2023 (11) TMI 69 - AT - Customs

Availability of exemption from the whole of the customs duty by Beetal Teletech under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - Classification of imported goods - Wireless Access Points WAP / MIMO Product (products having MIMO Technology) - classifiable under Customs Tariff Item CTI 8517 62 90 or not - period from July 2014 to June 2017 - Extended period of limitation. Whether the 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 and that the product that only has MIMO technology may, therefore, not be covered by this exclusion clause and, therefore, may not be excluded from the scope of Serial No. 13? HELD THAT - What needs to be remembered is that MIMO is a technology and cannot be treated as an independent product. If the intention was to exclude even products having only MIMO technology, then the word products should have been used after MIMO as well as after LTE. It, therefore, follows that the scope of products excluded by entry (iv) would be products which use both MIMO and LTE. Thus, the term Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products means products which contain both MIMO and LTE. This view finds support from the the decision of Division Bench of the Tribunal in Ingram Micro India 2020 (11) TMI 9 - CESTAT CHENNAI confirmed the classification of identical product (i.e. WAP) under CTI 8517 62 90 and extended the benefit of the subsequent notification dated 30.07.2017. The Department has accepted the Order passed by the Tribunal. Therefore, once the benefit has been granted to Ingram Micro in the subsequent notification for an identical product, the benefit under the notification dated 01.03.2005, as amended on 11.07.2014 should also be extended to Beetal Teletech. 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 - It has been stated that the investigation by the DRI was not only against Beetal Teletech but few other importers of these goods also and the proceedings initiated against other importers was dropped but appeals have not been filed by the Department. The aforesaid discussion leads to be inevitable conclusion that 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 28.11.2019 passed by the Additional Director. The two Customs Appeals filed by the Department, therefore, deserve to be dismissed and are dismissed.

Summary

Issues Involved:
1. Classification of Wireless Access Points (WAP) under Customs Tariff Item (CTI) 8517 62 90.
2. Availability of 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) in Serial No. 13 of the notification.
4. Invocation of the extended period of limitation under section 28(4) of the Customs Act, 1962.
5. Imposition of penalties under sections 112, 114AA of the Customs Act.

Summary:

1. Classification of WAP:
Beetal Teletech Limited imported Wireless Access Points (WAP) and classified them under CTI 8517 62 90, claiming they work on MIMO technology but do not support LTE standard. The Additional Director General (Adjudication) ruled in favor of Beetal Teletech, classifying WAP under CTI 8517 62 90 and granting exemption from BCD.

2. Exemption from BCD:
The exemption under Serial No. 13 of the notification dated 01.03.2005, as amended by the notification dated 11.07.2014, was claimed. The relevant entry exempts all goods under heading 8517 except specified items, including "Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products." The Department issued a show cause notice proposing to deny the exemption, arguing the exclusion applies to both MIMO and LTE products separately.

3. Interpretation of Exclusion Clause (iv):
The core issue was whether the exclusion clause covers products having only MIMO technology and not LTE standard. The Department contended 'and' should be read as 'or', covering MIMO and LTE products separately. Beetal Teletech argued 'and' should be interpreted conjunctively, covering only products having both MIMO and LTE. The Tribunal accepted Beetal Teletech's interpretation, emphasizing that 'and' is conjunctive and the exclusion clause applies only to products with both MIMO and LTE.

4. Extended Period of Limitation:
The show cause notice invoked the extended period of limitation under section 28(4) of the Customs Act, 1962. However, the Tribunal found no willful suppression of information by Beetal Teletech, as the presence of MIMO technology was evident in all Bills of Entry.

5. Imposition of Penalties:
The proposals for confiscation and penalties under sections 112, 114AA of the Customs Act were dropped by the Additional Director, as Beetal Teletech satisfactorily discharged the onus for its claim and no willful suppression was found.

Conclusion:
The Tribunal upheld the order dated 28.11.2019, granting exemption from the whole of the customs duty to Beetal Teletech for WAP classified under CTI 8517 62 90. The appeals filed by the Department were dismissed, affirming that the exclusion clause (iv) applies only to products having both MIMO and LTE. The Tribunal did not find it necessary to address other contentions, including the invocation of the extended period of limitation.