2016 (5) TMI 989 - AT - Customs

Eligibility for exemption benefit of Customs Notification No.21/2005-Cus. dt. 1.3.2005 - Import of various parts, such as PCB, Plastic casings etc. for the manufacture of Fixed Wireless Terminal - Held that - Apex Court has settled the issue once and for all that the equipments working on FWT technology can be considered to be on par with cellular phones. This decision has also been followed by this Tribunal in many of its cases, such as in the case of Teracom Private Ltd. Vs CC Goa 2007 (10) TMI 47 - CESTAT, MUMBAI where the matter has been discussed at very great length. Therefore, CDMA FWT equipments are on par with cellular phones and mobile handsets as held by the Apex Court. Hence the benefit given under Notification No.21/2005 which exempts parts, components and accessories of mobile handsets including cellular phones will have to be extended to parts and accessories of CDMA FWT. - Decided against the revenue

Summary

Issues Involved:
1. Eligibility for exemption under Customs Notification No. 21/2005-Cus. dated 1.3.2005.
2. Classification of Fixed Wireless Terminal (FWT) as mobile handsets or cellular phones.
3. Application of the Supreme Court judgment in TATA Teleservices Ltd. Vs CC.
4. Relevance of CBEC Circulars and earlier notifications.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Customs Notification No. 21/2005-Cus. dated 1.3.2005:
The primary issue revolves around whether the parts, components, and accessories imported by the respondent for manufacturing Fixed Wireless Terminal (FWT) are eligible for exemption under Customs Notification No. 21/2005-Cus. dated 1.3.2005. The Revenue argues that the exemption is not applicable as the FWTs are not mobile handsets or cellular phones. The respondent contends that the FWTs serve the same purpose as mobile handsets, especially in remote areas where cable laying is not feasible, thus qualifying for the exemption.

2. Classification of Fixed Wireless Terminal (FWT) as Mobile Handsets or Cellular Phones:
The Revenue asserts that the FWTs do not possess the features of mobile handsets or cellular phones, such as handsets, microphones, ear pieces, dialing facilities, and sound-emitting devices. They argue that FWTs perform an intermediate function of connecting a CDMA cell tower to a common land telephone and are primarily transceivers for electric radio signals. The respondent, however, maintains that FWTs, when used with a telephone set, serve the purpose of mobile handsets and should be classified as such.

3. Application of the Supreme Court Judgment in TATA Teleservices Ltd. Vs CC:
The Revenue contends that the Supreme Court judgment in TATA Teleservices Ltd. Vs CC is distinguishable as it dealt with classification and not with the grant of exemption notification. The respondent relies on this judgment, arguing that the Apex Court recognized that FWTs using CDMA technology are on par with cellular phones, thus supporting their claim for exemption. The Tribunal agrees with the respondent, noting that the Apex Court has settled the issue by equating CDMA FWTs with cellular phones.

4. Relevance of CBEC Circulars and Earlier Notifications:
The Revenue references earlier notifications (Notification No. 26/2003-Cus. dated 1.3.2003) and CBEC Circulars to argue that the exemption should not be granted. They highlight that the government initially allowed exemptions for complete FWTs but not for parts and components. The respondent counters by citing CBEC Circular No. 15/2006-Cus. dated 20.4.2006, which, following the Supreme Court judgment, clarified that FWTs are considered on par with mobile handsets. The Tribunal acknowledges this circular and other supporting judgments from the Tribunal itself, reinforcing the respondent's position.

Conclusion:
The Tribunal concludes that CDMA FWTs are on par with cellular phones and mobile handsets as held by the Apex Court. Therefore, the benefit given under Notification No. 21/2005-Cus. dated 1.3.2005, which exempts parts, components, and accessories of mobile handsets including cellular phones, extends to the parts and accessories of CDMA FWTs. Consequently, the Revenue's appeal is rejected, and the order passed by the Commissioner (Appeals) is upheld.

(Order pronounced in court on 19.5.2016)