Commissioner Of Customs (Air), Chennai-Vii Commissionerate vs. Ms Redington (INDIA) Limited

Facts

The Revenue appealed against an order of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) which dismissed the Revenue's appeal. The respondent, M/s Redington (India) Limited, imported Wireless Access Points (WAPs) between July 2014 and June 2017. These WAPs utilized Multiple Input/Multiple Output (MIMO) technology. The Revenue alleged that these WAPs were ineligible for exemption from customs duty under Notification No. 24/2005-Cus, as amended by Notification No. 11/2014-Cus. The exclusion entry (iv) in the notification listed 'MIMO and LTE Products'. The Directorate of Revenue Intelligence (DRI) issued a Show Cause Notice proposing recovery of differential customs duty amounting to ₹17,18,03,287/-, confiscation of goods, and penalties. The Adjudicating Authority, however, ruled in favor of the respondent, holding that WAPs solely using MIMO technology were eligible for exemption. The CESTAT upheld this decision.

Held

The Court held that the phrase 'MIMO and LTE Products' in Serial No. 13(iv) of the amended Notification No. 24/2005 applies solely to products that combine both MIMO technology and LTE standards. The Court reasoned that the intention behind the notification, especially in light of India's commitment to the Information Technology Agreement (ITA) by the World Trade Organization, was to exempt products covered under the ITA. The WAPs imported by the respondent, which utilize MIMO technology but do not support LTE standards, are therefore entitled to the exemption from Basic Customs Duty. The Court found no infirmity in the CESTAT's order. The Court also noted that the investigation by the DRI against other importers was dropped, and appeals were not filed by the Department in those cases. The Court did not find it necessary to examine other contentions raised by the respondent, including the invocation of the extended period of limitation, as the primary issue was decided in their favor.

Key Issues

1. Whether the word 'and' as appearing in Custom Tariff Item (CTI) 8517 (iv) is to be read in a disjunctive manner and thus be viewed as referring to separate products? Petitioner's Arguments: The Revenue contended that the exclusion entry (iv) of Serial No. 13 in the amended Notification No. 24/2005, which states 'MIMO and LTE Products', should be interpreted to deny exemptions to all products operating on either MIMO or LTE standards. They argued that the conjunctive 'and' was used without repeating the term 'products' for both items, implying a broader exclusion. The Revenue relied on the decision in Sree Durga Distributors v. State of Karnataka. Respondent's Arguments: The respondent argued that the WAPs imported operated solely on MIMO technology and did not support LTE standards, thus qualifying for exemption under Serial No. 13(iv) of the amended Notification No. 24/2005. They maintained that the exclusion entry (iv) applies only to products that combine both MIMO technology and LTE standards. The respondent also argued that the WAPs are Information Technology products covered under the Information Technology Agreement (ITA) and thus entitled to exemption.