CESTAT upholds customs duty exemption for imported Wireless Access Points with MIMO technology under notification

CESTAT New Delhi dismissed the appeal regarding customs duty exemption for imported Wireless Access Points (WAP)/MIMO products. The tribunal held that MIMO technology alone does not disqualify products from exemption under notification dated 01.03.2005 as amended on 11.07.2014. The exclusion applies only to products containing both MIMO and LTE technologies. WAP products were classified under CTI 8517 62 90 and entitled to duty exemption under India's Information Technology Agreement commitments. The tribunal relied on precedent from Ingram Micro India case and confirmed the Additional Director's order granting exemption.

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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.

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