Mitali Palnitkar
Published on: March 9, 2022 at 20:32 IST
The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) referred to the Issue of Eligibility to avail Benefit of Exemption of Basic Custom Duty (BCD) under Information Technology Agreement (ITA) in relation to Digital Still Image Video Cameras by Nikon to a Larger Bench.
The Bench consisted Justice Dilip Gupta (President) and PV Subba Rao (Technical Member).
According to Nikon, the Cameras can capture Still Image Photographs under different modes, which is its Primary Feature. Thus, they cannot classify as “Video Camera Recorders” but as “Digital Cameras.”
The Cameras were shipped out of factory with Firmware embedded in it that was provided by manufacturer Nikon Corporation, Japan. It restricts the Video Length of cameras in a single sequence to 29 minutes and 59 seconds.
The Exemption from Basic Custom Duty was denied to Nikon by the Commissioner (Appeals) Citing that the camera could Record Video for less than 30 minutes in single sequence, but this was imposed by Firmware Software, which is an Artificial Restriction that can be removed eventually.
Further, it was held that to determine how much Video could be recorded, Capacity of Storage is a significant factor.
The Utilization of maximum Storage Capacity is linked to period of Recording. Therefore, Storage Capacity shall exhaust when optimum level is achieved with no further scope for Recording Videos.
The issue was whether the Cameras imported by Nikon are eligible for Exemption from Basic Custom Duty under Serial number 13 of Notification dated March 1, 2005; Amended on March 17, 2012.
In the list of products covered under Information Technology Agreement, ‘Digital Still Image Video Cameras’ are also mentioned.
India is a signatory to Information Technology Agreement, it allowed imports of Electronic Goods including the said Cameras classifiable under Customs Tariff Heading 8525 at Nil Rate of Duty.
The Ministry of Finance in order to fulfill Obligations under Information Technology Agreement, issued Basic Custom Duty Exemption under 2005 Notification. The Exemption to the said Cameras was issued under Serial number 13 of 2005 Notification.
The Tribunal noted that the 2005 notification Amended in 2012 seeks to promote Trade in Information Technology products. In view that India is a signatory to Information Technology Agreement, the Notification shall be Interpreted in a way that promotes Obligation undertaken by India.
