Fixed wireless terminal classification turns on function, but exemption may still apply where the product matches the notified description.
A fixed wireless terminal is not a cellular telephone merely because it operates on cellular technology; classification depends on the functional and commercial character of the goods. Model LST-250 did not function independently as a telephone and fell under the residual sub-heading 8525.20.19, so it was not entitled to exemption under Sl. No. 313 of Notification No. 21/2002-Cus. Model LSP-340 was likewise not classifiable under sub-heading 8525.20.17 and also fell under 8525.20.19, but it satisfied the specific description of a fixed wireless terminal in Sl. No. 427. Exemption could not be denied merely because the heading reference was not exact where the goods otherwise squarely matched the description.
Issues: (i) Whether Fixed Wireless Terminal model LST-250 was classifiable under sub-heading 8525.20.17 as a cellular telephone and entitled to the benefit of Notification No. 21/2002-Cus. at Sl. No. 313. (ii) Whether Fixed Wireless Terminal model LSP-340 was classifiable under sub-heading 8525.20.17 as a cellular telephone and, if not, whether it still qualified for exemption under Sl. No. 427 of Notification No. 21/2002-Cus.
Issue (i): Whether Fixed Wireless Terminal model LST-250 was classifiable under sub-heading 8525.20.17 as a cellular telephone and entitled to the benefit of Notification No. 21/2002-Cus. at Sl. No. 313.
Analysis: The product did not function as a telephone on its own and could not transmit or receive messages unless attached to another telephone apparatus. Mere wireless capability was insufficient to treat it as a cellular telephone. The relevant tariff entry applied to cellular telephones, while the goods fitted the residual description under sub-heading 8525.20.19.
Conclusion: The issue was decided against the assessee. Model LST-250 was held not classifiable under sub-heading 8525.20.17 and not entitled to exemption under Sl. No. 313.
Issue (ii): Whether Fixed Wireless Terminal model LSP-340 was classifiable under sub-heading 8525.20.17 as a cellular telephone and, if not, whether it still qualified for exemption under Sl. No. 427 of Notification No. 21/2002-Cus.
Analysis: A cellular telephone was treated as a mobile unit and the impugned product, described as a fixed wireless terminal, was not shown to be a cellular telephone merely because it used cellular technology. It was therefore not classifiable under sub-heading 8525.20.17 and instead fell under sub-heading 8525.20.19. However, the product was a fixed wireless terminal and squarely answered the description in Sl. No. 427, and the mismatch with Heading 85.17 did not defeat the exemption where the description of the goods was covered.
Conclusion: The issue was decided partly against the assessee on classification under sub-heading 8525.20.17, but in its favour on exemption under Sl. No. 427.
Final Conclusion: The appeals were disposed of by upholding classification under the residual tariff entry while extending exemption only to the extent the goods were covered by the specific description in Sl. No. 427 of the notification.
Ratio Decidendi: For tariff and exemption purposes, a fixed wireless terminal is not a cellular telephone merely because it operates on cellular technology; classification follows the functional and commercial character of the goods, while exemption by description cannot be denied solely because of an incorrect heading reference if the goods otherwise squarely fit the described entry.
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