By TIOL News service

CHENNAI, SEP 12, 2016: REVENUE is in appeal against the order of the Commissioner (Appeals), wherein he held that the goods imported by the appellant were the parts, components and accessories of the Fixed Wireless Terminal (FWT) which was complimentary to the telephone instrument to function under CDMA technology and mobile phones and respondent is eligible to get the benefit of the Customs Notification No.21/2005-Cus. dt. 1.3.2005 and not liable to Additional Duty of Customs.

It is the contention of the revenue that the goods manufactured by the respondent was neither mobile handsets nor cellular phones since Fixed Wireless Terminal (FWT) is neither mobile handsets nor cellular phone. Accordingly, respondent is not entitled to the benefit of the Notification and the Commissioner (Appeals) misconceived the entire object of the notification and decided in favour of the respondent. It is the submission of Revenue that respondent manufactured Fixed Wireless Terminal (FWT) without making use of imported material for manufacture of mobile handsets or cellular phones. Therefore, exemption benefit claimed in terms of the notification above is deniable being contrary to law.

After hearing both sides, the CESTAT held:

++ Revenue submitted a copy of service manual of the FWT and argued that the physical appearance of the goods does not resemble cellular phones or handsets and also lacks in several other important features. However, the respondent made out its case explaining that the very same dispute has arisen time and again in the context of direct import of FWTs in the context of eligibility of exemption under the erstwhile Customs Notification No.21/2002-Cus., as amended by Notification No.26/2003-Cus. dt. 1.3.2003. It was also submitted that the Revenue initially held the view that such FWTs cannot be considered on par with mobile handsets/cellular phones. However, the view has since been changed, clarificatory circular has been issued by the CBEC Circular No.15/2006-Cus. dt. 20.4.2006. In this circular, reference has been made to Apex Court's decision in the case of TATA Teleservices Ltd. Vs CC. In this decision, the Apex Court has, in turn, referred to several other cases in which the technical question whether such FWTs can be considered as cellular phones has been discussed at length and the Apex Court concluded that technology used in the equipments imported by TATA Teleservices and the hand held mobile phones is the same and hence they will be eligible for the exemption notification available to hand held cellular phones. The Board in its circular has reiterated this and in turn has withdrawn earlier Circular No.57/2003 dt. 27.6.2003. Thus Apex Court has settled the issue once and for all that the equipments working on FWT technology can be considered to be on par with cellular phones.