2023 (10) TMI 323 - AT - Customs

Classification of imported goods - to be classifiable under Customs Tariff Item 8517 7010 as claimed by the appellants or classifiable under Customs Tariff Item 8517 62 90 as contended by the Department? - HELD THAT - The government had provided concessional rate of basic customs duty of 10% on all products covered under the scope of tariff item 8517 6290 or 8517 6990, except for eight specified products specified therein. These include Optical Transport Network (OTN) products under entry 20(d). The said exemption notification does not perse provide for any aid for classification of goods. Hence, the conclusion arrived at by the learned Commissioner (Appeals) in the impugned order for excluding the classification of the imported goods under CTH 8517 7010 and for deciding the classification under CTH 8517 6290 on the basis of entries under exemption notification, cannot be agreed upon. It is a settled law that while statutory notifications may be looked at for the purpose of ascertaining the scope of goods covered under the exemption notification, they cannot be used to determine the classification of goods. The Co-ordinate Bench in the case of COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S RELIANCE JIO INFOCOM LTD 2019 (11) TMI 451 - CESTAT MUMBAI had dealt with the product antenna used with Base Transmission Station (BTS) for mobile telecommunication network, in which the matter is shown as pending in the Apex Court; whereas, in the case in hand, it is dealt with interface cards , whose features are entirely different than the products dealt with by the Co-ordinate Bench. Hence, the ratio of the judgement of Co-ordinate Bench does not apply to the facts of this case. The decision of the Tribunal in the case of COMMISSIONER OF CUSTOMS-MUMBAI (AIR CARGO IMPORT) AND COMMISSIONER OF CUSTOMS-MUMBAI (ACC) VERSUS RELIANCE JIO INFOCOMM LTD. 2022 (6) TMI 1051 - CESTAT MUMBAI deals with classification of cards i.e., Populated Printed Circuit Boards (PCBs) incorporated in photonic service switch. Thus, the imported goods in the present case interface cards being functionally similar, the decision of the Co-ordinate Bench of the Tribunal, which has been upheld by the Hon ble Supreme Court in COMMISSIONER OF CUSTOMS (IMPORT) VERSUS M/S. RELIANCE JIO INFOCOMM LTD. 2023 (1) TMI 1297 - SC ORDER , by holding that they do not think it is appropriate to interfere in the impugned order, is relevant to the present case. Thus, on the basis of the decision of the Tribunal which was upheld by the Hon ble Supreme Court, the impugned order is not sustainable. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of customs duty.
3. Confiscation and penalty.

Issue 1: Classification of Imported Goods
The appellants classified the imported goods as Populated Printed Circuit Board Assembly (PPCBA) under customs tariff item 85177010. The department disputed this, proposing reclassification under customs tariff item 85176290, which led to the issuance of a show cause notice and subsequent orders by the original authority and the Commissioner of Customs (Appeals). The Tribunal examined the scope of headings, section notes, chapter notes, and General Rules for Interpretation (GIR) of the Customs Tariff Act, 1975, and concluded that the imported goods, being "interface cards" used in cloud engine switches for data packet processing and traffic management, should be classified under sub-heading 851770 as parts of apparatus rather than as complete apparatus under 85176290.

Issue 2: Applicability of Customs Duty
The Commissioner (Appeals) held that the imported goods fell under the category of Optical Transport Network (OTN) products, which are excluded from exemption under notification No.75/2018-Customs dated 11.10.2018 and notification No.02/2019-Customs dated 29.01.2019, thus attracting a higher duty rate. However, the Tribunal found that exemption notifications cannot be used to determine the classification of goods and that the correct classification should be based on the statutory provisions of the Customs Tariff Act. The Tribunal held that the imported goods should be classified under CTH 85177010, attracting a lower duty rate.

Issue 3: Confiscation and Penalty
The original authority had ordered the confiscation of the imported goods and imposed a penalty of Rs.2,30,000/- under Section 112(a) of the Customs Act, 1962. The Tribunal, however, found that the imported goods were correctly classified by the appellants and that there was no mis-declaration or undervaluation. Consequently, the Tribunal set aside the confiscation and penalty orders.

Conclusion
The Tribunal set aside the impugned order passed by the Commissioner of Customs (Appeals), Mumbai-III, and allowed the appeal in favor of the appellants, holding that the imported goods should be classified under CTH 85177010 and are not liable for confiscation or penalty.