Tata Teleservices Ltd. vs Commissioner of Customs, Chennai>2004(04)LCX0124

2004(04)LCX0124

IN THE CESTAT, NORTHERN BENCH, NEW DELHI

S/Shri V.K. Agrawal, Member (T) and M.P. Bohra, Member (J)

TATA TELESERVICES LTD.

Versus

COMMISSIONER OF CUSTOMS, CHENNAI

Final Order Nos. 303-304/2004-NB(B), dated 15-4-2004 in Appeal Nos. C/141-142/2004-NB(B)

CASES CITED

Inter Continental (India) v. U.O.I. — 2002(02)LCX0021 Eq 2003 (154) ELT 0037 (Guj.) — Distinguished.......... [Para 3]

Izharul Haque v. Joint Director General of Foreign Trade — 2001(04)LCX0008 Eq 2001 (132) ELT 0539 (Cal.) — Distinguished [Para 3]

Jain Engineering Co. v. Collector — 1987(09)LCX0020 Eq 1987 (032) ELT 0003 (S.C.) — Distinguished................. [Para 4]

Madras Rubber Factory Ltd. v. U.O.I. — 1980(04)LCX0021 Eq 1981 (008) ELT 0804 (Del.) — Distinguished..... [Para 3]

DEPARTMENTAL CLARIFICATIONS CITED

C.B.E. & C. Circular No. 9/1996-Cus., dated 13-2-1996................................................ [Paras 4, 8]

C.B.E. & C. Circular No. 57/2003-Cus., dated 27-6-2003.............................................. [Paras 2, 3]

REPRESENTED BY : S/Shri Arvind P. Datar, Sr. Advocate with R. Raghvan and T.S. Balasubramanian, Advocates, for the Appellant.

Ms. K.A. Mishra, SDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - In these two appeals, filed by M/s. Tata Teleservices Ltd., arising out of two Order-in-Appeals, the issue involved is whether Fixed Wireless Terminal LSP-340 and LST-250 are classifiable under sub-heading 8525.2017 of the First Schedule to the Customs Tariff Act and the benefit of exemption under Notification No. 21/2002-Cus., dated 1-3-2002 (Sl. No. 313) is available.

2. Shri Anil P. Datar, learned Senior Advocate submitted that the Fixed Wireless Terminal imported by the Appellants working on Cellular Technology on CDMA platforms and, therefore, is classifiable under sub-heading 8525.2017 of the Customs Tariff which applies to “Cellular Telephone”; that the benefit of Serial No. 313 of Notification No. 21/2002-Cus. which provides partial exemption to Cellular Phones and Radio trunking terminals; has to be extended to the product imported by them; that the Deputy Commissioner has classified the imported goods under sub-heading 8525.20.19 (others) and disallowed the benefit of the Notification No. 21/2002 (Sl. No. 313) relying upon the Board’s Circular No. 57/2003-Customs, dated 27-6-2003 according to which the term “Cellular Phone” covers only hand held mobile phones working on cellular technology and the Serial No. 313 of the notification does not cover either fixed wireless terminals or fixed wireless telephones working on cellular technology; that Commissioner (Appeals) has also rejected their appeals relying upon the said Circular.

3. The learned Senior Counsel, further, submitted that neither the Central Excise Act nor the Central Excise Tariff Act defines the term “Cellular telephone”; that a Cellular telephone is a wireless communication system and it is two way communication equipment as it transmits as well receives the signals; that as such it falls under sub-heading 8525.20; that as the impugned goods are based on cellular technology, the same are to be classified as cellular telephones; that every mobile telephone is a cellular phone but every cellular telephone need not be mobile phone; that this is apparent from the definition of Mobile phone given in Newton’s Telecom Dictionary which defines Mobile phone as under :-

“Mobile Phone One term for a Cellular phone. There are four main types of - Cellular phones - mobile (also called car phone), transportable, portable and personal.”

He mentioned that the Model LSP 340 is only larger in size than the cellular phone working under CDMA technology and it does not require any line connection for being installed; that wherever land line connections could not be offered by the Appellants and the Customer insists on having telephone facility, the cellular phone technology has been offered as a land line by the Appellants. He also referred to the letters, dated 12-3-2001, 16-3-2003 and 29-5-2003 of the Department of Telecommunications wherein it is specifically mentioned that FWT Model LSF 340 “has the property of both trans receiver and features of a telephone and the item is capable of operating on cellular technology and, therefore, the same could be covered under Sl. No. 313 of Customs Notification No. 21/2002.” The learned Senior Counsel mentioned that the opinion tendered by Department of Telecommunications which is the Model Department of Government of India in relation to telephone cannot be brushed aside without assigning technical reasons. He also contended that the Circular issued by the Central Board of Excise and Customs cannot alter the Tariff and Notification; that if the Revenue wants to restrict, the benefit of exemption notification only to Mobile phone, it should have been specifically mentioned in the notification; that both the Tariff Heading and Sl. No. 313 of the Notification refers to “Cellular Phones” and not to Cellular Phones which are handsets or mobile”. He relied upon the decision of the Delhi High Court in the case of Madras Rubber Factory Ltd. v. Union of India, 1980(04)LCX0021 Eq 1981 (008) ELT 0804 (Del.) wherein it has been held that “the exemption granted by notification cannot be altered by putting additional conditions by Press notes, or trade notices.” Reliance has also been placed on the decision in Inter Continental (India) v. Union of India, 2002(02)LCX0021 Eq 2003 (154) ELT 0037 (Guj.) wherein the Gujarat High Court has held that it would not be permissible to permit Revenue to impose condition in a notification by way of Circular as “it would give licence to the executive to bypass/override the legislature and cannot be countenanced.”, and Izharul Haque v. Joint Director General of Foreign Trade, 2001(04)LCX0008 Eq 2001 (132) ELT 0539 (Cal.). He, further mentioned that FWT Model LST-250 is also based on Cellular technology and as such is classifiable under sub-heading 8525.20.17 of the Tariff. He finally mentioned that the features of both Mobile phone and FWT are same as both are wireless, operate through Base Trans Receiver Station and mobile; that the difference was only in size and the instrument; that both the impugned Models have been classified under sub-heading 8525.20.17 in Mumbai Customs House.

4. Alternatively, the learned Senior Advocate contended that the impugned goods may be allowed the benefit of serial No. 427 of Notification No. 21/2002-Cus.; that Serial No. 427 of the Notification provides concessional rate of duty in respect of “Routers, modems and fixed wireless terminals (FWT)”; that as the impugned goods are FWT, the benefit of the said serial No. cannot be denied on the ground that the goods are not classifiable under Heading 85.17 of the Tariff, which is mentioned in Serial No. 427. He relied upon the Board’s Circular No. 9/96-Cus., dated 13-2-96 wherein it is mentioned that “if the goods are squarely covered by the description but not by the Chapter Heading Nos. and the specified tariff references could never be linked to goods as they are described, then it could only be case of mention of incorrect Chapter No./Heading No./or sub-heading No. and may be due to inadvertence and therefore should not be a basis of the denial of exemption .... In view of the law laid down by the Supreme Court in the matter of Jain Engineering v. Collector of Customs [1987(09)LCX0020 Eq 1987 (032) ELT 0003 (S.C.)]…..”

5. Countering the argument, Mrs. Krishna A. Mishra, learned Senior Departmental Representative, submitted that both the Heading in the Tariff and Sl. No. 313 of Notification No. 21/2002 refers to Cellular phone which the impugned products are not; that as per the description of these goods on the labels affixed to them, the impugned goods are “Fixed Wireless Terminals” and are not described as Cellular Phones; that Cellular telephone is synonymous with Mobile which is apparent from the definition of expression “Cellular System” given in “The Electronics Hand Book; (Editor-in-Chief Jerry C. Whitaker); that according to the Hand Book Cellular System is defined as under :

“Cellular System : A high capacity land mobile radio system in which an assigned frequency spectrum is divided into discrete channels that are assigned in groups to cells covering the cellular geographic service area. The discrete cells can be reused in different cells within the same service area. Calls are handed off automatically from a channel in one cell to a different channel in an adjacent cell as the mobile unit moves across cell boundaries.”

She contended that thus cellular phones are those phones which have mobility and can be used anywhere; that geographical areas are divided into small cells where each cell is having communication set up to receive, amplify and transmit a signal received from another cell thus providing mobility; that the benefit of Serial No. 313 is available only to cellular phones and not for fixed wireless telephones; that Board’s Circular is not introducing any new condition/ restriction in the Notification; the Circular is only clarifying the position. Regarding FWT Model LST-250, the learned Senior Departmental Representative mentioned that it is by itself not a phone as it on its own cannot work as a telephone as it has to be connected to another system. She finally submitted that the benefit of Serial No. 427 will also not be available to Model LST-340 as it is a Fixed Wireless Telephone and not Fixed Wireless Terminal.

6. We have considered the submissions of both the sides. Heading 8525.20.17 applies to “Cellular Telephones”. As far as FWT Model “LST 250” is concerned, we observe that it does not have the facility of a telephone as neither one can receive the message or transmit the message unless and until it is attached to some telephone apparatus. It thus can not be classified under sub-heading 8525.20.17 of the Customs Tariff and it will be appropriately classifiable under sub-heading 8525.20.19 of the Customs Tariff as it has not been disputed by the Revenue that the said model is not a ‘transmission apparatus incorporating reception apparatus’.

7. Now coming to the question of classification of CDMA FWT Model LSP-340, we observe that the issue to be decided is whether it is a ‘Cellular telephone’. The contention of the Appellants is that it is a cellular phone as it is based on cellular technology and Department of Telecommunications has opined that benefit of serial No. 313 of Notification No. 21/2002-Cus. is available. On the other hand, the contention of the Revenue is that the Cellular phone is that phone which is mobile and the impugned goods being ‘Fixed Wireless Terminal’ as per catalogue itself, the same is not a cellular phone merely because it is based on cellular technology. We find substance and force in the submission of the learned Senior Departmental Representative. No technical literature or opinion has been brought on record that every phone based on cellular technology will be called “cellular phone” Even according to Newton’s Telecom Dictionary, referred to by the learned Senior Advocate, Mobile Phone is “one term for cellular phone.” According to Work Book Encyclopedia, “cellular telephone is a movable telephone unit. It allows people to communicate over a wide area by using a combination of radio, telephone and computer technology.” This Encyclopedia also explains the manner in which a cellular telephone functions as under :

“A Cellular communication system consists of three main parts : (1) a cellular telephone, (2) a network of low powered radio aerials, and (3) a central switching office. When a call is made on a cellular telephone, radio waves carry the message to an aerial transmitter. This aerial is centrally located in a geographical area called a cell. Cells vary in size and number, according to the area of the network. The transmitter sends the message to a computerized central switching office. The central switching office transmits the message to a local or long distance telephone company, where the call is sent to its destination. As a caller moves across a service area, the call is automatically passed from one transmitter to another without interruption of operation.”

8. It is thus apparent that the cellular telephone has to be a mobile one. This is strengthened from ‘The Electronics Hand Book’ wherein the ‘Cellular Service Evolution’ speaks of mobile service. It is an admitted fact that the impugned product Model LSP-340 is a “Fixed Wireless Terminal’ as per the manufacturer/exporter itself. No doubt there is no necessity of laying down wires as in the case of landline telephones; but this facility itself does not make them mobile telephones. The technology used in the impugned goods make its installation easy as it works on wireless technology. As per the Appellants themselves “FWT (Phone Type) was provided wherever land line connections could not be offered by M/s. Tata Teleservices Ltd. and the customer insists on having telephone facility with the tariff rates applicable to land line telephoning. Therefore, the cellular technology was offered as a land line by TTSL.” We, therefore, agree with Revenue that the impugned goods is not classifiable as cellular telephone under sub-heading No. 8525.20.17 of the Tariff. It is appropriately classifiable under sub-heading 8525.20.19 of the Customs Tariff. In view of our findings, the decision relied upon by the learned Senior Counsel are not applicable to the facts of the present material as the Board’s Circular is not imposing any new condition/restriction for availing the benefit of Notification No. 21/2002-Cus. (Sl. No. 313). We, however, find force in the contention of the learned Senior Advocate that the benefit of Serial No. 427 inserted by Notification No. 26/2003-Cus. in Notification No. 21/2002-Cus. will be available to both the Models as these are Fixed Wireless Terminals covered by Serial No. 427. The mere fact that the serial No. 427 refers to Heading No. 85.17 will not make the exemption non-available as the description of the goods fits the impugned product and the Government itself has clarified vide Circular No. 9/96-Cus., dated 13-2-96 that “the benefit of exemption will be available to these goods even though the articles mentioned in the notification are not covered by the Chapters/Heading Nos./Sub-heading Nos. mentioned in the notifications” if the goods are squarely covered by the description.

9. The Appeals are thus disposed of in the above manner.

Equivalent 2004 (168) ELT 0181 (Tri. - Del.)

Equivalent 2004 (065) RLT 0497 (CESTAT-Del.)