2024 (10) TMI 636 - AT - Customs

Classification of imported goods - MPC7E MRATE IRB 10G/40G 100 QSFP28-MPC-L3 Line Cards Router Line Cards - to be classified under Customs Tariff Item CTI 8517 69 30 of the First Schedule to the Customs Tariff Act, 1975 or under CTI 8517 62 90? - benefit of the Exemption Notification dated 01.03.2005 under Serial No. 13N - HELD THAT - A Division Bench of the Tribunal in the case of the appellant itself in M/s Vodafone India Limited 2022 (9) TMI 1600 - CESTAT NEW DELHI found that the Router Line Cards can be classified either under CTI 8517 70 90 or CTI 8517 70 10 - it was held that 'Router Line Cards are Populated PCBs as they are printed circuit boards mounted with various active and passive electronic elements. Therefore, these cards can be classified under CTI 8517 70 10, which covers populated, loaded or stuffed printed circuit boards . It would attract NIL rate of duty.' In view of the aforesaid decision of the Tribunal in M/s Vodafone India Limited, the classification of Router Line Cards by the Principal Commissioner under CTI 8517 62 90, as claimed by the department cannot be sustained. In this view of the matter, the classification of Router Line Cards by the appellant would have to be maintained. The order dated 24.02.2022 passed by the Principal Commissioner, therefore, deserves to be set aside and is set aside - appeal allowed.

Summary

Issues:
Classification of Router Line Cards under Customs Tariff Items, Demand of duty under Customs Act, Confiscation of goods under Customs Act, Imposition of penalty under Customs Act.

Classification of Router Line Cards:
The appeal was filed by M/s Vodafone Idea Limited challenging the reclassification of Router Line Cards imported by them. The Principal Commissioner rejected the appellant's classification under CTI 8517 69 30 and reclassified them under CTI 8517 62 90. The appellant argued that the Router Line Cards are parts of the main equipment and should be classified accordingly. The Tribunal found that the Router Line Cards can be classified under CTI 8517 70 90 or CTI 8517 70 10 based on their functionality and nature as parts of the main equipment. The Tribunal concluded that the classification by the Principal Commissioner could not be sustained, and the appellant's classification was upheld.

Demand of Duty under Customs Act:
The Principal Commissioner had demanded duty under section 28(1) of the Customs Act, 1962, along with interest. The appellant contended that they were entitled to exemption under specific notifications based on the classification of the Router Line Cards. The Tribunal's decision on the classification also impacted the duty demand, as the correct classification would determine the duty liability. The Tribunal's decision in favor of the appellant's classification also affected the duty demand, leading to the setting aside of the Principal Commissioner's order.

Confiscation of Goods and Imposition of Penalty:
The Principal Commissioner had also ordered the confiscation of the goods under section 111(m) of the Customs Act and imposed a penalty under section 112(a)(ii) of the Customs Act. The appellant argued against the confiscation and penalty, stating that their classification was correct and did not warrant such actions. The Tribunal's decision to set aside the reclassification by the Principal Commissioner also nullified the confiscation and penalty imposed, as they were based on the incorrect classification. Therefore, the Tribunal's decision to allow the appeal resulted in setting aside the orders for confiscation and penalty as well.