2025 (4) TMI 1343 - AT - Customs

Exemption form Basic Customs Duty under the notification dated 01.03.2005 as amended by the notification dated 17.03.2012 - imported digital still image video cameras - HELD THAT - All the four Customs Appeals came up for hearing before a Division Bench of the Tribunal in M/S SONY INDIA PRIVATE LTD. 2025 (4) TMI 1247 - CESTAT NEW DELHI . The impugned order dated 28.10.2016 that was impugned in all the four Customs Appeals was set aside and all the four Customs Appeals were allowed. It was held in the said case that The digital still image video cameras involved in the present Customs Appeals would therefore be entitled to exemption from basic customs duty in terms of the Notification dated 01.03.2005 as amended on 17.03.2012. The order dated 20.03.2018 passed by the Commissioner (Appeals) holding that the digital still image video cameras imported by the appellant would not be entitled to basic customs duty exemption under the notification dated 01.03.2005 as amended by the notification dated 17.03.2012 on the basis of the decision rendered by the Tribunal on 19.12.2017 would therefore have to be set aside and is set aside. Conclusion - The appellants are eligible to exemption from BCD under the said Notification 25/2005 CE dated 1.3.2005 as amended. The appeal is accordingly allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

(i) Whether the 'digital still image video cameras' imported by the appellant are entitled to exemption from Basic Customs Duty (BCD) under Notification No. 25/2005-Cus. dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012, which added an 'Explanation' clarifying the scope of exemption;

(ii) Whether the Division Bench of the Tribunal, in its decision dated 19.12.2017, correctly interpreted the scope and application of the 'Explanation' appended to the said Notification;

(iii) The correctness of the orders passed by the Commissioner of Customs (Appeals) and the Deputy Commissioner of Customs denying the exemption claim;

(iv) The applicability of the limitation period under section 28(1) of the Customs Act, 1962, following the Supreme Court's remand order, and whether the demand for customs duty was justified within the normal limitation period;

(v) The binding effect of the Larger Bench's interpretation on subsequent appeals involving similar issues.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i) & (ii): Entitlement of 'digital still image video cameras' to BCD exemption and interpretation of the 'Explanation' in the Notification

Relevant legal framework and precedents: The exemption claim was governed by Notification No. 25/2005-Cus. dated 01.03.2005, as amended by Notification No. 15/2012 dated 17.03.2012, which inserted an 'Explanation' clarifying the conditions under which digital cameras would be exempted from BCD. The Tribunal's earlier Division Bench decision dated 19.12.2017 had denied the exemption, interpreting the 'Explanation' restrictively.

Court's interpretation and reasoning: The Larger Bench of the Tribunal, constituted to resolve conflicting views, held that the Division Bench's interpretation was incorrect. It emphasized that the 'Explanation' must be read literally and cumulatively, requiring all three parameters/functions of a digital camera to exceed specified threshold limits to deny exemption. If any one parameter falls below the threshold (e.g., recording time less than 30 minutes), the camera qualifies for exemption.

The Larger Bench also clarified the applicable interpretative principles: in case of ambiguity in a charging provision, benefit goes to the assessee, whereas ambiguity in an exemption notification is construed strictly in favor of the Revenue. However, the Tribunal found no ambiguity in the 'Explanation' and thus applied a liberal interpretation consistent with exemption notifications. The burden of proof lies on the claimant to establish eligibility, which the appellant successfully did by adducing evidence.

Key evidence and findings: The appellant demonstrated that the digital still image video cameras met the criteria under the Notification, specifically that at least one parameter was below the threshold, qualifying them for exemption.

Application of law to facts: Applying the literal and cumulative reading of the 'Explanation', the Tribunal concluded that the imported cameras qualified for exemption from BCD.

Treatment of competing arguments: The Revenue argued there was no ambiguity and urged literal interpretation denying exemption. The Tribunal agreed on the absence of ambiguity but held that the literal interpretation favored exemption in this case. The appellant's evidence satisfied the conditions for exemption.

Conclusions: The Larger Bench reversed the earlier Division Bench decision, holding that 'digital still image video cameras' are entitled to BCD exemption under the Notification as amended.

Issue (iii): Validity of the orders passed by the Commissioner (Appeals) and Deputy Commissioner of Customs denying exemption

The Commissioner (Appeals) had dismissed the appellant's appeal relying on the 2017 Division Bench decision. Following the Larger Bench's ruling and subsequent orders, the Tribunal set aside the Commissioner (Appeals)'s order dated 20.03.2018 and the Deputy Commissioner's order denying exemption, allowing the appeal and granting consequential relief.

Issue (iv): Applicability of limitation period under section 28(1) of the Customs Act and justification of demand

Relevant legal framework and precedents: The Supreme Court had earlier held that the extended limitation period under section 28(4) of the Customs Act could not be invoked for these cases and remanded the appeals for adjudication on merits limited to the normal limitation period under section 28(1).

Court's interpretation and reasoning: The Tribunal examined whether the demand for customs duty was justified within the normal limitation period. It found that since the exemption was applicable, the demand was not justified.

Application of law to facts: The Tribunal allowed the appeals remanded by the Supreme Court, setting aside the impugned orders confirming the demand within the normal limitation period.

Issue (v): Binding effect of Larger Bench's decision on subsequent appeals

The Tribunal noted that the issue regarding exemption of digital still image video cameras was common to multiple appeals involving various appellants. The Larger Bench's interpretation and the subsequent Division Bench's decision dated 09.09.2024 were held to be binding on these appeals. Accordingly, the Tribunal allowed all four Customs Appeals filed by different appellants, setting aside the impugned orders denying exemption.

3. SIGNIFICANT HOLDINGS

The Tribunal's Larger Bench crystallized the following core principles and determinations:

"The ratio laid down in the aforesaid judgment reveals that in case of ambiguity in a charging provision, the benefit must be given to the assessee and in case of an exemption Notification, the benefit of ambiguity is strictly interpreted in favour of the Revenue. ... If there is no ambiguity in the interpretation of the exemption Notification, the same should be liberally interpreted adopting the tools of interpretation applicable to a Notification granting exemption from payment of duty. Also, it is essential that the burden lies on the claimant of the Exemption to establish that this case falls within the parameters of the exemption Notification. In the present case, there is no ambiguity in reading the Explanation of the Notification No.25/2003-Cus. dated 01.03.2005 as amended, in as much as, a literal interpretation of the said Explanation... reveals that all the three parameters/functions of a digital camera should be cumulatively read so as to ascertain whether all the characteristics are above the threshold limit; in that event, the digital camera would not be eligible to the exemption from BCD under the said Notification. In the event any one of the parameter/characteristic is below the threshold limit... then the cameras would be eligible to the benefit of the said Notification."

Further, the Tribunal held:

"The appellants are eligible to exemption from BCD under the said Notification 25/2005 CE dated 1.3.2005 as amended."

And finally:

"The order dated 28.10.2016 impugned in all the present four Customs Appeals deserves to be set aside and is set aside. All the four Customs Appeal No.'s 50098 of 2017, 50099 of 2017, 50100 of 2017 and 50280 of 2017 filed by Sony India, Canon India, Nikon India and Samsung India, respectively, are, accordingly, allowed with consequential relief(s), if any."

The Tribunal conclusively set aside the orders denying exemption and held that the 'digital still image video cameras' imported by the appellants are entitled to BCD exemption under the relevant Notification as amended, thereby overruling the earlier contrary decision.