2006 (2) TMI 196 - AAR - Customs

Whether each of the fourteen products proposed to be imported by assessee whose identifying descriptions have been enlisted in the Table in para 2 and whose technical details and representative samples have been produced by them before the Authority, is not covered by the Tariff Heading 8544 and would accordingly be appropriately classifiable under the Tariff Item 9001 10 00 of the First Schedule to the Act?

Issues Involved:
1. Classification of imported telecommunication cables under the Customs Tariff Act, 1975.
2. Determination of whether the cables are "made up of individually sheathed fibres."
3. Interpretation of relevant tariff headings and rules for classification.
4. Consideration of international rulings and technical opinions.
5. Impact of the Information Technology Agreement (ITA) on classification.

Issue-wise Detailed Analysis:

1. Classification of Imported Telecommunication Cables:
The applicant sought a ruling on whether the telecommunication cables they proposed to import were classifiable under Tariff Item 8544 70 90 of the First Schedule to the Customs Tariff Act, 1975. The cables in question were categorized into three types: OALC (submarine telecommunication cables), URC (submarine telecommunication cables), and Terrestrial (land telecommunication cables).

2. Determination of "Individually Sheathed Fibres":
The core issue was whether the optical fibre cables were "made up of individually sheathed fibres" as required for classification under Heading 8544. The applicant contended that their cables, coated with UV curable resin and housed in protective tubes, met this criterion. However, the Department of Information Technology (DIT) opined that the cables were not made up of individually sheathed fibres, as the coating did not constitute a sheath in the context of the tariff heading.

3. Interpretation of Relevant Tariff Headings and Rules for Classification:
The Authority examined the tariff headings 8544 and 9001. Heading 8544 covers "Insulated (including enameled or anodized) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors." Heading 9001 covers "Optical fibres and optical fibre bundles; optical fibre cables other than those of Heading 8544." The Authority emphasized that for classification under Heading 8544, it must be established that the cables are made up of individually sheathed fibres.

4. Consideration of International Rulings and Technical Opinions:
The applicant presented rulings from Customs authorities in the UK, USA, and Australia, classifying similar cables under Heading 8544. However, the Authority noted that these rulings did not provide independent technical evidence to support the classification. The DIT's technical opinion, based on physical examination of the samples, stated that the cables were not made up of individually sheathed fibres, as the UV curable resin coating did not qualify as a sheath.

5. Impact of the Information Technology Agreement (ITA) on Classification:
The applicant argued that classifying the cables under Heading 9001 would contravene the principles of the ITA, which aims to eliminate customs duties on information technology products. The Authority reviewed the ITA and India's schedule, which includes "Optical fibre cables" under Heading 8544 70. However, since the cables did not meet the criteria for classification under Heading 8544, they could not benefit from the ITA provisions.

Conclusion:
The Authority concluded that the optical fibre cables proposed to be imported by the applicant were not "made up of individually sheathed fibres" and thus did not qualify for classification under Heading 8544. Consequently, the cables were appropriately classifiable under Tariff Item 9001 10 00 of the First Schedule to the Customs Tariff Act, 1975. The ruling emphasized the distinction between coating and sheathing, noting that the improved coating technology did not equate to individual sheathing as required by the tariff heading. The decision was pronounced in the open court on 28-2-2006.

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