2020 (11) TMI 9 - AT - Customs

Classification of imported goods - telecommunication internet equipment and their parts - classified under CTH 85176290 or under 85176290? - benefit of 10% BCD in terms of Notification No.57/2017 dated 30.06.2017 - HELD THAT - The impugned goods have been classified under 85176290 by the appellant in the past and learned counsel has submitted evidence to the effect that the same are being classified under same heading even afterwards at various customs locations and exemption is being allowed as claimed. We also find that ADG (Adjudication), DRI has passed a comprehensive order holding the classification of the goods in favour of the appellants. Learned counsel has demonstrated that US and German Customs have given rulings classifying the goods at six digit level as claimed by the appellants. Department has not made out any case for reopening of the classification of the impugned goods. Classification of the imported goods should be based on specific headings, section notes and chapter notes and General Rules of Interpretation of Tariff and HSN. The department has tried to change the classification of the goods being imported by the appellants from CTH 85176290 to CTH 85176990 on the basis of a notification without making any case for revising the classification of the goods. This is not permissible. The department s reliance on Notification No.2/2019 which is subsequently issued is misplaced; cannot be made applicable retrospectively and therefore, not applicable to the present facts of the case. While Revenue was free to decide on the eligibility of the impugned products for exemption under any notification. It is to be noted that the learned counsel for the appellant submits that they are discharging duty, at the merit rate, on carrier Ethernet Switches when they are imported for supply to telecom service providers, even though classified under CTH 85176290. However, it is not open to them to change the classification on the basis of an exemption notification when there is no change in the Customs Tariff Act, 1975. The impugned goods are rightly classifiable under CTH 85176290 in view of the past and present practice of the department, Rulings of US and German Customs and the order by ADG (Adjudication), DRI. Department has not adduced any evidence to show that the said order has been stayed by any competent authority - Appeal allowed.

Summary

Issues involved: Classification of telecommunication internet equipment and their parts imported by the appellant under Customs Tariff Act, 1975 and Notification No.57/2017; Proper classification of access points, Ethernet switches, and network appliances.

Classification of Telecommunication Internet Equipment:
The appeal revolves around the classification of telecommunication internet equipment imported by the appellant under the Customs Tariff Act, 1975. The appellant, Ingram Micro India Pvt Ltd., Chennai, imported goods declared as access points, enterprise class Ethernet switches, and networking appliances. The dispute arises from the classification of these goods under CTH 85176290 as per Notification No.57/2017, which the department contests. The appellant argues that classification should be based on the Customs Tariff Act, 1975, section notes, and chapter notes, not solely on a notification. The appellant cites legal precedents to support their stance, emphasizing the importance of proper classification under relevant rules and notes.

Classification of Access Points, Ethernet Switches, and Network Appliances:
Regarding access points, the appellant asserts that they should be classified under CTH 8517620050 based on clarifications from US and German Customs. The appellant claims exemption under Notification No.24/2005, which they believe is applicable. For Ethernet switches, the appellant distinguishes between carrier Ethernet switches and enterprise Ethernet switches, citing rulings from US Customs to support their classification under CTH 8517620050. The appellant argues that network appliances, specifically TPS, should be classified under CTH 85176290 due to their functionality in inspecting and blocking traffic. The appellant challenges the department's classification under CTH 85176990, highlighting inconsistencies in the decision-making process.

Judgment and Analysis:
The Appellate Tribunal, after hearing both sides and examining the evidence, found in favor of the appellant. The Tribunal noted that the impugned goods had consistently been classified under CTH 85176290, with exemption granted as claimed. Rulings from US and German Customs supported the appellant's classification. The Tribunal emphasized the importance of specific headings, section notes, and chapter notes in classification, rejecting the department's attempt to change the classification based solely on a notification without sufficient grounds. The Tribunal also dismissed the department's reliance on a subsequent notification, emphasizing that it cannot be applied retrospectively. The Tribunal upheld the appellant's classification under CTH 85176290, considering past practices, customs rulings, and the order by ADG (Adjudication), DRI. The decision allowed the appeal, classifying the goods as per the appellant's claims.