Delhi High Court
Commissioner Of Customs Air … vs M/S. Ingram Micro India Pvt. Ltd. on 13 January, 2025
Author: Swarana Kanta Sharma
Bench: Swarana Kanta Sharma
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 13.01.2025
+ CUSAA 38/2023
COMMISSIONER OF CUSTOMS AIR CHENNAI-VII
COMMISSIONERATE .....Appellant
Through: Mr Akshay Amritanshu, Senior
Standing Counsel with Mr
Samyak Jain, Ms Drishti Safar
and Ms Pragya Upadhyay,
Advocates.
versus
M/S. INGRAM MICRO INDIA PVT. LTD. .....Respondent
Through: Mr Yogendra Aldak and Mr
Kunal Kapoor, Advocates.
CORAM
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MS. JUSTICE SWARANA KANTA SHARMA
JUDGMENT
SWARANA KANTA SHARMA, J.
INTRODUCTION
1. The Revenue has preferred the present appeal under Section
130A of the Customs Act, 1962 [hereafter „the Act‟], impugning the
order dated 12.09.2022 [hereafter „the impugned order‟] passed by
the learned Customs, Excise, and Service Tax Appellate Tribunal,
Principal Bench, New Delhi [hereafter „the learned CESTAT‟], by
way of which the appeal filed by the Revenue (Customs Appeal No.
51093 of 2020) was dismissed.
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QUESTION OF LAW
2. The principal controversy in the present case was captured by
this Court in order dated 12.09.2023 while framing the question of
law, which is set out below:
Whether the word “and” as appearing in CTl 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
the nomenclature of these headings and items, is as under:
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8517 Telephone Sets, Including Smartphones And Other
Telephones For Cellular Networks Or For Other
Wireless Networks :
Other Apparatus For The Transmission Or Reception Of
Voice, Images Or Other Data, Including Apparatus For
Communication In a Wired Or Wireless Network (Such
As a Local Or Wide Area Network), Other Than
Transmission Or Reception Apparatus Of Heading 8443,
8525, 8527 Or 8528
– Other apparatus for transmission or reception of voice,
images or other data, including apparatus for
communication in a wired or wireless network (such as a
local or wide area network):
8517 62 — Machines for the reception, conversion and
transmission or regeneration of voice, images or other
data, including switching and routing apparatus:
8517 62 90 — Other
5. At this juncture, it is relevant to note that by way of Notification
No. 24/2005-Cus. dated 01.03.2005 [hereafter „Notification No.
24/2005‟], the Central Government had exempted certain goods from
the whole of customs duty leviable thereon, on their import into India.
This included exemption to goods imported under CTH 8517. The
relevant extract of the said notification is set out below:
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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 Description
tariff itemx 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 Network (OTN) products,
and IP Radios;
(iii) Carrier Ethernet Switch, Packet
Transport Node (PTN) products,
Multiprotocol Label Switching-
Transport Profile (MPL5-TP)
products;
(iv) Multiple Input/Multiple
Output (MIMO) and Long Term
Evolution (LTE) Products.
7. Therefore, according to the amended Notification No. 24/2005,
the above-mentioned four categories of products would not be entitled
to the benefit of exemption from Customs Duty.
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8. The respondent claimed exemption from Customs Duty under
Serial No. 13, exclusion entry (iv), of the amended Notification No.
24/2005. This exemption was claimed specifically for WAPs
operating solely on MIMO technology. For products utilizing both
MIMO technology and Long-Term Evolution (LTE) standard, the
respondent did not claim any exemption and paid the applicable
customs duty in full.
9. The controversy began when the Directorate of Revenue
Intelligence (DRI), Bangalore Zonal Unit, initiated an investigation in
2017, alleging that the WAPs imported by the respondent were
ineligible for the claimed exemption. Pursuant to the investigation, the
Additional Director General of the DRI issued a Show Cause Notice
(SCN) dated 13.12.2018, under Sections 28 and 124 of the Act. The
SCN called upon the respondent to explain why the exemption benefit
claimed under the notification should not be denied. The SCN noted
that the exclusion entry (iv) of Serial No. 13 in the amended
Notification No. 24/2005, which mentions “MIMO and LTE
products”, should be interpreted to deny exemptions to all products
operating on either MIMO or LTE standards. It was also mentioned
that there are only two types of products in exclusion entry (iv) and
the conjunctive „and‟ has been used without using the term „product‟
for both the items. It was further the Revenue‟s case that in case the
purpose was to apply the said condition on the products having both
MIMO technology and LTE standards and, therefore, Serial No. 13(iv)
should have read as „LTE products having MIMO technology‟ orSignature Not Verified
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„LTE products with MIMO technology‟. The SCN also noted that
between the words „MIMO‟ and „LTE‟, the word „and‟ is placed,
however, it is not followed by a comma. Reliance was placed on the
decision in Sree Durga Distributors v. State of Karnataka: 2007
(212) ELT 12 SC.
10. The SCN further proposed to recover a differential customs
duty of ₹9,10,74,505/-, 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 principlesSignature Not Verified
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laid down in Commissioner of Customs (Import), Mumbai v. Dilip
Kumar & Co and Ors.: 2018 (361) ELT 577 (SC). It also held that the
decision in Sree Durga Distributors v. State of Karnataka (supra)
was not applicable since it is silent on a possible situation where a set
of two words, having „and‟ in between them, is not followed by
comma but by a „full stop‟. The Adjudicating Authority also
acknowledged that the respondent had provided all the necessary
information in its declarations and bills of entry, which clearly
identified the imported WAPs as MIMO-enabled products. It rejected
the allegations of willful suppression of facts or misrepresentation by
the respondent. The final directions issued by the Adjudicating
Authority are extracted hereunder:
“1. In respect of charges answerable to the Principal
Commissioner/Commissioner of Customs (Import), Air
Customs VII Commissionerate, Air Cargo Complex,
Meenambakkam, Chennai – 600027:
1.1 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.
1.2 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.43,22,74,439/-
through Customs, ACC, Chennai vide Bills of Entry as
detailed in Annexure-B to the show cause notice, as liable
for confiscation under Section 111(m) of the Customs Act,
1962. Therefore, I do not confiscate the same.
1.3 The demand of differential Customs duty of
Rs.4,85,37,039/- on the impugned imported goods by
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them during the period from 11.07.2014 to 30.06.2017 as
detailed in Annexure-B to the show cause notice is hereby
dropped.
1.4 I hold that no interest, on the duty foregone is recoverable
from them under Section 28AA of the Customs Act, 1962;
1.5 I do not impose any penalty under Sections 112/114A/
114AA of the Customs, Act, 1962 on the Noticee No.1.
1.6 I do not impose any penalty under Section 112 and 114AA
of the Customs Act, 1962 on Shri Blasé D’Souza, Director
Material of M/s. Ingram Micro India Pvt. Ltd, Mumbai.
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 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 notice is hereby
dropped.
2.4 1 hold that no interest, on the duty foregone is recoverable
from them under Section 28AA of the Customs Act, 1962;
2.5 I do not impose any penalty under Sections 112/114A/
114AA of the Customs, Act, 1962 on the Noticee No.1.
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2.6 I do not impose any penalty under Section 112 and 114AA
of the Customs Act. 1962 on Shri Blasé D’Souza, Director
Material of M/s. M/s. Ingram Micro India Pvt. Ltd,
Mumbai.
3. In respect of charges answerable to the Principal
Commissioner/ Commissioner of Customs (Import),
Air Cargo Complex, Near IGI Airport, New Custom
House, Indira Gandhi International Airport, New
Delhi 110037:
3.1 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.
3.2 I do not hold impugned goods, which were imported by
them them during the period from 11.07.2014 to
30.06.2017, with a declared assessable value of Rs.
6,29,69,522/- through Customs (Import), Air Cargo
Complex, Near IGI Airport, New Custom House, Indira
Gandhi International Airport, New Delhi 110037 vide
Bills of entry as detailed in Annexure-D to the show cause
notice, as liable for confiscation under Section 111(m) of
the Customs Act, 1962. Therefore, I do not confiscate the
same.
3.3 The demand of differential Customs duty of
Rs.70,94,472/- on the impugned imported goods by them
during the period from 11.07.2014 to 30.06.2017 as
detailed in Annexure-D to the show cause notice is hereby
dropped.
3.4 I hold that no interest, on the duty foregone is recoverable
from them under Section 28AA of the Customs Act, 1962;
3.5 I do not impose any penalty under Sections 112/114A/
114AA of the Customs, Act, 1962 on the Noticee No.1.
3.6 I do not impose any penalty under Section 112 and 114AA
of the Customs Act, 1962 on Shri Blasé D’Souza, Director
Material of M/s. Ingram Micro India Pvt, Ltd, Mumbai.
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12. The aforesaid Order-in-Original passed by the Adjudicating
Authority was reviewed by the Committee of Chief Commissioners,
New Delhi vide Review Order 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 been granted for identical
products under subsequent notifications and in proceedings involving
other importers. The relevant extracts of the impugned order are as
under:
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“16. A bare perusal of the exclusion clause (iv) under SI. No.
13 of notification shows that it covers MIMO and LTE
products. The sole dispute in this appeal is whether this
exclusion clause covers products having only MIMO
technology and not working on LTE standard. Exclusion
clause (iv) uses the conjunction ‘and’ and, therefore, it can be
urged that the scope of clause (iv) can be restricted to those
products that have MIMO and LTE both and that the product
that only has MIMO technology may, therefore, not be covered
by this exclusion clause and, therefore, may not be excluded
from the scope of Serial No. 13.
17. The contention of the Department is that ‘and’ should be
read as ‘or’ in clause (iv) so that it would cover MIMO products
or LTE products. The contention advanced on behalf of Ingram
Micro is that since the exclusion clause (iv) uses the
conjunction ‘and’ its scope would be restricted to those
products that have both MIMO and LTE. Thus, according to
Ingram Micro a product that has only MIMO technology
would not be covered by the exclusion clause and, therefore,
would not be excluded from the scope of Serial No. 13 (iv).
18. The submission advanced by learned counsel for the
respondent deserves to be accepted.
19. It needs to be remembered that ‘and’ is a conjunctive and is
used to connect and join. The dictionary meaning of ‘and’ is as
follows.
“The New International Webster’s Comprehensive Dictionary
of the English Language: And: Also; added to; as well as; a
particle denoting addition, emphasis, or union, used as a
connective between words, phrases, clauses, and sentences; shoes
and ships and sealing wax…
Or: Introducing an alternative: stop or go: red or white.
Oxford Dictionary of English, Third Edition: And: Used to
connect words of the same part of speech, clauses or sentences,
that are to be taken jointly; bread and butter they can read and
write a hundred and fifty. Or: Used to link alternatives: a cup of tea
or coffee are you coming or not either take taxis or walk
everywhere…
Collins Cobuild English Dictionary for Advanced Learners:
And: You can 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?…
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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 contended that
clause (iv) would effectively mean and cover two categories of
products, namely, (i) Multiple Input/multiple Output (MIMO)
products and (II) Long Term Evolution (LTE) products and
that MIMO products and LTE products are products which
have distinct identities. Learned special counsel also contended
that the expression ‘Multiple Input/Multiple Output (MIMO)’
appearing before ‘and’ does not, by itself, mean anything unless
it is followed by expressions like ‘technology’ or ‘products’.
Since the exception carved out has to be ‘goods’, this
expression has to be interpreted to connote products based on
MIMO technology. Thus, the expression ‘products’, appearing
after ‘LTE’ has to be read with ‘MIMO’ to mean and cover
MIMO products. Further, ‘products’ being the common factor
for both MIMO technology and LTE standard, the expression
‘and’ has been used in a conjunctive way to cover individually
MIMO products and LTE products. Learned special counsel,
therefore, contended that as there are only two types of
products at Serial No. 13 (iv), the conjunctive ‘and’ has been
used without using the term ‘products’ twice. There is,
therefore, no ambiguity and the expression ‘Multiple
Input/Multiple Output (MIMO) and Long Term Evolution
(LTE) Products” denotes Multiply Input/Multiple Output
(MIMO) products on the one hand and Long Term Evolution
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(LTE) products on the other. There is, therefore, no need to
refer to the World Trade Organisation ITA.
22. Though it is correct that clause (iv) would effectively mean
include two categories of products namely MIMO and LTE
and that they have distinct identities, but it is not possible to
accept the Contention advanced by learned special counsel for
the Department that MIMO does not by itself mean anything
unless it is followed by the expressions ‘technology’ or
‘products’ and, therefore, since the exception carved out has to
be ‘goods’, this expression has to be Interpreted to connote
products based on MIMO technology.
23. What needs to be remembered is that MIMO is a
technology and cannot be treated as an independent product. If
the intention was to exclude even products having only MIMO
technology, then the word ‘products’ should have been used
after MIMO as well as after LTE. 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 being increased from NIL to 10%. As WAP is an
Information Technology product and is specifically covered
under the ITA as ‘Network Equipment’ in Attachment B, the
intention was clearly not to exclude WAP imported by Ingram
Micro. The Network Equipment as defined in Annexure-B
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includes LAN and Wide Area Network 19 apparatus, including
those products dedicated for use solely or principally to permit
the interconnection of automatic data processing machines and
units thereof for a network that is used primarily for the
sharing of resources such as central processor units, data
storage devices and input or output units – including adapters,
hubs, in- line repeaters, converters, concentrators, bridges and
routers, and printed circuit assemblies for physical
incorporation into automatic data processing machines and
units thereof. Imported WAP is a networking equipment
working in LAN connecting Wi-fi enabled devices such as
laptops, smartphones, tablets, etc. to a wired network. Thus
also, imported WAP is entitled to the exemption from the
whole of the customs duties under the ITA.
***
29. It has been stated that the investigation by the DRI was not
only against Ingram Micro but few other importers of these
goods also and the proceedings initiated against other
importers was dropped but appeals have not been filed by the
Department.
30. The aforesaid discussion leads to be inevitable conclusion
that WAP imported by the appellant works on technology and
does not support LTE standard. Ingram Micro was, therefore,
justified in claiming exemption from the whole of the customs
duty under Serial No. 13(iv) of the notification. There is,
therefore, no infirmity in the order dated 23.12.2019 passed by
the Additional Director.
31. Such being the position, it would not be necessary to
examine the other contentions raised by the learned counsel for
the respondent, including the submission relating to the
invocation of the extended period of limitation.
32. The appeal filed by the Department, therefore, deserves to
be dismissed and is dismissed…”
15. Aggrieved by the decision of the learned CESTAT, the Revenue
has filed the present appeal, challenging the learned CESTAT‟s
interpretation of the exclusion entry (iv) of Serial No. 13 of the
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amended Notification No. 24/2005 and its findings on the eligibility of
the imported 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,” “Medicinal and Toiletry,” and
“Ayurvedic and Unani,” where the word “and” is commonly
interpreted disjunctively to mean separate categories. Accordingly, the
learned counsel argued that in Serial No. 13(iv) of the notification, the
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phrase “Multiple Input/Multiple Output (MIMO) and Long Term
Evolution (LTE) products” should be interpreted disjunctively,
excluding products based on MIMO technology, even when they do
not incorporate LTE standards, from the benefit of exemption.
18. The learned counsel further argued that the exclusion entry at
Serial No. 13(iv) expressly refers to “products,” and the phrase
“MIMO” preceding “and” must be treated as a distinct category of
goods. Consequently, the exclusion applies to products based on
MIMO technology, regardless of whether they also support LTE
standards. It was contended that the learned CESTAT erred in
concluding that only products incorporating both MIMO and LTE
were excluded from the exemption.
19. The Revenue also took exception to the learned CESTAT‟s
reliance on subsequent developments, such as the exemption granted
to identical products under a later notification dated 30.07.2017. It was
argued that the prevailing notification could not be interpreted in light
of subsequent notifications, as the law applicable during the relevant
period must govern the matter. It was further submitted that the
Finance Minister‟s Budget Speech for the year 2014-15 and the Tax
Research Unit letter dated 10.07.2014 clearly intended that products
containing both MIMO and LTE were to be excluded under Serial No.
13(iv).
20. Additionally, it was contended that MIMO and LTE products,
while being information technology products, were categorized as
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telecommunication products under Serial No. 13(iv) of the
notification. The Revenue argued that the Hon‟ble Supreme Court‟s
decision in Sun Export Corporation, Bombay v. Collector of
Customs, Bombay & Anr.: (1997) 6 SCC 564 mandates that any
ambiguity in an exemption notification must be resolved in favor of
the Revenue, and the burden of proving eligibility for exemption lies
squarely on the assessee.
21. The Revenue also pointed out that other importers of similar
products had not claimed exemptions under the notification in
question, which further undermined the respondent‟s position. It was
argued that the phrase “MIMO and LTE products” should be
interpreted in its natural 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
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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. Ltd. v. Commissioner of
Customs, Chennai: Customs Appeal No. 41694/2019. This decision
had attained finality as the Revenue did not challenge the decision. It
was argued that the Revenue‟s acceptance of the earlier decision in an
identical matter bars it from taking a contrary stance in the present
case. Reliance was placed on the Hon‟ble Supreme Court‟s decisions
in Birla Corpn. Ltd. v. Commissioner of Central Excise: (2005) 6
SCC 95 and Jayaswals NECO Ltd. v. Commissioner of Central
Excise, Nagpur: (2007) 13 SCC 807, wherein it was held that the
Revenue cannot take inconsistent positions on the same issue in
separate cases. The respondent submitted that allowing the Revenue to
act inconsistently would lead to legal uncertainty and confusion.
25. It was next argued that the word “and” in Serial No. 13(iv) of
the notification must be read conjunctively, meaning that the exclusion
applies only to products incorporating both MIMO technology and
LTE standards, and that such an interpretation would align with the
plain, grammatical meaning of the clause. Reliance was placed on
several dictionaries and legal principles, including the principle of
literal interpretation, to argue that the word “and” denotes addition or
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connection. It was argued that interpreting “and” disjunctively, as
proposed by the Revenue, would amount to rewriting the notification
and lead to absurd results. It was submitted that the language of Serial
No. 13(iv) is precise and unambiguous, and any attempt to treat the
exclusion as applying to either MIMO or LTE products individually
would distort the legislative intent.
26. The respondent contended that exclusionary clauses in
exemption notifications must be interpreted strictly and narrowly, as
held by the Hon‟ble Supreme Court in Sun Export Corporation,
Bombay v. Collector of Customs, Bombay & Anr. (supra). It was also
argued that the exclusion clause must be interpreted in line with the
principle of ejusdem generis, which mandates that general terms
following specific items must be confined to items of the same nature.
Based on this principle, the phrase “MIMO and LTE products” should
be restricted to telecommunication products that incorporate both
technologies.
27. The learned counsel next highlighted that other exclusion
entries in Serial No. 13 of the notification, such as those referring to
“VoIP equipment” and “optical transport 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.
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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 and thus, this selective approach by
the Revenue highlighted the inconsistency in its stance. Finally, the
respondent submitted that it had discharged its burden of proof by
providing complete documentation and evidence to demonstrate that
the imported WAPs worked solely on MIMO technology, and that the
Revenue‟s allegations of misrepresentation or suppression were
baseless, as the respondent had fully disclosed the nature of the
imported goods.
30. In light of these arguments, the respondent prayed that the
appeal filed by the Revenue be dismissed and the order of the learned
CESTAT be upheld.
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ANALYSIS & FINDINGS
31. The core issue before this Court is whether the WAPs, which
work on MIMO technology, imported by the respondent would
qualify for an exemption from Basic Customs Duty.
32. The question, thus, pertains to the interpretation of the
exclusion entry (iv) of Serial No. 13 of the amended Notification No.
25/2005, and specifically as to whether WAPs with MIMO technology
but without LTE standard, would qualify for the said exemption.
33. The Revenue interprets the entry „MIMO and LTE Products‟ to
apply separately and individually to both MIMO-based and LTE-
based products. Conversely, the respondent asserts that the said entry
applies only to the products incorporating both MIMO technology and
LTE standards. The Adjudicating Authority, while adjudicating the
SCN, agreed with the submissions of the respondent herein, and held
that the imported WAPs – while employing MIMO technology – do
not support LTE standards, and therefore do not fall within the scope
of Serial No. 13(iv) of the amended Notification No. 25/2005. It also
held that the word „and‟ cannot be read as „or‟ in the present case. The
learned CESTAT, by way of the impugned order, upheld the order of
the Adjudicating Authority, which has now been assailed by the
Revenue in this petition.
Understanding WAP, MIMO and LTE
34. Before deciding the issue in question, it would be apposite to
briefly understand the three devices and technologies in question, i.e.
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WAP, MIMO and LTE. In the impugned order, the learned CESTAT
has understood WAP, MIMO and LTE in the following manner:
“(i) WAP: It is a networking device used for wireless
communication within the Local Area Network. It helps in
connecting wireless enabled devices such as Laptops,
Smartphone, Tablets etc., to a 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.
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37. A closer examination of Serial No. 13 of the amended
Notification No. 25/2005 reveals that wherever the Central
Government intended to specify products individually, the terms such
as “products”, “equipment” or the nomenclature of a specific product
have been mentioned after the respective technology or feature. In this
regard, we may again take note of the four exclusion entries in Serial
No. 13, which are as under:
(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 Network (OTN)
products, and IP Radios;
(iii) Carrier Ethernet Switch, Packet Transport Node
(PTN) products, Multiprotocol Label Switching-
Transport Profile (MPL5-TP) products;
(iv) Multiple Input/Multiple Output (MIMO) and Long
Term Evolution (LTE) Products.
38. For instance, the entry (i) of Serial No. 13 pertains to
„equipment‟ which have both „soft switches‟ and „Voice over Internet
Protocol‟. It is followed by a list of such products that includes (1)
VolP phones, (2) media gateways, (3) gateway controllers and (4)
session border controllers. Thus, it is to be noted that the word „and‟
has been used between „soft switches‟ and „Voice over Internet
Protocol‟, followed by the word „equipment‟, to refer to one class of
products.
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39. In entry (ii) of Serial No. 13, four categories of products have
been mentioned. These are:
(1) Optical Transport Equipment
(2) POT Product(s) or POT Switch(es)
(3) OTN Products
(4) IP Radios
40. Therefore, every technology or feature is followed by words
such as „equipment‟ or „product(s)‟ or specific products such as
„radios‟. The word „or‟ has been specifically used in the same entry,
while referring to either Packet Optical Transport Product(s) or Packet
Optical Transport Switch(es).
41. Further, the entry (iii) of Serial No. 13 pertains to three
categories of products which are as under:
(1) Carrier Ethernet Switch
(2) PTN Products
(3) MPLS-TP Products
42. Thus, again, every technology or feature is followed by words
such as „products‟ or a specific product such as „switch‟.
43. It is clear from the aforesaid that the Central Government 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
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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 product‟.
46. However, in our opinion, the aforesaid contention is unmerited.
If the intention of the Central Government was to include products
utilizing either MIMO technology or LTE standard or both, the phrase
„MIMO or LTE Products‟ could have been used. The use of the
conjunction „or‟ would have naturally encompassed all products with
either of the two technologies/standards, and also those products
which combine both. There would have been no need to use „and‟ in
place of „or‟, as the latter would inherently fulfill the purpose of
including all such categories. To explain in simpler terms, the phrase
“MIMO or LTE Products” would mean – products having MIMO
technology or products having LTE standard. A product having
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MIMO technology can have many other technologies, standards, etc.,
which may also include LTE standard. Similarly, a product having
LTE standard can have many other technologies, standards, etc.,
which may also include MIMO technology. Thus, the phrase „MIMO
or LTE Products‟ would have included the categories of products,
which the Revenue is projecting before this Court.
47. Moreover, in earlier entries of the same notification, such as
Serial No. 13 (ii) and (iii), the word „or‟ has been used wherever
appropriate to denote alternatives. Similarly, commas have also been
employed to demarcate distinct categories of products. Had the
intention been to use „and‟ in a disjunctive manner in entry (iv) of
Serial No. 13, the phraseology could also have been easily drafted as
follows: „MIMO Products and LTE Products‟, or „MIMO Products
and/or LTE Products‟, or „MIMO Products or LTE Products‟. These
products could also have been separated by use of commas, such as by
drafting the same as „MIMO Products, LTE Products‟ or „MIMO
Products, and LTE Products‟. However, the same has not been done in
the exclusion entry in question.
48. As noted in the preceding discussion, MIMO is a technology
and LTE is a standard. Concededly, the case of Revenue is that
“MIMO and LTE Products”, inter alia, includes “products which
work on LTE standard and have MIMO technology”. Thus, it is not
disputed that there exist products which embody both MIMO
technology and LTE standard.
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49. At this juncture, we note that as a general rule of interpretation,
when the words of a statute are clear, plain and unambiguous, it is
necessary to expound those words in their 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 any
assumed deficiency.”
21. Therefore, the attempt of the High Court to read down the
provision by way of substituting the word “OR” by an “AND”
so as to give relief to the assessee is found to be erroneous. In
that regard the submission of the counsel for the appellant is
well-founded that once the said credit is taken the beneficiary
is at liberty to utilize the same, immediately thereafter, subject
to the Credit rules.”
(Emphasis added)
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50. The Hon‟ble Supreme Court in Commissioner of Customs
(Import), Mumbai v. Dilip Kumar & Co and Ors. (supra), held as
under:
“21. The well settled principle is that when the words in
a statute are clear, plain and unambiguous and only one
meaning can be inferred, the Courts are bound to give
effect to the said meaning irrespective of consequences. If
the words in the statute are plain and unambiguous, it becomes
necessary to expound those words in their natural and ordinary
sense. The words used declare the intention of the
Legislature.
***
25. At the outset, we must clarify the position of „plain
meaning rule or clear and unambiguous rule‟ with respect
of tax law. „The plain meaning rule‟ suggests that when
the language in the statute is plain and unambiguous,
the Court has to read and understand the plain language
as such, and there is no scope for any interpretation. This
salutary maxim flows from the phrase “cum inverbis nulla
ambiguitas est, non debet admitti voluntatis quaestio”.
Following such maxim, the courts sometimes have made strict
interpretation subordinate to the plain meaning rule, though
strict interpretation is used in the precise sense. To say that
strict interpretation involves plain reading of the statute and to
say that one has to utilize strict interpretation in the event of
ambiguity is self–contradictory.
***
44. In Hansraj Gordhandas v. CCE [hereinafter referred as
„Hansraj Gordhandas Case‟ for brevity], wherein this
Court was called upon to interpret an exemption
notification issued under the Central Excise Act. …
……. It was held that a taxing legislation should be
interpreted wholly by the language of the notification.
45. The relevant observations are: (Hansraj case, AIR p. 759,
para 5)
“It is well -established that in a taxing statute
there is no room for any intendment but regard must be
had to 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
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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 to meet a casus
omissus. As appears in the judgment of the Privy Council
in Crawford v. Spooner.
„… we cannot aid the Legislature‟s defective phrasing
of the Act, we cannot add, and mend, and, by
construction, make up deficiencies which are left
there.‟
The learned Counsel for the respondents is possibly right in
his submission that the object behind the two notifications
is to encourage the actual manufacturers of handloom cloth
to switch over to power looms by constituting themselves
in co- operative Societies. But the operation of the
notifications has to be judged not by the object which the
rule making authority had in mind but by the words
which it has employed to effectuate the legislative intent.”
(Emphasis added)
51. Further, the term “and” is a conjunction, commonly understood
to connect and join words, clauses, or phrases. Dictionaries and
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combination, unless there is ambiguity or absurdity arising from its
literal interpretation.
52. In this regard, it would be relevant to take note of the following
passage from G.P. Singh‟s Principles of Statutory Interpretation (15th
Edn.):
“The word “or” is normally disjunctive and “and” is normally
disjunctive but at times they are read as vice versa to give
effect to the manifest intention of the Legislature”
53. In the present case, there is no such ambiguity or absurdity. In
our view, when all the four entries of Serial No. 13 are analysed, it
would lead to only one conclusion that the word “and” is to be read in
conjunctive manner only, and the phrase “MIMO and LTE Products”
would refer to only those products which have both MIMO
technology and LTE standard.
54. As far as the argument of the Revenue that in the year 2021, the
Notification No. 25/2005, and one Notification No. 57/2017-Customs
were amended and the phrase “MIMO and LTE Products” were
substituted with „(i) MIMO products; (ii) LTE products‟, and that
these amendments were clarificatory in nature, is concerned, notably,
an amendment in the Notification No. 57/2017-Customs was brought
vide Finance Act, 2021 which is clarificatory in nature, and, clarifies
Serial No. 20 of the said notification. It states that the subject entry
will now be read as „(i) MIMO products; (ii) LTE products‟. Similar
change was brought in Notification No. 25/2005 by virtue of
Notification No. 05/2021-Customs.
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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 due to such
ambiguities. The fact that a clarification is needed to be brought about
in the subject entry by the Finance Act, 2021 would point out towards
the inherent ambiguity experienced in its interpretation and application
which prompted and necessitated the subject amendment and
clarification. In the light of this observation and the facts of the
present case as well as the judicial precedents in similarly situated
cases, we are of the opinion that exclusion clause (iv) of Serial No. 13
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of the amended Notification No. 24/2005, which reads as „MIMO and
LTE products‟, would have to be read in its original form applying the
law and rules of interpretation of statutes, especially as applicable in
cases of taxation.
58. While adjudicating cases of disputes over an entry attracting or
not attracting customs duty, the first and foremost rule to be followed
is reading it as it stands by giving it the meaning that can be
understood by reading the plain language of the entry in question.
59. Coming back to the facts of the case and applying the above
principle, we note that the word „and‟ is suffixed with the word
„MIMO‟ and prefixed with the word „LTE‟ and there is no
punctuation mark or comma after the word „MIMO‟ and before the
word „and‟. Further, „MIMO and LTE‟ are followed by the word
„products‟. Therefore, as a common rule of English language, the
word „and‟ would clearly, and in unambiguous terms, be read
conjunctively.
60. To reiterate, the amendments as discussed above were
introduced in the year 2021, whereby “MIMO and LTE products”
were changed to “(i) MIMO products; (ii) LTE products”. The word
„and‟ has been totally taken out from the new entry and the same is
absent from the entry altogether. The absence of word „and‟ between
the word „MIMO‟ and „LTE‟, as it existed prior to the amendment
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about the presence of intention to read „MIMO‟ and „LTE‟ as
conjunctive and not disjunctive.
61. In light of the above, we hold 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.
62. In view thereof, we are of the opinion that the order of the
learned CESTAT does not suffer from any infirmity or error and, is,
therefore upheld.
63. The Question of Law is accordingly answered in favour of the
assessee, and against the Revenue.
64. The appeal is accordingly dismissed.
SWARANA KANTA SHARMA, J
VIBHU BAKHRU, ACJ
JANUARY 13, 2025/at
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