TaxTMI 
TaxTMI 
2024 (6) TMI 1422
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....view that we have taken, namely, that 'digital still image video cameras' imported by the appellant would be entitled to BCD exemption under the notification dated 01.03.2005, as amended on 17.03.2012, is contrary to the view taken by the Division Bench of the Tribunal on 19.12.2017 in the earlier round of proceedings arising out of the show cause notice dated 09.08.2014. 65. It would, therefore, be appropriate to refer the matter to the President of the Tribunal for constituting a larger bench of the Tribunal for deciding the following issues: "(i) Whether the 'digital still image video cameras' 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, whereby an 'Explanation' was added; (ii) Whether the Tribunal, in the decision rendered on 19.12.2017, has correctly interpreted the scope of 'Explanation'. 2. Pursuant to the said reference, the Hon'ble president constituted the Larger Bench, to address the issues raised in the referral order. 3. Facts of the case in brief are that the appellants are engaged in the import of "NIKON Brand Digital Still Image ....
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....cepted, then the notification benefit is to be extended to all those digital still image video cameras, in which a single sequence recording is of less than 30 minutes. Such an interpretation will make the stipulation in the explanation to the Notification about the maximum storage (including expanded) capacity as redundant. It is obligatory to read and satisfy all the conditions of the notification without rendering any part therein as redundant. Since in the present case, the imported digital cameras are capable of recording video with minimum resolution and minimum recording speed for more than 30 minutes in a single sequence; using maximum storage capacity, such cameras will not be entitled to the benefit of notification. It is well settled that a person who claims exemption or concession, has to establish that he is entitled to that exemption or that concession. In the present case, as discussed above, the impugned goods do not fulfil all the conditions specified in the notification and hence it is inevitable that the benefit of notification is denied to these goods." 5. Learned Senior Advocate for the appellant supporting the Order of the Referral Bench has submitted that ....
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....e Explanation was removed extending exemption to all digital still image video cameras. It is his contention that the benefit has been extended for the period prior to 17.03.2012 under Notification No. 25/2005-Cus. dated 01.03.2005 and after 30.04.2015 under amended Notification No. 12/2012-Cus. 5.2 Advancing on the interpretation of the Notification, learned advocate has submitted that the Explanation to Sl. No. 13 of the said Notification consists of mainly three conditions, (i) be capable of recording video at a resolution equal to or greater than 800 x 600 pixels, and (ii) be capable of recording video at a speed equal to or greater than 23 frames per second, and (iii) be capable of recording video in a single sequence for a period greater than 30 minutes by using the maximum storage (including expanded) capacity. 5.3 It is their contention that even if one of the condition is not met then the cameras shall be eligible for the exemption under Notification No. 25/2005-Cus. dated 01.03.2005. He has submitted that the digital camera is an umbrella term in which two types of cameras fall namely still image video camera and video camera. During the r....
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.... Condition by relevant without prejudice to the correctness or otherwise of the said finding. Thus, the impugned order is beyond the finding in the Order-in-Original to this extent. 5.5 It is submitted that the DSCs imported by the appellant do not fulfil all the three conditions and thus, are eligible for the BCD exemption. It has a feature to click still images and record video of resolution higher than 800 x 600 pixels with 23 or more frames per second, but can record only for a maximum period of 29 minutes and 59 seconds in a single sequence. Therefore, it does not fulfil the 3rd condition that requires the length of a video in a single sequence shall be a minimum of 30 minutes. Further, advancing their argument, it is submitted that 3rd Condition has three characteristics (i) 30 minutes or more; (ii) in a single sequence; and (iii) using maximum storage (including expanded) capacity. The first characteristics provides that the recording time in a single sequence must be less than 30 minutes i.e., the function to exclude video cameras capability of recording lengthy videos from its ambit. The imported goods can record videos of maximum 29 minutes and 59 seconds; thereafter, ....
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....which enables a user to interact with the hardware of the device. Firmware is different from software application which can be loaded to an electronic device for enhancement of its function. Firmware is a basic set of programming code without which the interface between the user and the device would not be possible. For explanation of the work 'firmware', they referred to the judgment of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Pondicherry vs. Acer India Ltd. 2004 (172) ELT 289 (SC) Further, they have submitted that there is no prohibition in the Notification for restricting the maximum length of single sequence of video by using a firmware irrespective of the storage space available. 5.8 Further, interpreting the characteristics using the maximum storage, the learned advocate submits that it does not suggests that recording of video in a single sequence is to be contingent on the exhaustion of the entire memory (including expanded memory). It is an anti-abuse provision to ensure that unscrupulous importers do not enhance the memory capacity of the imported goods post-import clearance and provide video recording capabilities in a single clip of 30....
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....ellant. Further, they have submitted that the European Union Explanatory notes is also a guiding factor interpreting the explanation of the said Notification. As India is a signatory to ITA; therefore, the Government is obliged to extend the benefits to ITA bound goods. In support, they have referred to the judgment of the Hon'ble Supreme Court in the case of Commissioner of Customs, Bangalore vs. G. M. Exports and Others. (2016) 1 SCC 91 Further, they have submitted that the judgment of the Hon'ble Supreme Court in Commissioner of Cus. (Import), Mumbai vs. Dilip Kumar & Company 2018 (361) E.L.T. 577 (S.C.) is not applicable to the facts of the present case as the benefit has been extended by the Government in furtherance of the obligation undertaken by the Indian Government under ITA of 1996. The aim of the treaty is to promote trade in information technology (IT) products and the same is affected by lowering the taxes and tariffs in IT products. Further, they have submitted that the Hon'ble Apex Court in the case of Government of Kerala & Anr. vs. Mother Superior Adoration Convent 2021 (3) TMI 93 (SC) held that judgments of Dilip Kumar and Company (supra) does not apply to exempt....
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....irmed and an appeal was filed before this CESTAT, which was rejected. Consequently, the appellant approached the Hon'ble Supreme Court. Out of five appeals, the Hon'ble Supreme Court decided four appeals in favour of the respective appellants observing that Directorate of Revenue Intelligence DRI has no jurisdiction to issue show-cause notice. The present appeal pertains to the period February 2014 to March 2015 and the show-cause notice was not issued by DRI. It involves 629 Bills of Entry filed during the said period and it was assessed by the adjudicating authority denying benefit of the Notification No. 25/2005-Cus. dated 01.03.2005 as amended and on an appeal, the order was upheld by the Commissioner (A). 6.1 On the scope of Explanation inserted in the Notification No. 25/2005-Cus. dated 01.03.2005 vide Notification No. 15/2012-Cus. dated 17.03.2012, he has submitted that the Digital Still Image Video Cameras (DSC) are eligible for exemption provided the same are required to be covered by the scope of the Explanation. The Explanation starts with the words 'for the purposes of this entry' and the entry referred to is the entry at Sl. No. 13 which covers Still Image Video Cam....
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...., will be covered by the Explanation. He has submitted that as per Explanation, since the crucial word used is not capable of recording certain types of videos, the capability in respect of three parameters should be below the threshold mentioned in the Explanation. In other words, video camera is capable of recording videos of less than 800 x 600 pixels at below 23 frames per second for a period below 30 minute in a single sequence using maximum storage capacity, the same will be eligible for the benefit of exemption. Any other cameras will not be eligible for exemption. 6.4 Further, he has submitted that the argument that the conditions in Explanation inserted have been borrowed from European Union Explanatory Notes is only a claim and not substantiated by any other documentary evidence by the appellant. The ITA was negotiated under the aegis of World Trade Organisation WTO and not European Union. 6.5 Comparing the Indian and European Tariff, the learned Special Counsel has submitted that the scheme of classification at 8-digit level in Indian Customs Tariff is different from European Union Tariff relied by the appellants, the Indian Tariff was aligned with revised HSN in 2....
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....pacity to use maximum storage capacity of recording in a quality of 800 x 600 pixels (or higher) at a speed of 23 frames per second (or higher) at least 30 minutes in a single sequence of a video. If the quality is such that the three parameters are equal to or above these three values, the classification as a video recording camera are under 8525 80 91 and 8525 80 99. All other cameras are classified as digital camera falling under Heading 8525 80 91. In contrast under the Indian Customs Tariff, the digital still image video cameras remain classified under 85258020 irrespective of the fact that whether maximum storage capacity is capable or not recording video recording in a quality of 800 x 600 pixels (or higher) at a speed of 23 frames per second (or higher) at least 30 minutes in a single sequence of a video. 6.8 Advancing the argument on a different perspective, the learned Special Counsel rebutting the contention of the Appellant that the DSC, if satisfy all the three parameter than will fall under category of video camera i.e. having capacity to record video of a quality of 800 x 600 pixels (or higher) at 23 frames per second (or higher) at least 30 minutes in a single se....
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....tation of the exemption notification the Department has followed the principle laid down in various judgements namely, Commissioner of Customs, Mumbai vs. Dilip Kumar and Company (supra); Novapan India Ltd. vs. Commissioner of C. Ex & Customs 1994 (73) ELT 769 (SC) SRP Enterprises Pvt. Ltd. vs. Commissioner of Customs & C. Ex. 2019 (365) ELT 840 (Tri.-Mum.) Thus, if the camera is capable of exceeding any threshold, the condition of 'not capable of mentioned in the explanation will not be met and the exemption will not be available. He has submitted that the adjudicating authority has rightly observed that as the two specifications were more than the threshold the cameras were not eligible for exemption and there was no need to discuss the issue relating to recording duration being less than 30 minutes in a single sequence using maximum(including expanded) capacity. 6.11 He has submitted that in the earlier proceeding, no doubt the imported cameras were having resolution more than 800X600 pixels and the speed more than 23 frames per second, the importer's claim was that the third condition i.e. video recording duration was less than 30 minutes in a single sequence, hence they wer....
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....t if the maximum storage capacity is used for recording video, then the camera would not be able to do its primary function of recording still images is erroneous. It is also submitted that the department had always argued that the primary function is to take still images and the same is not lost even when the video of less than 30 minutes is recorded for utilising full memory. 6.13 On the Plea of the Appellant that Technically and Commercially it would be unviable, if the interpretation of the department is applied to the third condition that on recording in a single sequence of less than 30 minutes, the capacity of the camera ought to be exhausted, it is submitted that the said argument is only an apprehension and not based on facts. It is further submitted that the wording of notification is quite clear and unambiguous and its eligibility be decided within the legal framework. 6.14 On the applicability of European Union Explanatory Notes, the Ld. Special counsel submitted that the scheme of things being different there cannot be any applicability of persuasive value of European Union Tariff to Indian situation. The appellants have not shown any Rulings of WTO against the d....
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....e scope of DSC and the conclusion is in line with fulfilment of India's obligations under ITA. Secondly, use of firmware to restrict time to less than 30 minutes in a single sequence is fulfilment of third condition. Also, in the order the Tribunal did not discuss the point that if any one or more capabilities of recording video are above the threshold, the benefit will not be available. 7. Heard both sides at length and perused the records. 8. The principal issue for determination is: whether the appellants are entitled to the benefit of exemption from BCD under Notification No. 25/2005-Cus. dated 01.03.2005 as amended by Notification No. 15/2012-Cus. dated 17.03.2012 on the imported "Nikon brand digital still image video camera" during the period February 2014 to March 2015. 9. Before proceeding to analyse the issue, it is relevant to trace the development of the said Exemption Notification No. 25/2005-Cus. dated 01.03.2005 from time to time and the Explanation, the bone of contention in the present case, inserted by amending Notification No. 15/2012-Cus. dated 17.3.2012. 10. The Notification No. 25/2005-Cus. dated 1.3.2005 as has been in force from time to time is as....
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....al still video camera mentioned in the Explanation viz., recording video with a minimum resolution of 800 x 600 pixels, at a minimum of 23 frames per second, for at least 30 minutes in a single sequence using the maximum storage (including expanded) capacity is above the threshold limit, then the benefit of Notification would not be admissible. 12. In the previous proceeding, for the period 2012 to 2014 in the show-cause Notice dated 09.8.2014, the digital cameras imported by the appellant were capable of recording video at a resolution of more than 800X600 pixels, more than 23 frames per second, but not capable of recording at least 30 minutes in a single sequence using the maximum storage (including expanded) capacity. Admittedly, in the present case also, the first two parameters/functions of the imported cameras are more than the prescribed minimum i.e., the recording of video with a resolution more than 800 x 600 pixels, more than 23 frames per second, but the third parameter of recording for at least 30 minutes in a single sequence using maximum storage (including expanded) capacity, is below the threshold limit, since the recording time is restricted to 29 minutes 59 seco....
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....n, 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 held up at Delhi Air Cargo and the importers has paid duty under protest. In this regard it is pertinent to state that as per the verbal communication held with Shri Yogendra Garg, Director TRU this office has taken the view that all the three conditions should be met before imposing 10% basic customs duty. In accordance with the said view this office is clearing the goods at 0% BCD if all the three conditions are not met. (copy of the letter dated 25.04.2012) to Additional Commissioner of Customs CCCU(DZ) enclosed). 3. Vide the above said letter it has also been stated that the importer has filed the claim without getting the Bills of Entry re-assessed or going to appeals. The refund claim of....
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...., 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) at minimum 23 frames per second, (iii) for at least 30 minutes in a single sequence using the maximum storage (including) expanded capacity. 7.2 The first two conditions are satisfied by most of the imported cameras, as they are able to function at these specifications i.e. they are able to record video at a resolution higher than 800 x 600 pixels and at more than 23 frames per second. What is relevant for fulfilling this condition is that the digital camera should not be capable of recording video at or above these specifications, and all the cameras listed in table No. 6 (below) satisfy these requirements. As regards maxim....
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....s 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 point of dispute is regarding the third condition viz. capability to record video for at least 30 minutes in a single sequence using the maximum storage (including expanded) capacity." 41. Reference can also be made to the order 19.12.2017 passed by the Tribunal in the appeal that had been filed to challenge the aforesaid order dated 28.10.2016 and the relevant portion of the order of the Tribunal is contained in paragraph 23, which has been reproduced above. The Tribunal observed that the three conditions are required to be satisfied though it ultimately held that the restriction of v....
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....would be eligible to fall within the meaning of 'digital still image video camera' and qualify for the said exemption. The reasoning is that each of the parameters/functions specified for a digital camera to be a 'digital still image video camera' in a line under the said Explanation is separated by a comma and comma cannot be read as 'or' in the said sentence, as claimed by the Revenue, that is, if any one or more parameter/function found to be above the threshold limit, then the benefit of the Notification is not admissible. On the other hand, all the three parameters/functions of a digital camera simultaneously should be above the threshold of the said parameters, to deny the benefit of the said Notification. In other words, even if one or more parameters are above the prescribed limit, the remaining parameter below the limit, the digital camera would qualify to be called as 'digital still image video camera' as per said Entry, and be eligible to the Exemption under the said Notification. The significance of 'comma' in interpreting the meaning and scope of the term 'digital still image video camera' in the said Explanation cannot be ignored. The significance of punctuation in th....
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....o so avoid, it has to be held that the long line of clause 2(s) starting with "with 90%" and ending with "Constitution" qualifies sub-clause (ii); and, if the conjunction 'or' is to be read as 'and', meaning thereby that the portion "with 90% ... Constitution" has to be read as qualifying both sub-clauses (i) and (ii), then the intention of redefining "governmental authority" would certainly be defeated. As discussed earlier, the purpose for which "governmental authority" was re-defined must have been to make it workable. We cannot, therefore, resort to a construction that would allow subsistence of the unworkability factor. Assuming what Ms. Bagchi contended is right, it was incumbent for the appellants to bring to our notice, if not by way of pleading, but at least with reference to the relevant statutes, which of the particular authorities/boards/bodies are created by legislation - Central or State - "with 90% or more participation by way of equity or control by Government". Each word in the definition clause has to be given some meaning and merely because promoting educational aspects is one of the functions of a municipality in terms of Article 243W of the Constitution read wi....
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....ord more than 30 minutes in a single sequence has been restricted by a firmware even though the cameras have the capability to record in a single sequence much more than 30 minutes. Rejecting the argument of the Appellant, it is observed that if the arguments of the appellant are accepted, then the benefit of the Notification has to be extended to all those digital still video cameras in which a single sequence recording is less than 30 minutes which will make the stipulation in the Explanation about maximum storage (including expanded) capacity as redundant. It is held that all the conditions of the Notifications be read without rendering any part therein as redundant. Consequently, the Bench concluded that the imported digital cameras are capable of recording video with a minimum resolution of 800 x 600 pixels, minimum speed of 23 frames, 30 minutes in a single sequence using maximum storage(including expanded) capacity, hence, not entitled to the benefit of the Notification. In other words, it means that after recording for 30 minutes in a single sequence, there should not be any further storage space left in the camera (including expanded) capacity, for further recording of vid....
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....g the last year, some of the developed country members of the ITA-USA, European Union and Japan have again proposed in the ITA Committee meetings to broaden the scope and coverage of the ITA (it is being referred as ITA-2). These proposals basically relate to increasing the coverage of IT products on which customs duty would be bound at zero; addressing non-tariff measures; and expanding the number of signatory countries to include new signatories such as Argentina, Brazil and South Africa. Proponents of ITA expansion have prepared a consolidated list containing IT products (combining products of Interest of all proponents of ITA 2), on which tariff reductions are being sought has been prepared and circulated amongst WTO members. Same is under active discussions in the WTO these days. India's experience with the ITA has been most discouraging, which almost wiped out the IT Industry from India. The real gainer from that agreement has been China which raised its global market share from 2% to 14% between 2000-2011in light of recent measures taken by the Government to build a sound manufacturing environment in the field of Electronics and Information Technology, ....
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....h statute that are vague or ambiguous to have recourse to the terms of the treaty to resolve such ambiguity in favour of a meaning that is consistent with the provisions of the treaty. (3) In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation to an international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner t....
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.... 800 X 600 pixel (or higher) at 23 frames per second (or higher) at least 30 minutes in a single sequence of video. 28. The alignment of the classification of digital cameras and video camera recorders in the year 2007 was more or less in line with Harmonised System of Nomenclature (HSN), lends support to the aforesaid understanding of the subject. Initially, the Digital Still Image Cameras and Video Cameras were classified under a common Chapter Subheading 8525 40 00 and accordingly, the exemption Notification No. 25/2005-Cus. dated 01.03.2005 also made applicable to the said Tariff Entry to all "Digital Still Image Video Cameras". Pursuant to rationalisation of Customs Tariff Act in line with Harmonised System, the said Entry was split into 'digital camera' falling under 8525 80 20 and 'video camera recorder' under 8525 80 30 with effect from 01.01.2007. Pursuant to the said change in the classification, a Circular was issued by Board bearing No. 32/2007-Cus. dated 10.09.2007 clarifying the doubts about the classification of digital camera having dual function of recording video as well as capturing still images in the context of the said Notification. It is clarified as follo....
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....hat only those digital cameras that record still images on Video format are covered under the description of the exemption entry i.e. 'digital still image video cameras'. However, to ensure uniformity, it was decided that the Board would issue a circular in this regard. The minutes of this Conference were circulated to the field formations. 5. The WCO has clearly outlined the features of the Digital Video camera. Such cameras have been described as Digital cameras that capture light images, convert them to digital electronic signals and then record such digital image data on internal or removable media (built-in memory or diskettes). These images can be reproduced by connecting the camera to a video monitor (or TV), an ADP machine, or by inserting the media in the ADP machine. This type of digital cameras can produce both video signals (e.g., NTSC, PAL, SECAM or other similar video format) and computer readable image data like MPEG. 6. The term 'Video' relates to recording, reproducing or broadcasting of visual images. It is a technology of electronically capturing, recording, processing, storing, transmitting, and reconstructing a sequence of still images represe....
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....ng. The relevant extracts are reproduced below: Digital Coolpix S2800 - User's Manual Maximum Movie Length Individual movie files cannot exceed 2 GB in size or 29 minutes in length, even when there is sufficient free space on the memory card for longer recording. * The maximum movie length for a single movie is displayed on the shooting screen. * Recording may end before either limit is reached if camera temperature becomes elevated. * The actual movie length may vary depending on the movie content, subject movement, or type of memory card. Notes About Camera Temperature * The camera may become hot when shooting movies for an extended period of time or when the camera is used in a hot area. * If the inside of the camera becomes extremely hot when recording movies, the camera will automatically stop recording. The amount of time remaining until the camera stops recording (10s) is displayed. After the camera stops recording, it turns itself off. Leave the camera off until the inside of the camera has cooled. 30. In this background facts, the Division Bench in Sony India's ca....
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....y and will lose its significance." 32. It is a cardinal principle of interpretation that liberal meaning of the expression be given so as to carry out the object of the statute instead of leading to an absurd result defeating the purpose and also against the common sense or understanding of a man of ordinary prudence. Assuming that the camera has not been used for recording the still image and used only for video recording; and after 30 minutes of recording at the minimum resolution of 600X800 pixel, speed of 23 frames per second, the entire Memory (storage capacity inbuilt in cameras including expanded) capacity ought to be completely used and no space left for further function, to fall under the scope of the said Explanation, in our view, would only be possible by mis-construing the expression 'using the maximum storage (including expanded) capacity', and rendering the phrase 'in a single sequence' otiose. Reading the catalogue enclosed with the paper-book which indicates that continuous recording at a specified resolution and frames per second for more than the specified time would heat up the camera or automatically recording would be terminated. Consequently, we agree with ....
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....fied to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State." (emphasis supplied) 34. The ratio laid down in the aforesaid judgment reveals that in case of ambiguity in a charging provision, the benefit must be given to the assessee and in case of an exemption Notification, the benefit of ambiguity is strictly interpreted in favour of the Revenue. This ratio has been laid down by the Constitutional Bench while overruling the earlier decision in Sun Export Corporation v. Collector 1997 (93) E.L.T 641 (S.C.) case. To apply the said ratio to the facts of a case, presence of ambiguity in the subject for interpretation is a sine qua non. If there is no ambiguity in the interpretation of the exemption Notification, the same should be liberally interpreted adopting the tools of interpretation applicabl....