2025 (1) TMI 859 - HC - Customs

Interpretation of statute - word and in the exclusion entry (iv) of Serial No. 13 of the amended Notification No. 24/2005 - classification of imported goods - Wireless Access Points (WAPs) - whether the WAPs, which work on MIMO technology, imported by the respondent would qualify for an exemption from Basic Customs Duty? HELD THAT - By way of judgment dated 13.01.2025 delivered today in CUSAA 38/2023 2025 (1) TMI 797 - DELHI HIGH COURT , the question of law answered in favour of the respondent and against the Revenue, and it is held that the phrase MIMO and LTE Products in Serial No. 13(iv) of the amended Notification No. 24/2005 applies solely to products combining MIMO technology and LTE standards, and thus, the WAPs imported by the respondent, which employ MIMO technology but not the LTE standards, are entitled to the exemption from Basic Customs Duty. Conclusion - The court established that the interpretation of exemption notifications should be narrow and that the conjunctive and in legal texts typically means a combination rather than alternatives. The WAPs imported by the respondent, which employ MIMO technology but not LTE standards, are entitled to the exemption from Basic Customs Duty.

1. ISSUES PRESENTED and CONSIDERED

The core legal question in this judgment is whether the word "and" in the exclusion entry (iv) of Serial No. 13 of the amended Notification No. 24/2005 should be interpreted in a conjunctive manner, referring to products that combine both MIMO technology and LTE standards, or disjunctively, referring to products using either MIMO technology or LTE standards.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Interpretation of "and" in Exclusion Entry (iv)

Relevant Legal Framework and Precedents:

The legal framework involves the Customs Act, 1962, and the amended Notification No. 24/2005, which specifies exemptions from customs duty. The relevant precedents include the Supreme Court's decision in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co., which emphasizes that exemption notifications should be construed narrowly.

Court's Interpretation and Reasoning:

The court interpreted the word "and" in the exclusion entry (iv) as conjunctive, meaning that the exemption applies only to products using both MIMO and LTE technologies. The court reasoned that if the intention was to exclude products with only MIMO technology, the word "products" should have been used after both "MIMO" and "LTE".

Key Evidence and Findings:

The court noted that the respondent imported Wireless Access Points (WAPs) that utilized MIMO technology but not LTE standards. The court also considered the fact that similar exemptions had been granted for identical products under subsequent notifications.

Application of Law to Facts:

The court applied the narrow interpretation principle to conclude that the WAPs imported by the respondent, which operated solely on MIMO technology, were entitled to the exemption from customs duty. This interpretation aligned with the intention of the exemption notification and international agreements like the Information Technology Agreement.

Treatment of Competing Arguments:

The Revenue argued that "and" should be read as "or" to include products with either MIMO or LTE technology. However, the court rejected this argument, emphasizing the conjunctive nature of "and" and the absence of the word "products" after "MIMO".

Conclusions:

The court concluded that the phrase "MIMO and LTE Products" refers to products combining both technologies, and therefore, the WAPs imported by the respondent are eligible for the customs duty exemption.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"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."

Core Principles Established:

The court established that the interpretation of exemption notifications should be narrow and that the conjunctive "and" in legal texts typically means a combination rather than alternatives.

Final Determinations on Each Issue:

The court determined that the WAPs imported by the respondent, which employ MIMO technology but not LTE standards, are entitled to the exemption from Basic Customs Duty. The appeal by the Revenue was dismissed, and the order of the learned CESTAT was upheld.

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