2017 (1) TMI 471 - AT - Customs

Classification of imported goods - Network Security Device - classified under CTH 8517 or under CTH 8543? - Held that - the product is a Gateway Security Device. It has the function of transmitting the data through Network from one server to other and it has function of security for the data transmitted. Since the product has feature of transmission of data, it merits classification under the communication apparatus i.e. under CTH 8517. Since as per the application and function of the product, it is used for communication and transmission of the data. It finds place under the specific entry i.e. under 8517 - subject goods is correctly classifiable under CTH 8517 and not under CTH 8543 - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of imported goods - CTH 8517 vs. CTH 8543.

Analysis:
The appeal revolved around the classification of imported goods, specifically a Network Security Device, under CTH 8517 or CTH 8543. The Revenue contended that the device should be classified under CTH 8543 as a security device not used for communication. In contrast, the respondent argued that the device, named McAfee Web Gateway WBG-5500 Appliance, facilitated communication between servers and was correctly classifiable under CTH 8517. The respondent highlighted that the device acted as a router for data communication and referenced relevant HSN codes and foreign rulings supporting their classification argument.

The Tribunal carefully considered both parties' submissions and the Commissioner (Appeals) decision to classify the goods under CTH 8517. The Commissioner emphasized that the device acted as a security device protecting networks from external threats and was designed for network-specific use, thus falling under the more specific description of CTH 8517. The Tribunal agreed with this assessment, noting that the device's primary function was data transmission through a network, making it a communication apparatus under CTH 8517. They rejected the Revenue's argument of classifying the device under the residuary entry CTH 8543, as it was specifically designed and used for communication purposes, warranting classification under CTH 8517. Consequently, the Tribunal upheld the Commissioner's classification decision, dismissing the appeal and disposing of the Cross-Objection filed by the respondent.

In conclusion, the judgment clarified the classification of the Network Security Device under CTH 8517 based on its function as a communication apparatus facilitating data transmission between servers. The decision underscored the importance of specific product use and characteristics in determining the appropriate classification under the Customs Tariff Heading, ultimately upholding the initial classification made by the Commissioner (Appeals).