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TMI Blog2025 (1) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts; (ii) LTE products , and that these amendments were clarificatory in nature, is concerned, notably, an amendment in the Notification No. 57/2017-Customs was brought vide Finance Act, 2021 which is clarificatory in nature, and, clarifies Serial No. 20 of the said notification. It states that the subject entry will now be read as (i) MIMO products; (ii) LTE products . Similar change was brought in Notification No. 25/2005 by virtue of Notification No. 05/2021-Customs. The clarification is brought about in the Statute when there is ambiguity and disputes arise due to such ambiguities. The fact that a clarification is needed to be brought about in the subject entry by the Finance Act, 2021 would point out towards the inherent ambiguity experienced in its interpretation and application which prompted and necessitated the subject amendment and clarification - exclusion clause (iv) of Serial No. 13 of the amended Notification No. 24/2005, which reads as MIMO and LTE products , would have to be read in its original form applying the law and rules of interpretation of statutes, especially as applicable in cases of taxation. Conclusion - The phrase MIMO and LTE Products in Serial No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired networks. 4. Under the Customs Tariff Act, 1975, these imported WAPs were classified under Customs Tariff Heading ( CTH ) 8517, and particularly Custom Tariff Item ( CTI ) 8517 62 90. A table, setting out the nomenclature of these headings and items, is as under: 8517 Telephone Sets, Including Smartphones And Other Telephones For Cellular Networks Or For Other Wireless Networks : Other Apparatus For The Transmission Or Reception Of Voice, Images Or Other Data, Including Apparatus For Communication In a Wired Or Wireless Network (Such As a Local Or Wide Area Network), Other Than Transmission Or Reception Apparatus Of Heading 8443, 8525, 8527 Or 8528 - Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): 8517 62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: 8517 62 90 --- Other 5. At this juncture, it is relevant to note that by way of Notification No. 24/2005-Cus. dated 01.03.2005 [hereafter Notification No. 24/2005 ], the Central Government ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S), Optical Transport Network (OTN) products, and IP Radios; (iii) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPL5-TP) products; (iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products. 7. Therefore, according to the amended Notification No. 24/2005, the above-mentioned four categories of products would not be entitled to the benefit of exemption from Customs Duty. 8. The respondent claimed exemption from Customs Duty under Serial No. 13, exclusion entry (iv), of the amended Notification No. 24/2005. This exemption was claimed specifically for WAPs operating solely on MIMO technology. For products utilizing both MIMO technology and Long-Term Evolution ( LTE ) standard, the respondent did not claim any exemption and paid the applicable customs duty in full. 9. The controversy began when the Directorate of Revenue Intelligence ( DRI ), Bangalore Zonal Unit, initiated an investigation in 2017, alleging that the WAPs imported by the respondent were ineligible for the claimed exemption. Pursuant to the investigation, the Additional Director General of the DRI issued a Show Cause Notice ( SCN ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Customs (Import), Mumbai v. Dilip Kumar Co and Ors.: 2018 (361) ELT 577 (SC). It also held that the decision in Sree Durga Distributors v. State of Karnataka (supra) was not applicable since it is silent on a possible situation where a set of two words, having and in between them, is not followed by comma but by a full stop . The Adjudicating Authority also acknowledged that the respondent had provided all the necessary information in its declarations and bills of entry, which clearly identified the imported WAPs as MIMO-enabled products. It rejected the allegations of willful suppression of facts or misrepresentation by the respondent. The final directions issued by the Adjudicating Authority are extracted hereunder: 1. In respect of charges answerable to the Principal Commissioner/Commissioner of Customs (Import), Air Customs VII Commissionerate, Air Cargo Complex, Meenambakkam, Chennai - 600027: 11.1 The Access Points imported by M/s Ingram Micro India Pvt Ltd are classifiable under 85176290 of the Customs Tariff. Since these Access Points are having MIMO technology but without LTE standard the Basic Customs Duty (BCD) exemption claimed under Notification No. 24/2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962; 2.5 I do not impose any penalty under Sections 112/114A/ 114AA of the Customs, Act, 1962 on the Noticee No.1. 2.6 I do not impose any penalty under Section 112 and 114AA of the Customs Act. 1962 on Shri Blas D'Souza, Director Material of M/s. M/s. Ingram Micro India Pvt. Ltd, Mumbai. 3. In respect of charges answerable to the Principal Commissioner/ Commissioner of Customs (Import), Air Cargo Complex, Near IGI Airport, New Custom House, Indira Gandhi International Airport, New Delhi 110037: 3.1 The Access Points imported by M/s Ingram Micro India Pvt Ltd are classifiable under 85176290 of the Customs Tariff. Since these Access Points are having MIMO technology but without LTE standard, the Basic Customs Duty (BCD) exemption claimed under Notification No. 24/2005-Cus dated 01.03.2005 as amended vide Notification No. 11/2014-Cus dated 11.07.2014 is allowed to them. 3.2 I do not hold impugned goods, which were imported by them during the period from 11.07.2014 to 30.06.2017, with a declared assessable value of Rs. 6,29,69,522/- through Customs (Import), Air Cargo Complex, Near IGI Airport, New Custom House, Indira Gandhi International Airport, New Delhi 1100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication shows that it covers MIMO and LTE products. The sole dispute in this appeal is whether this 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. 17. The contention of the Department is that 'and' should be read as 'or' in clause (iv) so that it would cover MIMO products or LTE products. 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 and LTE. Thus, according to Ingram Micro a product that has only MIMO technology would not be covered by the exclusion clause and, therefore, would not be excluded from the scope of Serial No. 13 (iv). 18. The submission advanced by learned counsel for the respondent deserves to be accepted. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MIMO)' appearing before 'and' does not, by itself, mean anything unless it is followed by expressions like 'technology' or 'products'. Since the exception carved out has to be 'goods', this expression has to be interpreted to connote products based on MIMO technology. Thus, the expression 'products', appearing after 'LTE' has to be read with 'MIMO' to mean and cover MIMO products. Further, 'products' being the common factor for both MIMO technology and LTE standard, the expression 'and' has been used in a conjunctive way to cover individually MIMO products and LTE products. Learned special counsel, therefore, contended that as there are only two types of products at Serial No. 13 (iv), the conjunctive 'and' has been used without using the term 'products' twice. There is, therefore, no ambiguity and the expression 'Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products denotes Multiply Input/Multiple Output (MIMO) products on the one hand and Long Term Evolution (LTE) products on the other. There is, therefore, no need to refer to the World Trade Organisation ITA. 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input or output units - including adapters, hubs, in-line repeaters, converters, concentrators, bridges and routers, and printed circuit assemblies for physical incorporation into automatic data processing machines and units thereof. 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. * * * 29. It has been stated that the investigation by the DRI was not only against Ingram Micro 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. 30. 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 dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel further argued that the exclusion entry at Serial No. 13 (iv) expressly refers to products, and the phrase MIMO preceding and must be treated as a distinct category of goods. Consequently, the exclusion applies to products based on MIMO technology, regardless of whether they also support LTE standards. It was contended that the learned CESTAT erred in concluding that only products incorporating both MIMO and LTE were excluded from the exemption. 19. The Revenue also took exception to the learned CESTAT s reliance on subsequent developments, such as the exemption granted to identical products under a later notification dated 30.07.2017. It was argued that the prevailing notification could not be interpreted in light of subsequent notifications, as the law applicable during the relevant period must govern the matter. It was further submitted that the Finance Minister s Budget Speech for the year 2014-15 and the Tax Research Unit letter dated 10.07.2014 clearly intended that products containing both MIMO and LTE were to be excluded under Serial No. 13 (iv). 20. Additionally, it was contended that MIMO and LTE products, while being information technology products, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 807, wherein it was held that the Revenue cannot take inconsistent positions on the same issue in separate cases. The respondent submitted that allowing the Revenue to act inconsistently would lead to legal uncertainty and confusion. 25. It was next argued that the word and in Serial No. 13 (iv) of the notification must be read conjunctively, meaning that the exclusion applies only to products incorporating both MIMO technology and LTE standards, and that such an interpretation would align with the plain, grammatical meaning of the clause. Reliance was placed on several dictionaries and legal principles, including the principle of literal interpretation, to argue that the word and denotes addition or connection. It was argued that interpreting and disjunctively, as proposed by the Revenue, would amount to rewriting the notification and lead to absurd results. It was submitted that the language of Serial No. 13 (iv) is precise and unambiguous, and any attempt to treat the exclusion as applying to either MIMO or LTE products individually would distort the legislative intent. 26. The respondent contended that exclusionary clauses in exemption notifications must be interpreted strict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed and the order of the learned CESTAT be upheld. ANALYSIS FINDINGS 31. The core issue before this Court is whether the WAPs, which work on MIMO technology, imported by the respondent would qualify for an exemption from Basic Customs Duty. 32. The question, thus, pertains to the interpretation of the exclusion entry (iv) of Serial No. 13 of the amended Notification No. 25/2005, and specifically as to whether WAPs with MIMO technology but without LTE standard, would qualify for the said exemption. 33. The Revenue interprets the entry MIMO and LTE Products to apply separately and individually to both MIMO-based and LTE-based products. Conversely, the respondent asserts that the said entry applies only to the products incorporating both MIMO technology and LTE standards. The Adjudicating Authority, while adjudicating the SCN, agreed with the submissions of the respondent herein, and held that the imported WAPs while employing MIMO technology do not support LTE standards, and therefore do not fall within the scope of Serial No. 13 (iv) of the amended Notification No. 25/2005. It also held that the word and cannot be read as or in the present case. The learned CESTAT, by way of the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (POTP or POTS), Optical Transport Network (OTN) products, and IP Radios; (iii) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPL5-TP) products; (iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products. 38. For instance, the entry (i) of Serial No. 13 pertains to equipment which have both soft switches and Voice over Internet Protocol . It is followed by a list of such products that includes (1) VolP phones, (2) media gateways, (3) gateway controllers and (4) session border controllers. Thus, it is to be noted that the word and has been used between soft switches and Voice over Internet Protocol , followed by the word equipment , to refer to one class of products. 39. In entry (ii) of Serial No. 13, four categories of products have been mentioned. These are: (1) Optical Transport Equipment (2) POT Product (s) or POT Switch (es) (3) OTN Products (4) IP Radios 40. Therefore, every technology or feature is followed by words such as equipment or product(s) or specific products such as radios . The word or has been specifically used in the same entry, while referring to either Packet Optical Transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standard can have many other technologies, standards, etc., which may also include MIMO technology. Thus, the phrase MIMO or LTE Products would have included the categories of products, which the Revenue is projecting before this Court. 47. Moreover, in earlier entries of the same notification, such as Serial No. 13 (ii) and (iii), the word or has been used wherever appropriate to denote alternatives. Similarly, commas have also been employed to demarcate distinct categories of products. Had the intention been to use and in a disjunctive manner in entry (iv) of Serial No. 13, the phraseology could also have been easily drafted as follows: MIMO Products and LTE Products , or MIMO Products and/or LTE Products , or MIMO Products or LTE Products . These products could also have been separated by use of commas, such as by drafting the same as MIMO Products, LTE Products or MIMO Products, and LTE Products . However, the same has not been done in the exclusion entry in question. 48. As noted in the preceding discussion, MIMO is a technology and LTE is a standard. Concededly, the case of Revenue is that MIMO and LTE Products , inter alia, includes products which work on LTE standard and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense. The words used declare the intention of the Legislature. * * * 25. At the outset, we must clarify the position of plain meaning rule or clear and unambiguous rule with respect of tax law. The plain meaning rule suggests that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language as such, and there is no scope for any interpretation. This salutary maxim flows from the phrase cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio . Following such maxim, the courts sometimes have made strict interpretation subordinate to the plain meaning rule, though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilize strict interpretation in the event of ambiguity is self--contradictory. * * * 44. In Hansraj Gordhandas v. CCE [hereinafter referred as Hansraj Gordhandas Case for brevity], wherein this Court was called upon to interpret an exemption notification issued under the Central Excise Act. . It was held that a taxing legislation should be interpreted wholly by the language of the notification. 45. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of the following passage from G.P. Singh s Principles of Statutory Interpretation (15th Edn.): The word or is normally disjunctive and and is normally disjunctive but at times they are read as vice versa to give effect to the manifest intention of the Legislature 53. In the present case, there is no such ambiguity or absurdity. In our view, when all the four entries of Serial No. 13 are analysed, it would lead to only one conclusion that the word and is to be read in conjunctive manner only, and the phrase MIMO and LTE Products would refer to only those products which have both MIMO technology and LTE standard. 54. As far as the argument of the Revenue that in the year 2021, the Notification No. 25/2005, and one Notification No. 57/2017-Customs were amended and the phrase MIMO and LTE Products were substituted with (i) MIMO products; (ii) LTE products , and that these amendments were clarificatory in nature, is concerned, notably, an amendment in the Notification No. 57/2017-Customs was brought vide Finance Act, 2021 which is clarificatory in nature, and, clarifies Serial No. 20 of the said notification. It states that the subject entry will now be read as (i) MIMO products; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efixed with the word LTE and there is no punctuation mark or comma after the word MIMO and before the word and . Further, MIMO and LTE are followed by the word products . Therefore, as a common rule of English language, the word and would clearly, and in unambiguous terms, be read conjunctively. 60. To reiterate, the amendments as discussed above were introduced in the year 2021, whereby MIMO and LTE products were changed to (i) MIMO products; (ii) LTE products . The word and has been totally taken out from the new entry and the same is absent from the entry altogether. The absence of word and between the word MIMO and LTE , as it existed prior to the amendment brought as clarification, rather speaks and explains by its absence, about the presence of intention to read MIMO and LTE as conjunctive and not disjunctive. 61. In light of the above, we hold that the phrase MIMO and LTE Products in Serial No. 13 (iv) of the amended Notification No. 24/2005 applies solely to products combining MIMO technology and LTE standards. The exclusion clause cannot be stretched to encompass products featuring either one of the two technologies. Accordingly, the WAPs imported by the respondent, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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