2024 (1) TMI 194 - AT - Customs

Classification of Wireless Access Points - eligibility for exemption under Notification No. 24/2005-Cus dated 01.03.2005, as amended by Notification No. 11/2014-Cus dated 11.07.2014. Whether the exclusion from duty exemption clause of the said notification, as amended, also covers products having only MIMO technology and not working on LTE standard and vice-versa or just the products having both the technologies? HELD THAT - A bare perusal of the exclusion clause (iv) under Sl. No. 13 of notification shows that it covers MIMO and LTE products. Said exclusion Clause 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, may not be excluded from the scope of duty exemption benefit given at Serial No. 13 of the impugned notification as amended. The contention of the Department is that and in clause (iv) should be read as or so that it would cover MIMO products or LTE products as well. The contention advanced on behalf of Ingram Micro is that since the exclusion clause (iv) uses the conjunction and its scope would be restricted to those products that have both MIMO as well as LTE technology. Thus, a product that has only MIMO technology would be out of the scope of the exclusion clause and at Serial No. 13 (iv) of the impugned notification and should be available with the customs duty exemption benefit given under said notification. It is observed that in the Serial no. 13(iv) of the Notification No. 57/2017-Cus. as amended the word products is used only once. It is not used with Multiple Input/Multiple Output (MIMO) as well as Long Term Evolution (LTE). Whereas it is used once after both the products are being mentioned, same is not true for the other entries of the same notification. Products being the common factor for both, MIMO technology and LTE standard, again corroborates that expression and as used in the impugned entry has been used in a conjunctive way. From the above discussion it is held that and used between Multiple Input/Multiple Output (MIMO); Long Term Evolution (LTE) is a conjunctive joining of both the said terms (MIMO/LTE). Hence it can reasonably be interpreted that the word and in the impugned entry means that those products which contain both MIMO technology and LTE standards are excluded from the benefit of exemption of duty given to the goods classifiable under Chapter 8517 in view of the said entry no. 13 of Notification No. 57/2017-Cus. Thus, it becomes clear that in the clause (iv) of Sl. No. 13 of Notification No. 57/2017-Cus. which amended clause (h) of Sl. No 20 of Notification 02/2019-Cus. and is a conjunctive. Hence the goods imported by the appellant since admittedly works on the MIMO technology only but do not support the LTE standard, they are held to be out of the scope of the impugned exclusion clause and thus are held eligible for the exemption from whole of the customs duty under Serial no. 13(iv) of the notification. The similar issue has earlier been deal with by this Tribunal vide Final Order No. 50831/2022 dated 12.09.2022 in the case titled as COMMISSIONER OF CUSTOMS (AIR) CHENNAI VII COMMISSIONERATE VERSUS M/S. INGRAM MICRO INDIA PVT. LTD. 2022 (9) TMI 594 - CESTAT NEW DELHI . There are no infirmity in the order under challenge. The department appeal is therefore dismissed.

Summary

Issues Involved:

1. Classification of imported Wireless Access Points.
2. Eligibility for Basic Customs Duty (BCD) exemption under Notification No. 24/2005-Cus as amended.
3. Interpretation of the term "and" in the exclusion clause of the notification.

Summary:

1. Classification of imported Wireless Access Points:

The respondents imported Wireless Access Points and claimed BCD exemption under Notification No. 24/2005-Cus. The Department alleged that these products, which utilize MIMO technology, are excluded from the exemption as per amended Notification No. 11/2014-Cus. The Department issued a Show Cause Notice proposing recovery of differential duty, interest, and penalties, arguing that MIMO products, whether or not they incorporate LTE technology, are excluded from the exemption.

2. Eligibility for BCD exemption:

The Department relied on Board's Circular clarifying that MIMO and LTE products include 4G and 5G products and their elements, thus arguing that all products using MIMO technology are excluded from the exemption. The Department contended that the word "include" in the circular implies that all MIMO technology products are covered under the exclusion clause (h) of the notification.

The respondent argued that the imported Wireless Access Points are networking devices used for wireless communication within LAN and are different from products having LTE technology. The respondent sought cross-examination of certain individuals and submitted a technical opinion to substantiate that the imported access points could not be considered MIMO products. The original adjudicating authority accepted the respondent's plea and dropped the demand, concluding that the BCD exemption claimed on import of access points with MIMO technology but without LTE standards was admissible.

3. Interpretation of the term "and" in the exclusion clause:

The Tribunal had to interpret whether the exclusion from duty exemption covers products having only MIMO technology and not working on LTE standard, or just the products having both technologies. The Tribunal observed that the conjunction "and" used in the exclusion clause (iv) under Serial No. 13 of the notification should be read as conjunctive, meaning it connects and joins both MIMO and LTE technologies.

The Tribunal referred to various rules of interpretation and concluded that the word "and" in the impugned entry means that products containing both MIMO technology and LTE standards are excluded from the duty exemption. Since the imported goods work on MIMO technology only and do not support LTE standards, they are eligible for the exemption from the whole of customs duty under Serial No. 13(iv) of the notification.

Conclusion:

The Tribunal found no infirmity in the order under challenge and dismissed the Department's appeal. The cross objection and miscellaneous application filed by the respondent were also disposed of accordingly.