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TMI Blog2022 (3) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... TOMS APPEAL NO. 52218 OF 2019 - INTERM ORDER NO. 04/2022 - Dated:- 8-3-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Shri Lakshmikumaran, Shri Ashwani Bhatiya, Ms. Jyoti Pal and Shri Rachit Jain, Advocates for the Appellant Shri Ajay Jain, Special Counsel and Shri Rakesh Kumar, Authorized Representatives of the Department ORDER M/s. Nikon India Private Limited [ the appellant ] is aggrieved by the order dated 06.06.2019 passed by the Commissioner of Customs (Appeals) [ the Commissioner (Appeals) ] by which the appeal that was filed to assail the order dated 13.05.2016 passed by the Assistant Commissioner of Customs, Group-VA [ the Assistant Commissioner ] has been dismissed. The Assistant Commissioner held that NIKON brand digital still image video cameras imported by the appellant are not entitled to Basic Customs Duty [ BCD ] exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012. 2. The appellant is engaged in the import and trade of various electronic products, including digital still image video cameras. According to the appellant, these cameras have the primary feature to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption to specified goods of Chapters 84 85 (ITA Bound expositions).- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts following goods of the description specified in column (3) of the Table below and falling within the heading, sub-heading or tariff item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as are specified in the corresponding entry in column (2) of the said Table, when imported into India, from the whole of the duty of customs leviable thereon under the said First Schedule, namely:- S.No. Heading, Sub-Heading or Tariff Item Description of Goods (1) (2) (3) 13. 8525 40 00 Digital still image video cameras. 6. Thereafter, w.e.f. 01.01.2007, the notification dated 01.03.2005 was aligned with the Harmonised System of Nomenclature [ HSN ] amendments and the tariff entry for digital still image video cameras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The aforesaid notification dated 01.03.2005 was further amended by notification dated 30.04.2015 and the same is reproduced below: S. No. Chapter or Heading, Sub-Heading or Tariff Item Description of Goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 428A. 8525 80 20 Digital Still Image Video Cameras Nil - - 11. It would thus be seen that Explanation was inserted from 17.03.2012 to 30.04.2015 only. Prior to 17.03.2012 and post 30.04.2015, the exemption from BCD was granted to digital still image video cameras without the Explanation. 12. It transpires from the records that earlier, a show cause notice dated 09.08.2014 was issued to the appellant by the Additional Director General in the Directorate of Revenue Intelligence proposing to deny the benefit of exemption granted by the notification to digital still image video cameras impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner (Appeals) further held the capacity of storage was also an important factor to determine how much video could be recorded and the utilization of maximum storage capacity was directly linked to the period of recording. Thus, the capacity storage should exhaust when the optimum level recording period is achieved and no more videos can further be recorded. 15. The relevant portions of the order dated 06.06.2019 passed by the Commissioner (Appeals) is reproduced below: 5.4 ***** A plain reading of Notification clearly establish that all the above three conditions are required to be fulfilled for a digital camera to qualify as Digital Still Image Video Camera . ***** 5.5 ***** The Appellant had accepted the fact that this feature or recording video in a single sequence for 29 minutes 59 seconds is introduced in the impugned goods by way of restriction provided by the firmware. ***** Hence, it is clear that the impugned goods were capable of recording video in a single sequence for 30 minutes or more but restriction of recording videos less than 30 minutes was imposed by a software 'firmware'. The Appellant had also contended that as long a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect in holding that the impugned Digital Still Image Video Cameras' imported by the Appellant are not entitled to BCD exemption as per Notification No. 25/2005-Cus., as amended. Therefore, re-assessment by the Department by denying the exemption benefit is in accordance with the said Notification. (emphasis supplied) 16. This appeal has been filed to assail the order dated 06.06.2019 passed by the Commissioner (Appeals). 17. Shri V. Lakshmikumaran, learned counsel appearing for the appellant submitted that the earlier order dated 19.12.2017 passed by the Tribunal in the previous round of litigation cannot be relied upon since it was set aside in the appeal filed against the said decision of the Tribunal by the Supreme Court in Canon India Private Limited vs. Commissioner of Customs [ 2021 (3) TMI 384 Supreme Court ] . Even otherwise, the appellant was entitled to exemption from BCD under the amended notification dated 01.03.2005 and in this connection, learned counsel pointed out that even if one of the three conditions contained in the Explanation that make the camera ineligible for availing the exemption is not satisfied, the camera would be a digital still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apability to record video for as long as 30 minutes in a single sequence using the maximum storage (including expanded capacity). The submission of the appellants is that the DSC imported are not capable of recording video at a resolution equal to /greater than 800 x 600 pixels at a speed, equal to / greater than 23 frames per second, for a period greater than 30 minutes in a single sequence. DRI, during investigation, found that all the digital still video cameras imported had firmware implanted within them to restrict the duration of a single sequence to less than 30 minutes. 22. The imported digital cameras taking into consideration the memory capacity at the time of import, were found to have the capability of recording video in a single sequence of more than 30 minutes. However, during investigation, it was found that such capabilities have been restricted through firmware to a single sequence of less than 30 minutes . Hence, the fact of matter is that the imported digital cameras, can run a single sequence of only less than 30 minutes whereas the cameras have the capability to have a single sequence of much more than 30 minutes . If the arguments of the appellant are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Additional Director General of the DRI by issuing show cause notices in all the matters before us are invalid without any authority of law and liable to be set- aside and the ensuing demands are also set aside. ... 31. In the result, these appeals are allowed. The common order dated 19.12.2017 passed by the CESTAT, New Delhi in Customs Appeal Nos. 50098, 50099, 50100 and 50280/2017 is set aside. Consequently, the impugned demand notices issued against all the three appellants herein are also set aside. 23. The fifth appeal was de-tagged as the issue relating to jurisdiction of the Department of Revenue Intelligence did not arise for consideration in this appeal. This Civil Appeal No. 5967 of 2018 filed by Sony India Private Limited is still pending before the Supreme Court. 24. It is not possible to accept the contention of learned counsel for the appellant that since the earlier decision rendered by the Tribunal on 19.12.2017 has been set aside by the Supreme Court in four appeals, the reasons given in the said decision of the Tribunal have to be ignored while deciding this appeal. In this connection, reliance can be placed on the decision of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Pillai and, therefore, referred the matter to a Full Bench of the High Court. When the Full Bench of the High Court took up the hearing of the writ petitions, the aforesaid order of the Supreme Court dated September 10, 1986 was brought to its notice. The Full Bench held that since the appeal against the decision of the Division Bench in Pillai was dismissed by the Supreme Court, the decision of the High Court merged in the order of the Supreme Court and so the Full Bench could not examine the correctness of the law laid down by the Division Bench in Pillai. 26. It is against the aforesaid decision of the Full Bench that appeals were filed by Special Leave before the Supreme Court. The Supreme Court noted that the earlier order dated September 10, 1986 of the Supreme Court did not go into the question of constitutional validity of Act No. 13 of 1960 nor did the Supreme Court apply its mind to the correctness or otherwise of the view taken by the High Court in Pillai.The Supreme Court also noted that the appeals had been dismissed as not properly constituted and hence incompetent as the State of Tamil Nadu, which was a necessary party, had not been impleaded. The appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Appeal by the Supreme Court. A review petition would not be maintainable before the High Court after the dismissal of the Appeal by the Supreme Court, but the decision can be reconsidered by a Larger Bench of the High Court if the Supreme Court had not adjudicated on the merits of the order of the High Court. The Supreme Court, therefore, set aside the order of the Full Bench of the High Court and restored the appeal before the Full Bench to be heard and decided in accordance with law. The relevant portion of the judgment of the Supreme Court is reproduced below :- 10 . Firstly, the doctrine of merger . Though loosely an expression merger of judgment, order or decision of a court or forum into the judgment, order or decision of a superior forum is often employed, as a general rule the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part, i.e. the mandate or decree issued by the Court which may have been expressed in positive or negative forum . For example, take a case where the subordinate forum passes an order and the same, having been dealt with by a superior forum, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 10.9.1986 had the effect of resulting in merger into the order of this Court as regard the statement of law or the reasons recorded by the Division Bench of the High Court in its impugned order. The contents of the order of this Court clearly reveal that neither the merits of the order of the High Court nor the reasons recorded therein nor the law laid down thereby were gone into nor they could have been gone into. 12. Thirdly, as we have already indicated, in the present round of litigation, the decision in Varadaraja Pillai's case was cited only as a precedent and not as res judicata. The issue ought to have been examined by the Full Bench in the light of Article 141 of the Constitution and not by applying the doctrine of merger. Article 141 speaks of declaration of law by the Supreme Court. For a declaration of law there should be a speech, i.e., a speaking order . In Krishen Kumar v. Union of India and Ors., [1990] 4 SCC 207, this Court has held that the doctrine of precedents, that is being bound by a previous decision, is limited to the decision itself and as to what is necessarily involved in it. In State of U.P. and Anr. v. Synthetics and Chemicals U.P. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt shall be binding on all the courts within the territory of India. When no reason are given, a dismissal simpliciter is not a declaration of law by the Supreme Court under Article 141 of the Constitution . In Indian Oil Corporation Ltd. v. State of Bihar and Ors., AIR (1986) SC 1780 this Court observed that the questions which can be said to have been decided by this Court expressly, implicitly or even constructively, cannot be re-opened in subsequent proceedings; but neither on the principle of res judicata nor on any principle of public policy analogous thereto, would the order of this Court bar the trial of identical issue in separate proceedings merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. ******* 14. It follows from a review of several decisions of this Court that it is the speech, express or necessarily implied, which only is the declaration of law by this Court within the meaning of Article 141 of the Constitution. xxxxxxxxx xxxxxxxxx xxxxxxxxx 16. In the present case, the order dated 10.9.1986 passed by this Court can be said to be declaration of law limited only to two points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court was no longer available to be reviewed. We need not here go into the question, whether it was a case of review, or whether the review application should have been filed in the High Court or Supreme Court. Such a question is not arising before us. 19. Under Article 141 of the Constitution, it is the law declared by the Supreme Court, which is binding on all Courts within the territory of India. Inasmuch as no law was declared by this Court, the Full Bench was not precluded from going into the question of law arising for decision before it and in that context entering into and examining the correctness or otherwise of the law stated by the Division Bench in M. Varadaraja Pillai's case and either affirming or overruling the view of law taken therein leaving the operative part untouched so as to remain binding on parties thereto. 20. Inasmuch as in the impugned judgment, the Full Bench has not adjudicated upon the issues for decision before it, we do not deem it proper to enter into the merits of the controversy for the first time in exercise of the jurisdiction of this Court under Article 136 of the Constitution. We must have the benefit of the opinion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it with HSN. The Circular dated 10.09.2007 also clarified the difference between a digital still image video camera and a video camera recorder . A digital still image video camera , it was provided, would cover only digital cameras that have the capability of capturing still images but this camera would also include a digital camera that takes videos for a limited time, though this camera would primarily be a still image camera. Such cameras would fall under CTI 8525 80 20. The Circular also clarifies that digital cameras that can take both still images and moving images like camcorder or video recorders falling under CTI 8525 80 30, would not be covered by this entry. Thus, a clear distinction was drawn between a digital camera that is primarily meant for capturing still images but can also take moving images for a limited period of time and a camera which captures still images as also moving images without limitation of time. 30. There is no dispute regarding the period prior to 17.03.2012 as the description under CTI 8525 80 20 was digital still image video cameras . The dispute arose when with effect from 17.03.2012 an Explanation was added to the description of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, whether on an internal storage medium or on interchangeable media. Most of the cameras of this subheading have the design of a traditional photographic camera and do not have a foldable view finder. The cameras may also have video-capture capability to record sequence of video. Cameras remain classified in this subheading unless they are capable, using maximum storage capacity of recording in a quality of 800 X 600 pixel (or higher) at 23 frames per second (or higher) at least 30 minutes in a single sequence of video. Compared to the video camera recorders of subheading 8525 80 91 and 8525 80 99 many digital cameras (when functioning video cameras) do not offer an optical zoom function during video recording. Unaffected by the storage capacity some cameras automatically terminate the recording of video after a certain period of time. 8525 80 91 and 8525 80 99 Video Camera recorders Video camera recorders of these subheadings are always capable of recording sequences of video, whether on an internal storage medium or on interchangeable media. In general the digital video camera recorders of these subheadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Please refer to your office letter C. No. VIII(1)20/Ref/1568/2012/19551 dated 17.08.2012 on the above mentioned subject. 2. As per Serial No. 13 of Notification No. 025/2005-Cus dated 01.03.2005 as amended by Notification No. 15/2012-Cus dated 17.03.2012 Basic Customs Duty on Import of Digital Still Image video camera classifiable under CTH 85258020 is NIL for the purposes of this entry. Digital Still Image Video Camera means a digital camera not capable of recording video with minimum resolution of 800 X 600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence using the maximum storage (including expanded) capacity. While implementing the above said notification, a doubt has arisen whether the above said notification is applicable only in those cases where all the above mentioned three conditions i.e. minimum resolution of 800X600 pixels, at minimum 23 frames per second and for at least 30 minutes in a single sequence using the maximum storage (including expanded capacity) are fulfilled cumulatively or even in those cases where any one of the three conditions is met independent of each other . Owing to this some of consignment were he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent from the above, what is exempt under the above exemption entry is Digital still image video cameras as defined in the above explanation. For a Digital Still Image Video Camera to qualify for the above exemption from payment of Basic Customs Duty as per the aforesaid exemption, it should fall within the meaning of Digital Still Image Video Camera as explained vide the explanation inserted vide Notification No. 15/2012-Customs dated 17.03.2012. The explanation so inserted imposes certain conditions in the form of three limitations to qualify for exemption granted to Digital Still Image Video Camera falling under Customs tariff item 8525 80 20, which in relation to capability of recording video are:- (i) with minimum resolution of 800 x 600 pixels, (ii) at minimum 23 frames per second, (iii) for at least 30 minutes in a single sequence using the maximum storage (including) expanded capacity. A plain reading of the above explanation indicates that the exemption is not available to cameras which satisfy the aforesaid specified conditions read together i.e. it should not have the capability to record video (i) at a minimum resolution of 800 x 600 pixels, (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence length of the video recording should be less than 30 minutes. Thus, the clear intention behind the introduction of the restrictive explanation is that the time limit on video recording should come from the maximum storage (including expanded) capacity and not from any other factor. (emphasis supplied) 40. Reference can also be made to the order dated 28.10.2016 passed by the Assistant Commissioner while adjudicating the aforesaid show cause notice and the relevant paragraph no s. 17.2.8 and 17.2.9 are reproduced below: 17.2.8 Now coming back to the facts of the present case that certain types of cameras were exempt on conditions as enumerated in the explanation: As per the explanation given in the said Notification, digital still image video camera means a digital camera not capable of recording video: (i) With resolution of 800x600 pixels or more; (ii) At 23 frames or more per second; and (iii) for at least 30 minutes in a single sequence using the maximum storage (including) expanded capacity. 17.2.9 There is no dispute in respect of conditions one and two above; both these conditions are satisfied by the Cameras imported by the noticees. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification. In other words, the notification intends to exclude video cameras capable of recording lengthy video from its ambit. The cameras imported by the appellant can record videos for maximum 29 minutes and 59 seconds in a single sequence and the recording automatically stops thereafter. Though, it can be urged that after every 29 minutes 59 seconds, a user can press the button to again record the video but this is not the purpose of introducing the characteristic of 30 minutes or more. A digital still image video camera is not suitable for long periods of video recordings. This characteristic has been introduced for the purpose of excluding video cameras and for including only digital still image video cameras . In a Single Sequence 48. There is always a possibility of multiple sequences and that is the reason why the Explanation in the notification dated 01.03.2005, uses the phrase in a single sequence . The European Union Explanatory Notes under the heading digital camera also provides that the cameras may also have video-capture capability to record sequences of video . The European Union Explanatory Notes also clarify that there can be multiple sequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng system-cum- software for the cameras. Typically the firmware would contain instructions for color correction, over/under exposure, blurring, red eye reduction, etc. Firmware is the combination of persistent memory and program code and data stored in it. Typical examples of devices containing firmware are embedded systems (such as traffic lights, consumer appliances, and digital watches), computers, computer peripherals, mobile phones, and digital cameras. The firmware contained in these devices provides the control program for the device. Firmware is held in non-volatile memory devices such as ROM, EPROM, or flash memory. (emphasis supplied) 53. It would also be pertinent to refer to the judgment of the Supreme Court in Commissioner of Central Excise, Pondicherry vs. Acer India Ltd. [ 2004 (172) E.L.T. 289 (SC) ], wherein the following observations have been made in respect of firmware: 20. In the said dictionary, Firmware has been defined at pages 281-282 as under: Software kept in semipermanent memory. Firmware is used in conjunction with hardware and software. It also shares the characteristics of both. Firmware is usually stored on PROMS (Programmable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 (83) ELT 255 ] and the relevant observations as follows: 3. Learned Counsel for the appellants submitted that there was no warrant for levying countervailing duty upon imported goods at a stage they would reach subsequent to their import after undergoing a process. They had to be subjected to duty in the state in which they were when imported. Reference was made to the judgment of a Single Judge of the Bombay High Court in Krislon Texturiser Pvt. Ltd. v. Union of India, 1989 (44) E.L.T. 448 [S.P. Bharucha, J.], which was followed by a Division Bench of the High Court of Gujarat in Special Civil Application No. 1165 of 1983, Vareli Exports Pvt. Ltd and Another v. Union of India and Others where it was so held. 4. Learned counsel for the respondent fairly stated that the view taken in these judgments was unassailable. 5. The circular upon the basis of which the duty was levied having been issued in Delhi, the Delhi High Court had jurisdiction to entertain and try the appellants writ petition. 6. Countervailing duty must be levied on goods in the state in which they are when they are imported. Section 3 of the Customs Tariff Act so mandates. The POY imported by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth of the video in a single sequence comes via software or via a mechanical timer or via storage capacity is irrelevant. As long as the user cannot record a video clip of 30 minutes or more in a single sequence using maximum (included expanded) capacity, the cameras imported by the appellant shall be covered by the exemption notification dated 01.03.2005, as amended on 17.03.2012. In fact the said feature has also been noted in the Explanatory notes to the Combined Nomenclature of the European Community in the following words: Unaffected by the storage capacity, some cameras automatically terminate the recording of video after a certain period of time. 59. Thus, the digital still image video camera imported by the appellant would be entitled to BCD exemption under the notification dated 01.03.2005, as amended by the notification dated 17.03.2012. 60. Learned special counsel appearing for the department however placed reliance upon the judgment of the Supreme Court in Commissioner of Cus. (Import), Mumbai vs. Dilip Kumar Company [ 2018 (361) E.L.T. 577 (S.C.) ] to contend that an exemption notification should be constituted strictly. 61. Learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta s contention that sub-silentio the line of judgments qua beneficial exemptions has been done away with by this 5-Judge Bench. It is well settled that a decision is only an authority for what it decides and not what may logically follow from it (see Quinn v. Leathem [1901] AC 495 as followed in State of Orissa v. Sudhansu Sekhar Misra (1968) 2 SCR 154 at 162,163). 24 . This being the case, it is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes . This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions reached by the impugned judgments of the Division ..... X X X X Extracts X X X X X X X X Extracts X X X X
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