2006 Supreme(SC) 1003

2006(8) Supreme 543
SUPREME COURT OF INDIA
(From Karnataka High Court)
Ashok Bhan, Altamas Kabir and Dalveer Bhandari, JJ.
Commissioner of Customs, Bangalore - Appellant
versus
M/s Spice Telecom, Bangalore - Respondent
Civil Appeal No. 1695 of 2006
Decided on 19-10-2206
Counsel for the Parties :
For the Appellant : Mohan Parasaran, A.S.G., K. Swami, T.A. Khan and B.K. Prasad, Advocates.
For the Respondent : Joseph Vellapally, Sr. Advocate, Nikhil Nayyar and Raghavesh Singh, Advocates.

IMPORTANT POINT
Radio Terminals could be considered as Base Transcievers Station (BTS) ancillary equipment and thus entitled to the benefit of notification No. 11/97-Cus. dt. 1-3-1997.

Headnote:Customs Act, 1962 - Section 25 - Notification at 1-3-1997 exempting base transceivers stations (BTS) and BTS ancillary equipment from custom duty - Respondent imported sets of Radio Terminals and goods were got cleared on payment of applicable duty - Goods were classified as falling under Entry No. 8525.2009 - Claim for refund of duty amount on plea that radio terminals were to be classified either as “BTS” equipment or BTS ancillary equipment - Deputy Commissioner dismissed the claim taking view that Radio Terminals had independent function and identity and were not a part of BTS or MSC - Commissioner Appeals upheld the order - Tribunal held that radio terminals and antenna were ancillary equipment of BTS and granted benefit of exemption - Appeal - Word “ancillary” - Meaning - Cellular network system - To have inter-connectivity Radio terminals were a must - Technical literature indicated that radio terminals and antennas as ancillary equipment - Subsequent Notification which defined scope of ancillary equipment was effective only from 1-3-2002 and did not have retrospective effect - No infirmity in finding of Tribunal.

       Held : In order to have inter-connectivity Radio terminals are a must. The technical literature produced indicates that the radio terminal and antennas as ancillary equipment. It "aids and attends" to discharge the functions it is meant to discharge. The authority in original as well as the Commissioner (Appeals) have held that radio terminals are part of BTS therefore they are not eligible for exemption. Upholding the said view would amount to reading BTS components in the notification instead of BTS ancillary equipment which is not permissible under law. (Para 14)

       The technical literature submitted makes it clear that the radio terminals transport the already converted digital speech from BTS equipment to the BSC (Base Station Control) through the outdoor units and antennas. It demonstrates that these radio terminals are solely and principally used with the BTS and therefore they rightly qualify as BTS ancillary equipments to be eligible to the benefit of Notification No. 11/97 dated 1.3.1997 as amended by Notification No. 51/97 dated 2.6.1997. Radio terminal is not independent equipment having its own independent function. It cannot be termed as a general purpose radio equipment as the technical literature clearly indicates that this is specially designed to support Mobile Communication Network in particular GSM. The literature makes it abundantly clear that the radio terminal is not a stand alone equipment and cannot function at all, on its own, as contended by the Department. Revenue in its appeal has admitted that the radio terminal functions as a radio wave transmitter between BTS/BSC/MSC. Without this function BTS/BSC/MSC will be rendered useless as there will be no connectivity.(Para 15)

       The subsequent notification which defines the scope of ancillary equipment is effective only from 1.3.2002 and does not have retrospective effect. Respondents clearance pertains to July, 1998 and the Notification No. 21/2002 has come into effect with effect from 1.3.2002. It would not apply to the goods which have already been cleared. Notification No. 21/2002 cannot be given retrospective effect. In the absence of any express provision contained in the notification ordinarily it cannot be presumed that the same is retrospective in nature. Learned counsel for the Revenue has failed to show that the subsequent notification is clarificatory in nature. Incidentally, it may be mentioned that with regard to the identical goods imported through Delhi, wherein the items were classified under the same heading, Delhi Customs House extended the benefit of the said notifications to the respondent.(Para 16)

       We do not find any infirmity at the finding arrived by the Tribunal. The said finding is approved. For the reasons stated above, we do not find any merit in the appeal.(Paras 18 and 19)