2023 (12) TMI 754 - AT - Customs

Import of Wireless Access Points WAP / MIMO Product - Availability of exemption from the whole of the customs duty under Serial No. 13 of the notification dated 01.03.2005, as amended by notification dated 11.07.2014 - Classification of imported goods - classifiable under Customs Tariff Item CTI 8517 62 90 or not - period from 11.07.2014 to 30.06.2017 - 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. A Division Bench of the Tribunal in Ingram Micro India 2020 (11) TMI 9 - CESTAT CHENNAI also 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 Redington. What also needs to be noted is 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 - 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. Thus, WAP imported by the appellant works on technology and does not support LTE standard. Beetal Teletech 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 29.11.2019 passed by the Additional Director. Appeal dismissed.

Summary

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 the exclusion clause in Serial No. 13(iv) of the notification.
4. Invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962.
5. Imposition of penalties and confiscation of goods.

Summary:

1. Classification of WAP under CTI 8517 62 90:
The appeal concerns the classification of Wireless Access Points (WAP) imported by M/s. Redington (India) Limited. The Additional Director General (Adjudication) held that WAPs, which use Multiple Input/Multiple Output (MIMO) technology but do not support Long Term Evolution (LTE) standards, are classifiable under CTI 8517 62 90 and eligible for exemption from Basic Customs Duty (BCD).

2. Eligibility for Exemption from BCD:
The core issue is whether WAPs with MIMO technology but without LTE standards qualify for exemption under Serial No. 13 of the notification dated 01.03.2005, as amended on 11.07.2014. The relevant clause exempts "all goods, except... (iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products."

3. Interpretation of Exclusion Clause in Serial No. 13(iv):
The Department argued that "and" in the exclusion clause should be read as "or," thereby excluding both MIMO products and LTE products separately. However, the Tribunal accepted the respondent's argument that "and" should be interpreted conjunctively, meaning only products that have both MIMO and LTE are excluded. Thus, WAPs with only MIMO technology are not excluded from the exemption.

4. Invocation of Extended Period of Limitation:
The show cause notice invoked the extended period of limitation under Section 28(4) of the Customs Act, 1962, proposing confiscation of goods and imposition of penalties. The Tribunal did not find any willful suppression of information by Redington, as the presence of MIMO technology was mentioned in all Bills of Entry.

5. Imposition of Penalties and Confiscation of Goods:
The Additional Director dropped the penalty imposed on Redington and its Director, E.H. Kasturi Rangan, finding no willful suppression or misrepresentation. The Tribunal upheld this decision, noting that Redington had satisfactorily discharged the onus for its claim and there was no ambiguity regarding the classification and exemption of WAPs.

Conclusion:
The Tribunal dismissed the Department's appeal, affirming that WAPs imported by Redington, which use MIMO technology but do not support LTE standards, are entitled to exemption from the whole of the customs duty under Serial No. 13(iv) of the notification. The order dated 29.11.2019 by the Additional Director General (Adjudication) was upheld, and all proposals for confiscation and penalties were dropped.