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2023 (11) TMI 68 - AAR - CustomsClassification of goods proposed to be imported - Routers - to be classified under sub-heading 8517 62 90 or not - eligibility benefit of exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended - HELD THAT - The impugned goods are devices that connect two or more packet-switched networks or sub-networks and deliver Wi-Fi network access to all parts of the house. They serve two primary functions managing traffic between these networks by forwarding data packets to their intended IP addresses, and allowing multiple devices to use the same internet connection. The Wavlink models Quantum D2G, Quantum S2K and WL-WN529E4 are wireless routers, which use an Ethernet cable to connect to a modem. A mesh Wi-Fi system is a home networking solution that opts for a more decentralised approach. Instead of connecting all the devices through the same router, mesh Wi-Fi systems rely on multiple Wi-Fi nodes. One node is the designated primary router and is directly wired into the gateway connection, while the other nodes act as satellites. Collectively, the nodes function as a single network. The device gets connected to the node that is closest to it. As per the applicant, the subject goods are classifiable under Chapter Heading 8517 of Customs Tariff Act, 1975 and ought to be specifically classified under sub-heading 8517 62 90, as they are routing apparatus and are supported by the HSN Explanatory notes under Heading 85.17. Further they attract eligibility benefit of exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended. In order to merit classification under 8517, it is essential that the subject goods under consideration meet the criteria as laid down in the relevant headings, sub-heading and notes cited above. From the relevant headings and HSN notes reiterated above, it is apparent that (a) Switching and routing apparatus are specifically covered under sub-heading 8517 62, (b) Routers are covered as other communication apparatus in the HSN notes under sub-heading 8517 62 and (c) Communication apparatus of sub-heading 8517 62 including routers, support the reception, conversion and transmission of signals and allow for the connection to a wired or wireless communication network - As the goods under consideration satisfy all the above conditions, they merit classification under sub-heading 8517 62. As the routers are not specifically covered under any tariff entry under said sub-heading 8517 62, they are classified under the residual Tariff Heading 8517 62 90. Further, Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended, exempts Routers falling under Heading 8517 62 90 from the whole of the duty of customs leviable thereon. As the impugned goods are held as classifiable under sub-heading 8517 62 90 they are entitled to the duty exemption benefit under the notification. The Routers covered under present application are classifiable under sub-heading 8517 62 90 of the First Schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended.
Issues Involved:
1. Classification of the routers under the Customs Tariff Act, 1975. 2. Eligibility for duty exemption under Notification No. 24/2005-Customs, dated 1-3-2005, as amended. Detailed Analysis: 1. Classification of Routers: The applicant, M/s. Ingram Micro India Pvt. Ltd., sought an advance ruling on the classification of four models of routers intended for import. The models are: - WAVLINK HALO Base Pro X2 Dual Band 1200 Mbps Wireless Mesh Router - WAVLINK QUANTUM D2G 1200 Mbps Dual Band Full Gigabit Wireless Router - WAVLINK QUANTUM S2K 300 Mbps Wireless Router - WAVLINK WL-WN529E4 4G LTE N300 Wireless Router The applicant argued that these routers should be classified under Chapter Heading 8517 of the Customs Tariff Act, 1975, specifically under sub-heading 8517 62 90, which includes "Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus." The applicant supported their classification with references to the Harmonized System of Nomenclature (HSN) Explanatory Notes, which state that routers are apparatus for the transmission or reception of data in a wired or wireless network. The applicant also cited various Supreme Court judgments to support the use of dictionary definitions and trade parlance for terms not defined in the statute. The Authority for Advance Rulings (AAR) agreed with the applicant, noting that the routers meet the criteria laid out in the relevant headings, sub-headings, and HSN notes. The routers are devices that manage traffic between networks by forwarding data packets to their intended IP addresses, and they allow multiple devices to use the same internet connection. Therefore, the AAR ruled that the routers are classifiable under sub-heading 8517 62 90. 2. Eligibility for Duty Exemption: The applicant also sought confirmation on the eligibility for duty exemption under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended. This notification exempts "Routers" falling under Heading 8517 62 90 from the whole of the duty of customs leviable thereon. The AAR noted that the applicant had been issued Show Cause Notices (SCNs) for the period prior to 1-1-2020, proposing a different classification (Tariff Item 8517 69 30) and denying the benefit of the notification. However, the specific Tariff Item for routers (8517 69 30) was eliminated effective 1-1-2020, and the exemption for routers under Sr. No. 13N of Notification No. 24/2005-Cus. was introduced only from that date. Given that the new legal framework came into existence from 1-1-2020, the AAR found no pending dispute under the current classification and notification benefit. Consequently, the AAR ruled that the routers are eligible for the duty exemption under Sr. No. 13N of Notification No. 24/2005-Cus., dated 1-3-2005, as amended. Conclusion: The Authority for Advance Rulings concluded that the routers in question are classifiable under sub-heading 8517 62 90 of the Customs Tariff Act, 1975, and are eligible for the duty exemption benefit under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended.
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