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2025 (1) TMI 797
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....23 while framing the question of law, which is set out below: Whether the word "and" as appearing in CTI 8517 (iv) is to be read in a disjunctive manner and thus be viewed as referring to separate products? FACTUAL BACKGROUND 3. The facts, as discernible from the records, are that the respondent, M/s Ingram Micro India Pvt. Ltd. [hereafter also referred to as 'the respondent'], is a distributor of Information Technology products in India and part of the internationally recognized Ingram Micro Group. During the period July, 2014 to June, 2017, it imported Wireless Access Points (WAPs) from various suppliers, including M/s Cisco Systems International BV, M/s Aruba Networks International Ltd., M/s Fortinet Singapore Pvt. Ltd., and others. These WAPs, which utilize Multiple Input/Multiple Output (MIMO) technology, were used for wireless communication within Local Area Networks (LANs) by connecting wireless-enabled devices like laptops, smartphones, and tablets to wired 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 t....
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....2,00, 9009 93,00, 9009 99,00, 9010 41,00, 9010 42,00, 9010 49,00, 9013 80,10, 9013 90,10, 9026, 9027 20,00, 9027 30, 9027 50, 9027 80, 9030 40,00, 9030 82,00, 9031,41,00 5. All goods for the manufacture of goods covered by S.Nos. 1 to 4 above, provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. [F.N0334/1/2005-TRU] 6. The aforesaid notification was amended by Notification No. 11/2014-Cus. dated 11.07.2014 [hereafter 'Notification No. 11/2014']. The relevant portion of Notification No. 24/2005, as amended by Notification No. 11/2014 [hereafter 'amended Notification No. 24/2005] pertaining to CTH 8517 is extracted below: Sr.No. Heading, sub-heading or tariff item Description x x x 13 8517 All goods, except the following :- (i) soft switches and Voice over Internet Protocol (VoiP) equipment, namely, VolP phones, media gateways, gateway controllers and session border controllers; (ii) optical transport equipments, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS), Optical Transport Net....
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...., invoke the extended limitation period under Section 28 (4) of the Act, confiscate the goods under Section 111 (m) of the Act, and impose penalties under Sections 112, 114A, and 114AA of the Act. Similar notice was also issued to the respondent's director, Mr. Blaze D'Souza, proposing penalties for his alleged role in the claimed exemption. 11. However, the Additional Director General (Adjudication) [hereafter 'the Adjudicating Authority'], vide its Order-in-Original dated 23.12.2019, adjudicated the SCN in favor of the respondent. The Adjudicating Authority held that the WAPs imported by the respondent, which solely utilized the MIMO technology, were eligible for exemption under the amended Notification No. 24/2005. It observed that the language of the exclusion clause was clear and unambiguous, and the phrase "MIMO and LTE products" referred exclusively to products that used both the technologies together. The Adjudicating Authority further noted that treating the phrase as encompassing three categories of products - MIMO only, LTE only, and both MIMO and LTE - would amount to a distortion of the notification's language and intent, and would be against the principles laid dow....
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....bai. 2. In respect of charges answerable to the Principal Commissioner/ Commissioner of Customs (Import), Air Cargo Complex, Sahar Road, Airport Link Road, Andheri (E), Mumbai-400099: 2.1. 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. 2.2 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. 31,40,44,170/- through Customs, ACC, Sahar, Andheri (E), Mumbai vide Bills of Entry as detailed in Annexure-C to the show cause notice, as liable for confiscation under Section 111 (m) of the Customs Act, 1962. Therefore, 1 do not confiscate the same. 2.3 The demand of differential Customs duty of Rs. 3,54,42,995/- on the impugned imported goods by them during the period from 11.07.2014 to 30.06.2017 as detailed in Annexure-C to the show cause ....
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....r No. 20/2019-20 dated 18.03.2020, by way of which the appellant herein was directed to file an appeal against the order of the Adjudicating Authority. 13. Accordingly, the Revenue filed an appeal before the learned CESTAT, inter alia contending that the word "and" used in the exclusion entry (iv) of Serial no. 13 should be interpreted disjunctively, thereby denying exemptions to products operating either on either MIMO technology or LTE standards. It was Revenue's case that the expression 'products' appearing after LTE has to be read with MIMO as well since the expression 'products' is a common factor for both MIMO and LTE. 14. However, the learned CESTAT, by way of the impugned order dated 12.09.2022, dismissed the Revenue's appeal and upheld the order of the Adjudicating Authority. The learned CESTAT observed that the word "and", as used in exclusion entry (iv) of Serial No. 13, is conjunctive and must be interpreted strictly to refer to products employing both MIMO and LTE technologies together. It noted that exemption notifications must be construed narrowly to avoid frustration of their intended purpose. The learned CESTAT further highlighted that similar exemptions had....
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....an use and to link two or more words, groups, or clauses. When he returned, she and Simon had already gone... Or: You can use 'or' to link two or more alternatives. Tea or coffee?... Cambridge Advanced Learners Dictionary, Fourth Edition: And: Used to join two words, phrases, parts of sentences, or related statements together: Ann and Jim; Boys and Girls; Knives and Forks And/ or used to mean that either one of two things or both of them is possible: Many pupils have extra classes In the evenings and/or at weekends. Or: Used to connect different possibilities. is it Tuesday or Wednesday today?" 20. It is also seen that the word 'products' is not used after the words 'Multiple Input/Multiple Output (MIMO)'. Infect, 'and' is used after the words 'Multiple Input/Multiple Output (MIMO)'. It is seen that in entry (iii) of the same Serial No. 13 of notification, every technology is followed by the word 'products': "Cartier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-transport Profile (MPLS-TP) products 21. Learned special counsel for the appellant contende....
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..... It, therefore, follows that the scope of 'products' excluded by entry (iv) would be products which use both MIMO and LTE. Thus, the term 'Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products' means products which contain both MIMO and LTE. This view finds support from the following decisions. * * * 27. This apart, what also needs to be noted is that India is a signatory to the Information Technology Agreement 18 dated 13.12.1996 by the World Trade Organization. The ITA requires each participant to eliminate and bind customs duties at zero for all products specified in the Agreement. India signed the Agreement on 01.07.1997. Pursuant to ITA, India introduced the notification. At the time of introduction, all goods falling under CTH 8517 were exempted from payment of duties. In 2014, on specified telecommunication products that were not covered under the ITA, the Government imposed customs duties by notification dated 11.07.2014. The Finance Minister's Budget Speech for the year 2014-15 and Tax Research Unit letter dated 10.07.2014 clarify that BCD on specified telecommunication products not covered under the ITA was bei....
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.... MIMO-enabled WAPs for exemption from customs duty. SUBMISSIONS BEFORE THE COURT Submissions on Behalf of the Revenue 16. The learned counsel appearing for the Revenue argued that the respondent had erroneously claimed Basic Customs Duty exemption on the import of various access points and MIMO products falling under CTH 8517 62 90, under the amended Notification No. 24/2005. The Revenue contended that the learned CESTAT erred in concluding that the WAPs imported by the respondent worked solely on MIMO technology and did not support LTE standards. It was further argued that the learned CESTAT's finding that the respondent was justified in claiming exemptions under Serial No. 13 (iv) of the notification and that there was no infirmity in the Adjudicating Authority's order dated 23.12.2019, was incorrect. 17. The learned counsel for the Revenue contended that the respondent's claim of exemption rested on interpreting the word "and" in Serial No. 13 (iv) of the notification as a conjunctive term. However, it was argued that there are instances where the word "and" is used disjunctively. The learned counsel provided examples, such as the phrases "goods and passengers," "Med....
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....ural and ordinary sense, analogous to phrases like "boy and girl" or "hare and tortoise," which signify separate entities rather than a single one. Therefore, Serial No. 13 (iv) should be read as excluding products with MIMO or LTE technologies individually, rather than jointly. 22. In conclusion, it was submitted that the learned CESTAT failed to appreciate the ordinary meaning of the exclusion clause and erred in granting the benefit of the exemption notification to the assessee. The Revenue thus sought a strict interpretation of the notification and the setting aside of the decision of the learned CESTAT. Submissions on Behalf of the Respondent 23. The learned counsel appearing for the respondent Ingram Micro submitted that the WAPs imported by it were rightly eligible for exemption under Serial No. 13 (iv) of the amended Notification No. 24/2005, as these WAPs operated solely on MIMO technology and did not support LTE standards. 24. It was contended that the issue of exemption eligibility for WAPs utilizing only MIMO technology had already been settled in its favor by the Chennai Bench of the learned CESTAT in an earlier case, captioned M/s Ingram Micro India Pvt. L....
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....nsport equipment," consistently describe specific categories of products. The absence of the term "products" after "MIMO" in entry (iv), coupled with the use of "and", reinforces the interpretation that the exclusion applies only to products featuring both MIMO and LTE standards. 28. It was also argued that WAPs are recognized as information technology products under the Information Technology Agreement (ITA), which India is obligated to comply with. Serial No. 13 of the notification was introduced to align with the ITA's framework, and denying exemption to WAPs would contravene this international commitment. It was also the respondent's case that the legislative intent, as reflected in the Budget Speech of the Finance Minister and relevant explanatory notes, indicates that the exclusion in Serial No. 13 (iv) applies only to products incorporating both MIMO and LTE technologies, whereas the Revenue's interpretation, which treats MIMO as an independent category, ignores this intent and creates unnecessary ambiguity. 29. The respondent also pointed out that similar investigations against other importers of WAPs had been dropped, and no appeals were filed against such decisions ....
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....wired network; (ii) MIMO: It is a technology wherein multiple antennas are used simultaneously for transmission and multiple antennas are used simultaneously for reception; (iii) LTE: In telecommunication, it is a standard for highspeed cellular communication for mobile devices and data terminals. It increases the capacity and speed using a different radio interface together with core network improvements." 35. Clearly, WAP is a networking device, MIMO is a technology and LTE is a standard. The WAPs imported by the respondent utilize MIMO technology to enhance network capacity and reliability by leveraging multiple antennas for data transmission and reception. However, they do not incorporate the LTE standard. Interpretation of the Phrase 'MIMO and LTE Products' 36. The phrase 'MIMO and LTE Products' is at the heart of the dispute, specifically the interpretation of the word 'and'. The disagreement is whether the said phrase means and includes: (i) only the products combining both MIMO technology and LTE standard; or (ii) the products using either MIMO technology or LTE standard, independently. 37. A closer examination of Serial No. 1....
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....has appropriately and purposefully used terms such as 'and', 'or', 'products' and 'equipment', along with commas, to ensure precise and unambiguous categorization. 44. In this background, when entry (iv) of Serial No. 13 - which refers to "MIMO and LTE Products" - is examined, we note that there is a clear absence of word 'products' after 'MIMO', as the same has been put after the word 'LTE'. To put it differently, the word 'products' has been put after the words 'MIMO and LTE', thereby indicating that "MIMO and LTE Products" includes those products which work on both MIMO technology and LTE standard. 45. The interpretation advanced by the Revenue is that the phrase "MIMO and LTE Products" includes three categories - (i) products using MIMO but not LTE, (ii) products using LTE but not MIMO, and (iii) products using both MIMO and LTE. In the written submissions filed on behalf of the Revenue, it has been asserted that the grammatically, the only possible way to fulfil this intention was to add the word 'and' between 'MIMO' and 'LTE' and then suffix the term 'products' after 'MIMO and LTE' as the same would have the meaning of 'MIMO product and LTE....
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.... natural and ordinary sense. Further, it is also well-settled that a taxing statute has to be interpreted in light of what is clearly expressed. In this regard, it would be apposite to take note of some observations of the Hon'ble Supreme Court in Union of India & Ors. v. Ind-Swift Laboratories Limited: (2011) 4 SCC 635, which are as under: "20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows: - "11. ........ In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply ....
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....o the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different, but that is not the case here. In this connection we may refer to the observations of Lord Watson in Salomon vs. Salomon & Co., (AC p. 38): ' "Intention of the Legislature" is a common but very slippery phrase, which, popularly understood may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication. It is an application of this principle that a statutory notification may not be extended so as ....
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....5 by virtue of Notification No. 05/2021-Customs. 55. Thus it is clear that the aforesaid amended entries in the concerned Notifications, in their clarificatory form, will be applicable only from the date of coming into force of these amendments i.e. 02.02.2021. As a natural consequence, the cases, which are in dispute qua the exclusion entry in question, which are pending adjudication or were adjudicated prior to the amendment brought about by clarifications, will be amenable to interpretation and adjudication as it stood prior to the aforesaid clarification and amendment. 56. It would, therefore, mean that in cases involving disputes over interpretation of the subject entry, the amendment brought about through later clarification cannot put fetters on the powers of the Courts or adjudicating authorities, dealing with disputes prior to the amendment so as to have a binding effect on such authorities or on the Courts to hold as correct the clarification as the guiding principle to decide the entry which stood prior to such amendment in its original form. 57. We are of the view that the clarification is brought about in the Statute when there is ambiguity and disputes arise ....