TMI Blog2024 (1) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... ngle dash entry as parts . The classification under first single dash entry is not relevant for the impugned goods, as these are for telephony. The appropriate classification of the imported goods at Serial No.1 of Table at paragraph 12, would be under Customs Tariff Item 8517 70 10 covering Populated, loaded or stuffed printed circuit boards and for other impugned goods at Serial No. 2 to 13 of Table at paragraph 12, under Customs Tariff Item 8517 70 90 of the First Schedule to the Customs Tariff Act, 1985. Reliance placed in the Co-ordinate Bench of the Tribunal in the case Reliance Jio Infocomm Ltd. [ 2022 (6) TMI 1051 - CESTAT MUMBAI ] where the issue of classification of goods of similar nature such as Optical Transponder, Optical Amplifier, Mux Ponder, Multiplexers etc., being parts of Ciena 5430 model Packet Optical Switch Platform was decided by holding that the goods are appropriately classifiable as Parts under CTH 85177010. Since the products under the present dispute are different from antenna forming part of Basic Transmission Station dealt in that pending case, and that the factual matrix of both cases are different, the argument made by AR cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions of Customs Act, 1962 and the Customs Tariff Act, 1985. Further, inasmuch as All goods of heading 8517, other those specified goods in (i) to (iv) above are exempt from payment of basic customs duty (BCD), and in the absence of any conclusion that the impugned goods are of those category, which are specifically excluded by drawing proper classification and testing by authorised agencies in the form of test report or other evidences, it cannot be said that the impugned goods are excluded from availing the said duty exemption. Thus, the impugned goods under consideration would appropriately be classifiable under CTH 8517 70 and not under CTH 8517 62 90, as claimed by Revenue - the impugned orders passed by the learned Additional Director General (Adjudication) cannot be sustained on merits. Appeal allowed. - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) Shri Harish Bindumadhavan, Advocate for the Appellant Shri D.S. Mann, Authorized Representative for the Respondent Order Per: M.M. Parthiban 1.1 Brief facts of the case are that M/s Ciena Communications India Private Limited, Gurgaon, Haryana (herein af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the imported goods. 1.4 The investigation concluded that the appellants have mis-declared the nature of the goods as parts and they had fraudulently evaded payment of BCD by wrongly classifying the imported goods under CTI 85177090, whereas such goods are appropriately classifiable as machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus under CTI 85176290. Further, the investigation also concluded that in cases where the goods have been rightly classified, the appellants had wilfully claimed the ineligible BCD exemption through exemption entry in the notification No.11/2014-Customs dated 11.07.2014. Thus, DRI MZU investigation concluded that the manner adopted by appellants for suppressing the nature of the goods and mis-declaring the description of the goods are for the sole purpose of evading BCD is of their mens rea. These goods have been categorized by DRI MZU in Annexure-II IV of SCN and differential duty was demanded in the SCN dated 12.07.2019. 1.5 Investigation further concluded that majority of the goods imported by appellants are pertaining to optical transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Line Module Printed Circuit Board (PCB) 2. Pluggable Removable parts which are inserted in ports of the Line Module above and connect the optic fiber and line modules. 3. Controller Card Controls the overall functionality of the networking equipment by controlling the power distribution unit and fan speed based on temperature of the data collected at various line modules. 4. Switch Module Establishes the interconnection between the signal and line module 5. Switch Control time module A combination of switch module and controller card. 6. Line amplified module Amplifies the signal passing through the optic fibre to enable it to travel longer distances. 7. Transponder/ Mux ponder In a telecommunication context, a transponder is a satellite repeater, which accepts the weak incoming signals from the Earth stations, boosts them, shifts them from the up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted by the Appellants categorically, without exception, fit in to the criteria adopted by the Hon'ble Supreme Court. All the goods in the instant case are parts that are (1) necessary and integral component of, and (2) essential to the operation of the following Ciena US equipment viz., (i) Ciena 5410 digital cross connect; (ii) Ciena 6500 reconfigurable optical add drop multiplexer (ROADM); and (iii) Ciena 6500 optical line amplifier (OLA). He stated that each product in question performs a specific and vital role as part of the above-mentioned equipment, without which the equipment would not be able to attain the particular capacity required to perform its destined function. Furthermore, the goods imported by the Appellant are functional only when installed in to the above-mentioned equipment. By common usage and practice the goods in question are used as parts of the switching and routing apparatus in an optic fibre network. Thus he concluded that the goods in the instant case are necessary and integral components for the equipment and are correctly classifiable only as parts under CTH 8517 70, not as other 'Machines for the reception, conversion and transmission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een followed in this case. However, he also stated that for 4 products as per such report, the products can be considered as equipment only. 4. Heard both sides and perused the records of the case. We have also considered the additional written submissions given in the form of paper book by learned Advocate for the appellants as well as Authorised Representative for the Revenue, and the arguments advanced during the hearings of this case. 5. The issue involved in the present appeal relates to classification of goods imported by the appellants for providing support services in respect of telecommunication networking equipment. In respect of the of disputed goods pertaining to clearances made during the period i.e., from July, 2014 to July, 2018, the appellants had imported the same for different types of networking equipment like Ciena 5430 , Ciena 5400 , Ciena 6500 etc. The details of individual description of thirteen products and its functions are contained in the discussion at para 5.3 5.3.1 of the impugned order and the paragraph 31 of the appeal papers filed by the appellant. By treating the impugned goods either as parts classifiable under CTH 8517 70 or as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PORT TARIFF Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished articles has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provisions does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub- headings of a heading shall be determined according to the terms of those sub headings and any related sub headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires. THE GENERAL EXPLANATORY NOTES (GEN) TO IMPORT TARIFF 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by - , the said article or group of articles shall be taken to be a sub- classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by - - , the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has - . where the description of an article or group of ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub-heading. In the event of the goods cannot be classified solely on the basis of GIR 1, and if the headings and legal notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Further, while classifying goods, the foremost consideration is the 'statutory definition', if any, provided in the Customs Tariff Act. In the absence of any statutory definition, or any guideline provided by HS explanatory notes, the trade parlance theory to be adopted for ascertaining as to how the goods are known in the common trade parlance for the purpose of dealing between the parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 85 and Heading 8517, there is no difference of opinion among the appellants and the department. The dispute in classification lies in the narrow compass of the Sub-headings and the respective Tariff Items falling there under. Now, we may closely examine the scope of the contending Sub-headings and Tariff Items thereof for determining correct classification of the imported goods. The relevant tariff entries in the First Schedule to the Customs Tariff Act are extracted as below: Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . . . . . u Free - 8517 62 --Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus : u 8517 62 10 --- PLCC equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 62 20 --- Voice frequency telegraphy . . . . . . . . . . . . . . . . . . u Free - 8517 62 30 --- Modems (modulators-demodulators). . . . . . . . . . . u Free - 8517 62 40 ---High bit rate digital subscriber line system (HDSL) u Free - 8517 62 50 ---Digital loop carrier system (DLC). . . . . . . . . . . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8517 70 10 --Populated, loaded or stuffed printed circuit boards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [u] Free - 8517 70 90 --Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . kg Free - 10. It could be seen that by applying the GIR 1 - rule at (i) above, the position is made clear that Heading 8517 by description covers within its scope and ambit, mainly of two broad categories of goods for ascertaining proper classification: (i) first one i.e., Telephone sets, including telephones for cellular networks or for other wireless networks and (ii) the other, second one i.e., other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network ) , which are other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528. 11. Hence, in simple words, it can be put that the dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dules. 6 Line Amplifier module These are modules which are interconnected through fibers to constitute an interconnected system to amplify the signals in multiple directions. 7 Wave Length Selectable Switches(WSS) module The function of switches is to simply transmit the optical signals into different directions. The acts like a mirror that take the light and transmits it to a desired direction. WSS can dynamically route, block and attenuate all the DWDM wavelength within the network node. 8 Transponder/ Mux ponder module It collects signals from different client port using pluggable and maps into Dense Wavelength Division Multiplexing wavelength which needs to be transported over DWDM network. It is the medium through which the incoming signal is converted from an optical signal to an electrical signal and then into the final output optical signal. 9 Splitter Coupler It is a passive device, which is used to separate the optical power and transmit to two adjacent fibers. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules : (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517; (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 3. Unless the context otherwise requires, composite machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne sets with cordless handsets 8517.12 --Telephones for cellular networks or for other wireless networks 8517.18 -- Other - Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network): 8517.61 -- Base stations 8517.62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus 8517.69 -- Other 8517.70 - Parts This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r line telephony, a television camera and a television receiver (transmission by line). (D) Apparatus for telegraphic communication other than facsimile machines of heading 84.43. These apparatus are essentially designed for converting characters, graphics, images or other data into appropriate electrical impulses, for transmitting those impulses, and at the receiving end, receiving these impulses and converting them either into conventional symbols or indications representing the characters, graphics, images or other data or into the characters, graphics, images or other data themselves. Examples are . (E) Telephonic or Telegraphic Switching Apparatus. (F) Transmitting and receiving apparatus for radio-telephony and radio-telegraphy .. (G) Other communication apparatus. This group includes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network. Communication networks include, inter alia, carrier-current line systems, digital-line systems and combinations thereof. They may be configured, for example, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r other data, including switching and routing apparatus. The impugned goods do not get covered under the group of Base stations and thus needs to be examined for coverage under the next group of other machines of sub-heading 851762 or under others . The various goods specified under specific CTI of the First Schedule under 85176210 to 85176270 being PLCC equipment, Voice frequency telegraphy, Modems (modulators-demodulators), High bit rate digital subscriber line system (HDSL), Digital loop carrier system (DLC). Synchronous digital hierarchy system (SDH), Multiplexers, statistical multiplexers, these are not specifically cover any of the 13 specified products which are the impugned goods in this case. We also note that the item at Sl. No. 12 is Multiplexer, Demultiplexer - Mux/Demux by its functional input is a passive device for multiplexing and de-multiplexing optical wavelengths into a single fiber pair i.e., combining and splitting of multiple optical wavelengths, and thus these are different from the one mentioned under 8517 6270. Similarly, the goods specified under CTI 8517 6910 to 85176970 covering ISDN System, ISDN terminal adaptor, Routers, X25 Pads, Subscriber end e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or regeneration of voice, images or other data, including switching and routing apparatus. Further, in terms of Section Note 2(b) to Section XVI, parts which are equally suitable for mic principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517 only. Hence, in our considered view, the appropriate classification of the imported goods at Serial No.1 of Table at paragraph 12, would be under Customs Tariff Item 8517 70 10 covering Populated, loaded or stuffed printed circuit boards and for other impugned goods at Serial No. 2 to 13 of Table at paragraph 12, under Customs Tariff Item 8517 70 90 of the First Schedule to the Customs Tariff Act, 1985. 23. We also find that our such view has also been considered favourably by the Co-ordinate Bench of the Tribunal in the case Reliance Jio Infocomm Ltd. (Supra) where the issue of classification of goods of similar nature such as Optical Transponder, Optical Amplifier, Mux Ponder, Multiplexers etc., being parts of Ciena 5430 model Packet Optical Switch Platform was decided by holding that the goods are appropriately classifiable as Parts under CTH 85177010. The relevant paragraph in the above or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as above, and considering the fact that Commissioner (Appeals) has been consistent in rejecting the department s claim, we are of the considered opinion that there is no merit in the appeals filed by the Department. 24. The aforesaid order was appealed by the department before the Hon ble Supreme Court (Civil Appeal No. 000586 - 000598 of 2023), and the same were dismissed. The relevant paragraphs in the said judgement are extracted below: IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No(s). OF 2023 (Arising out of Diary No(s). 31965/2022) COMMISSIONER OF CUSTOMS (IMPORT) Petitioner(s) VERSUS M/S RELIANCE JIO INFOCOMM LTD. Respondent(s) ORDER Mr. Balbir Singh, learned Additional Solicitor General, after getting instructions, fairly submits that the revenue has not indeed challenged the order(s) in the similar matters as mentioned in the Order(s) impugned. Therefore, we do not think it is appropriate to interfere in the impugned order(s). Consequently, the Appeals are dismissed. Pending applications, if any, are disposed of. We also note that when the Hon'ble Supreme Court decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pending before the Apex Court in C.A. Diary No. 14979/2020. However, we find that since the products under the present dispute are different from antenna forming part of Basic Transmission Station dealt in that pending case, and that the factual matrix of both cases are different, we are unable to agree with the argument made by AR that the decision of Hon'ble Supreme Court in a similar case of Reliance Jio Infocomm Ltd. in C.A. No. 38695/2022 should not be followed. Accordingly, we find that these arguments do not have any force, in determining the classification of the goods, in the present case. 26. Having decided the issue of classification, now we would like to peruse the scope of exemption contained in the relevant entry in the notification No. No.11/2014-Customs dated 11.07.2014. We find that the said notification is an amending notification to the firstly issued Notification No.24/2005-Customs dated 01.03.2005 which was subsequently amended vide Notification No.132/2006-Customs dated 30.12.2006. The relevant extracts of the above said notifications are given below: Notification New Delhi, dated the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, namely:- In the said notification (i) in the opening paragraph for the words, figures and letters following goods, falling under the heading, sub-heading or tariff-item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and specified in column (2) of the Table below , the words following goods of the description as specified in column (3) of the Table below and falling under the heading, sub-heading or tariff-item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table shall be substituted; (ii) for the table, the following table shall be substituted, namely: Sr. No. Heading, sub- heading or tariff item Description (1) (2) (3) 1 3818 00 All goods xx xx xx 13 8517 All goods xx xx Xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... POTS), Optical Transport Network(OTN) products, and IP Radios; (iii) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPLS-TP) products; (iv) Multiple Input / Multiple Output (MIMO) and Long Term Evolution (LTE) Products: provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. 27. On careful examination of the exemption entry at serial No. 13, at notifications dated 01.03.2005, 30.12.2006 and amendment introduced on the said exemption entry on 11.07.2014 indicate clearly that the exemption initially extended to All goods covered under the heading 8517 was restricted in its scope of coverage to All goods of heading 8517, other than the specified goods at (i) to (iv) above namely, (i) soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones, media gateways, gateway controllers and session border controllers; (ii) optical transport equipments, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS), Optical Transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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