. The Tribunal's decision was guided by the intent to align with international agreements and promote trade in IT products.