TMI Blog2021 (10) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... ted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function . The said products are principally used as a noncarrier ethernet switch as evident from the product catalogue. Therefore, the said products are classifiable as switches - It is a settled position of law that notification should be read and construed strictly. It is apparent that notification benefit is only available to routers. The services and standards of carrier ethernet have been defined by the Metro Ethernet Forum (MEF). From the product catalogue, it is clear that the instant products lack some essential features such as MPLS-TP, E-LAN services, MEF certification, etc. Carrier-class ethernet switches are generally used in telecommunication networks while non-carrier ethernet switches are used at homes/enterprises. From the product catalogue, it appears that the impugned devices lack most of these essential features - As per the Department of Telecommunication, classification of ethernet switches into carrier ether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as across multiple networks. Thus, the need for a separate switch and a router for performing switching and routing functions can be overcome with the installation of the DCSR. 3.1 The applicant has described the functioning of the devices as below: - Table 1: Specifications of the devices SN. Specification 7280R Series [DCS7280CR2K-60-1] 7800 Series [DCS-7816113-BND 1 Ports 25G SFP, 100G. QSFP and 40G QSFP 10 GbE, 25G SFP, 100G QSFP, 40G QSFP, 400G OSFP, and QSFP DD 2 Throughput 12 Tbps 460 Tbps 3 Packets/second 5.02 Bpps Upto 6 Bpps 4 CPU Multi-Core x86 Multi-core Hyper-threaded x86 5 System Memory 8Gb 64Gb 3.2 As per the applicant, these devices are deployed in a wide range of open networking solutions including large scale layer 2 and layer 3 cloud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under the said tariff item. DCSRs under consideration in the present application are capable of performing routing functions. The fact that the DCSRs can also perform the function of switches would not dis-entitle them from the exemption granted. The applicant further stated that it is a settled legal position that when an exemption is granted for a machine performing a function, it cannot be denied merely because the machine is capable of performing other functions also. In support of above, they have submitted decisions in Twenty-First Century Printers v. CC [2003 (162) E.L.T. 1045 (Tri. - Del.)], Escorts Tractors Ltd v. CC [1998 (98) E.L.T. 717 (Tribunal)] and Escorts Limited v. CC [1996 (88) E.L.T. 379 (Tribunal)]. 4.2 Sr. No. 20 of the Notification No. 57/2017-Customs, dated 30.06.2017, as amended, provides for levy of Customs duty at the concessional rate of 10%. In the said notification, the goods falling under sub-headings 85176290 or 85176990, except the goods specified therein, are eligible for a concessional rate of duty. Following are the goods for which such concessional rate of basic Customs duty is not applicable: (a) Wrist wearable devices (commonly known as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 18.11.2016. It was clarified that there is no definite technical classification between carrier ethernet switch and enterprise ethernet switch based on features or services supported. Classification can only be ascertained based on the purchase order from the ultimate consignee. They can be classified based on usage of such devices by TSP/ISP or customer location where these devices will be used. In the above clarification, it was also emphasised that the classification will be based on the findings of the customs authority 5. In relation to the above-mentioned goods, the questions on which advance rulings have been sought are as follows: - 1) Whether DCSRs being imported by the Applicant are classifiable under the Tariff Item 8517 62 90 of the Customs Tariff of India? 2) If the answers to the above question are negative, then what would be the correct classification of the DCSRs under the Customs Tariff of India? 3) Whether DCSRs are eligible for claiming the benefit under Sr No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005? 4) Whether the DCSRs are eligible to claim the benefit under Sr. No. 20 of Notification 57/2017-Customs, dated 30.06.2017? 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the submissions made by the applicant during the personal hearing and reply received from the jurisdictional Principal Commissioner/ Commissioner and the submissions of the departmental officers at the time of the hearing. The issue at hand is to decide the classification of Data Centre Switch Router models (CS-7280CR2K-60-F and DCS-7816R3-BND Series) and the applicability of Sr. No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005 and Sr. No. 20 of Notification No. 57/2017-Customs, dated 30.06.2017 to these devices. The impugned devices are basically network equipment. Network equipment are devices that are dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input and output units. This includes the adapters, hubs, in-line repeaters, converters, concentrators, bridges/switches and routers. A network switch is another term for a device that connects different parts of a computer network together. Switches enable several users to send information over a network at the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data, including switching and routing apparatus. DCSRs are capable of performing functions such as reception, conversion and transmission of data. Further, the sub-heading specifically covers switching and routing apparatus. Therefore, the DCSRs performing both switching and routing functions are clearly classifiable under sub-heading 851762. As per the applicant, the instant DCSRs are predominantly used as switches in an ethernet network. Considering the above, DCSRs merit classification under sub-heading 851762 as a switching apparatus. For the 8-digit classification sub-heading, 85176290 appears appropriate 9. As regards the question regarding the eligibility for Sr. No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005, as amended; it is available to the goods of the description `routers' falling under sub-heading 85176290. Routers are among items under the Information Technology Agreement (ITA)- 1 of WTO on which signatories, including India, have pledged to eliminate customs duties. As per the applicant's submission, even if the DCSRs have routing capability, they function pre-dominantly as a non-carrier ethernet switch within the confines of a small/mediu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany (2018) 9 SCC 1 (FB)(SC), where it was held that When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue . The present goods are principally switches having ancillary routing capacity. Therefore, the said goods are not eligible for the benefit under Sr. No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005, as amended. 10. As regards the question regarding the eligibility for Sr. No. 20 of Notification No. 57/2021- Customs, dated 30.06.2017, as amended; it is available to all goods falling under sub-headings 85176290 and 85176990 other than certain goods mentioned under Sr. No. 20 of the said notification. Such excluded goods are already mentioned in paragraph 3. Goods specified in clauses (a) to (f) and (h) are not relevant. Clause (g) specifies goods such as Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching Transport Profile (MPLS-TP) products. The impugned devices cannot be classified as MPLS-TP or PTN products. Therefore, we need to examine whether it can func ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
