2005 (11) TMI 94 - AAR - Customs

Whether submerged repeater, generic R4 proposed to be imported into India, is classifiable under Item No. 8517 50 99 of the First Schedule of the Customs Tariff Act, 1975 ?

Summary

Issues involved:
1. Classification of submerged repeater, generic R4.
2. Applicability of General Interpretative Rules for classification.
3. Consideration of international rulings and World Customs Organization agreements.

Issue-wise detailed analysis:

1. Classification of submerged repeater, generic R4:

The applicant, a wholly owned subsidiary of M/s. Alcatel, France, sought a ruling on whether the submerged repeater, generic R4, is classifiable under Item No. 8517 50 99 of the First Schedule of the Customs Tariff Act, 1975. The applicant argued that the product is a telecommunication apparatus classifiable under sub-heading 8517 50, which includes "other apparatus, for carrier-current line systems or for digital line systems." They supported their stance with rulings from UK, USA, and Australian Customs, which classified the product under tariff sub-heading 8517 50.

The Commissioner of Customs, however, contended that the repeater should be classified under Tariff Item 8543 89 79, arguing that it functions as an amplifier with an independent function, not covered more specifically by any other heading in Chapter 85.

2. Applicability of General Interpretative Rules for classification:

The Commissioner relied on General Interpretative Rule 3(a), which prefers the heading providing the most specific description over more general descriptions. He argued that since the repeater is an amplifier, it should be classified under Heading 8543, which includes "Electrical machines and apparatus having individual functions, not specified or included elsewhere in this Chapter." The Commissioner also referenced Rule 3(c), which states that when goods can be classified under two or more headings, the heading that occurs last in numerical order should be preferred.

The Authority, however, examined the technical literature and found that the product is a hybrid of optical, electronic, and mechanical systems, integral to a submarine telecommunication system for data transmission. The repeater's amplification function is part of the overall telecommunication apparatus, making Heading 8517 more appropriate. The Authority rejected the application of Rule 3(c) since the product does not fit under Heading 8543.

3. Consideration of international rulings and World Customs Organization agreements:

The applicant highlighted that the classification of repeaters was discussed at the World Customs Organization, which agreed that repeaters for wide area networks fall under Heading 8517. They also noted that India's schedule to the World Trade Organization's Information Technology Agreement classifies similar products under Heading 8517. The Authority acknowledged these international rulings and agreements, reinforcing the classification under Heading 8517.

Conclusion:

Based on the technical characteristics and the function of the submerged repeater, the Authority ruled that the product is classifiable under Tariff Item 8517 50 99 of the First Schedule of the Customs Tariff Act, 1975. The ruling aligns with international classifications and the World Customs Organization's principles, ensuring consistency in the interpretation of customs tariffs. The judgment was pronounced in the open Court on November 24, 2005.