2025 (4) TMI 190 - HC - Customs

Delhi HC upholds CESTAT ruling that MIMO and LTE exemption requires both technologies together, not separately

The Delhi HC dismissed an appeal regarding interpretation of 'and' in exemption notification clause (iv) of Serial No. 13 concerning MIMO and LTE ... Interpretation of the word ‘and’ appearing in the clause (iv) of Serial No. 13 of N/N. 11/2014-Customs dated 11th July, 2014 - Multiple Input/ Multiple Output (MIMO) and Long Term Evolution (LTE) Products - CESTAT has interpreted the said terms i.e., MIMO and LTE in conjunction and thereby, held that the subject goods would not be covered in the exclusion clause of the exemption notification. HELD THAT:- This issue has now been decided by a Coordinate Bench of this Court in Commissioner of Customs (Air) Chennai -VII Commissionerate, Chennai v. Ingram Micro India Pvt. Ltd. [2022 (9) TMI 594 - CESTAT NEW DELHI] where it was held 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 employ MIMO technology but not the LTE standards, are entitled to the exemption from Basic Customs Duty.' Since the question of law stands decided, no further questions of law would arise in this appeal. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered in this judgment is the interpretation of the word 'and' in the exclusion clause of Serial No. 13 of Notification No. 11/2014-Customs dated 11th July, 2014, specifically concerning 'Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products'. The core question is whether the term 'and' should be read conjunctively or disjunctively, determining if the exemption applies to products incorporating both MIMO technology and LTE standards or to products with either technology.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework involves various notifications under the Customs Act, 1962, particularly Notification No. 24/2005-Customs, as amended by Notification No. 11/2014-Customs. The interpretation of these notifications is crucial in determining the applicability of customs duty exemptions. The case also references previous judgments, including Commissioner of Customs (Air) Chennai -VII Commissionerate, Chennai v. Ingram Micro India Pvt. Ltd., which addressed similar interpretative issues.Court's Interpretation and ReasoningThe Court analyzed the language of the notification, focusing on the placement and use of the word 'and' between 'MIMO' and 'LTE'. The Court emphasized that 'and' is typically a conjunctive term, suggesting a combination rather than alternatives. The judgment highlighted that if the intention was to include products with either MIMO or LTE, the word 'or' would have been used instead.Key Evidence and FindingsThe Court referred to the absence of the word 'products' after 'MIMO', which appears only after 'LTE', indicating that the notification intended to cover products with both technologies. The Court also noted that subsequent amendments in 2021 clarified the distinction by listing MIMO and LTE products separately, reinforcing the original conjunctive interpretation.Application of Law to FactsThe Court applied the interpretative principles to the facts, concluding that the imported Wireless Access Points, which employed MIMO technology but not LTE standards, were eligible for the exemption. The Court's interpretation aligned with the precedent set in the Ingram Micro India Pvt. Ltd. case, which had ruled that the phrase 'MIMO and LTE Products' referred to products combining both technologies.Treatment of Competing ArgumentsThe Department argued for a disjunctive reading, suggesting that the phrase should include products with either MIMO or LTE. However, the Court found this interpretation unsupported by the notification's language and structure. The Court noted that the use of 'and' was deliberate and consistent with other entries in the notification, which used 'or' to denote alternatives.ConclusionsThe Court concluded that the exemption applied only to products incorporating both MIMO technology and LTE standards. Products featuring only one of the technologies did not fall under the exclusion clause, thus were eligible for the duty exemption.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning'The word 'and' is a conjunction, commonly understood to connect and join words, clauses, or phrases. Dictionaries and linguistic principles affirm that 'and' denotes addition or combination, unless there is ambiguity or absurdity arising from its literal interpretation.'Core Principles EstablishedThe judgment established that the interpretation of statutory language, especially in taxation, must adhere to the plain meaning of the text unless context or precedent dictates otherwise. The decision underscored the importance of legislative intent and the precise use of language in legal texts.Final Determinations on Each IssueThe Court determined that the phrase 'MIMO and LTE Products' in the notification applied exclusively to products combining both technologies. Consequently, the appeal was dismissed, affirming the lower tribunal's decision to grant the exemption to the imported Wireless Access Points that utilized MIMO technology without LTE standards.