2018 (12) TMI 172 - AT - Customs

Classification of imported goods - Encoder / Multiplexer / Modulator - whether classified under CTH 8517 or under CTH 8528 of CTA? - Held that - In the instant case, it is an undisputed fact that the items in question, i.e. Encoders, Multiplexers, Modulators, are having individual functions. It is found that each of these products is having independent functions and are used for various purposes for transmission of data. The Appellants are selling these goods not only to TV Cable operators but also to other users such as Space Centre Application (Space & Satellite related applications), Infosys (Information Technology & Software industry), Hathway Cable Datacom (Cable & Broadband Network service provider), Broadband (Internet service provider). These products are used for conversion and compression (coding) used for conversion of signals as apparatus for transmission at transmission site for both wired and wireless networks (WAN & LAN). The goods are not used at subscribers end as reception apparatus for television - The adjudicating authority has over-looked this aspect while passing the impugned order. Further, the same goods have been imported into India by others classifying the same under CTH 8517. The goods classified under CTH 8517 have functions, whereas the goods falling under Chapter 8528 are only of reception apparatus with no functions of transmission. It is only on this basis that the impugned goods would merit classification under CTH 8517. As the impugned goods are having the function of transmission of data and other functions and hence the same would merit classification under CTH 8517 - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of imported goods (Encoders, Multiplexers, Modulators) under Customs Tariff Head 8517 vs. 8528.
2. Applicability of exemption from duty under Notification No. 24/2005-CUS.
3. Allegations of incorrect classification, duty evasion, and imposition of interest and penalty.
4. Interpretation of relevant tariff headings and explanatory notes.
5. Precedents and past import practices regarding similar goods.
6. Time-barred demands and allegations of suppression or intent to evade duty.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The core issue was whether the goods (Encoders, Multiplexers, Modulators) should be classified under Customs Tariff Head (CTH) 8517 or 8528. The adjudicating authority classified the goods under CTH 8528, arguing they are digital head-end equipment used in cable TV transmission, thus falling under "reception apparatus for television." However, the appellant contended that these goods are used for data conversion and transmission, fitting the description under CTH 8517, which covers apparatus for transmission or reception of voice, images, or other data in networks.

2. Applicability of Exemption from Duty:
The appellant availed of duty exemption under Notification No. 24/2005-CUS, which was challenged by the Revenue on the grounds of incorrect classification. The exemption was applicable if the goods were correctly classified under CTH 8517.

3. Allegations of Incorrect Classification, Duty Evasion, and Imposition of Interest and Penalty:
The Show Cause Notices (SCNs) alleged that the appellant wrongly classified the goods under CTH 8517 instead of 8528, leading to duty evasion. The adjudicating authority imposed duty, interest, and penalties based on this reclassification.

4. Interpretation of Relevant Tariff Headings and Explanatory Notes:
The appellant argued that CTH 8517 includes apparatus for transmission or reception of data in networks, excluding apparatus of heading 8528. They emphasized that their goods are used for data transmission and not solely for television reception. The explanatory notes to CTH 8517 and 8528 were pivotal in determining the correct classification. CTH 8517 covers apparatus for communication in wired or wireless networks, while CTH 8528 pertains to reception apparatus for television.

5. Precedents and Past Import Practices:
The appellant cited several judgments where similar goods were classified under CTH 8517. They also highlighted that similar goods imported by others were classified under CTH 8517, supporting their stance. The Tribunal referenced cases like Dejero Logix Pvt Ltd Vs CCU and Multi Screen Media, which supported classifying goods with transmission functions under CTH 8517.

6. Time-barred Demands and Allegations of Suppression or Intent to Evade Duty:
The appellant argued that the demands were time-barred and there was no suppression or intent to evade duty, as similar goods had been consistently classified under CTH 8517 in the past. They relied on judgments like Air Cargo, Mumbai V/s Indelox Services Pvt Ltd and HP India V/s Commr. of Customs, Delhi to support their claim that there was no intent to evade duty.

Judgment:
The Tribunal concluded that the goods in question (Encoders, Multiplexers, Modulators) are used for data transmission and not solely for television reception, fitting the description under CTH 8517. It was determined that the adjudicating authority overlooked the multifunctional nature of the goods and their use in various networks beyond cable TV. The Tribunal set aside the impugned order, classifying the goods under CTH 8517, and allowed the appeal with consequential reliefs, if any.

Conclusion:
The Tribunal's decision emphasized the multifunctional use of the goods in data transmission across various networks, aligning with CTH 8517. This classification entitled the appellant to the duty exemption under Notification No. 24/2005-CUS and negated the allegations of duty evasion and penalties. The judgment reinforced the importance of considering the primary function and use of goods in determining their correct classification under the Customs Tariff.

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