2024 (11) TMI 64 - AT - Customs

Classification of import of the 6 Port Connector Assembly - Customs Tariff Item Entry 85177090 v/s Customs Tariff Item Entry 85389000 - as submitted from the pictorial details furnished by the appellant the imported goods are used in the manufacture of Patch Panel, which will be fitted in between/switch and the socket connecting the computer and the telecommunication network, therefore, they cannot be treated as parts of networking equipment, and they appear to be rightly classifiable under Chapter Heading 8538 as confirmed by the supplier in their invoices HELD THAT - We find that the impugned goods as per the Department are held to be classifiable under Customs Tariff Item Entry 85389000 under heading Others of chapter heading 8538, which reads as parts suitable for use solely or principally with apparatus of headings 8535, 8536 or 8537 . We find that the item was classified by the Department under chapter heading 8538 inter alia based on the classification adopted by the supplier in USA. We further find that the United States International Trade Commission adopts the classification under Harmonized Tariff Schedule (HTS), We find that the chapter headings of HSN code adopted by the Indian Customs and a HTS code of the US are not completely aligned. Hence, determination of classification based on HTS code of US for the purpose of Indian Customs Tariff Act does not appear to be tenable. The impugned item is an interface between the telecommunication network cabling and the computer network cabling, and it is not any Relay or Switching equipment to be excluded from the chapter heading 8517, in view of the exclusion provided in the HSN to chapter heading 8517. We find that the impugned goods are used in connecting a telephone or telecommunication network to a computer network for the purpose of transmission of voice, video and data and not for transmission of electricity and is not a relay or a switching equipment. The headings 8535, 8536 and 8537 are primarily for equipment and apparatus related to transmission and distribution of electricity. Hence, the classification of the impugned goods does not merit classification under any of the headings 8535, 8536 and 8537. Chapter Heading 8536 provides for specific classification for connectors of optical fibre, optical bundles or cables . We find that the impugned imported item is not meant for any connections of optical fibre or optical fibre bundles. Thus, we find that the classification of the impugned goods under Customs Tariff Item Entry 85389000 is not correct, and the classification should be under Customs Tariff Item Entry 85177090 as declared by the appellant.

Summary

Issues:
Classification of imported goods under Customs Tariff Item Entry 85177090 or 85389000.

Analysis:
The case involves the classification of imported goods, specifically the '6 Port Connector Assembly,' used in the manufacture of 'Patch Panel.' The appellant had classified the imported goods under Customs Tariff Item Entry 85177090, while the Department contended that they should be classified under 85389000. The dispute arose from the interpretation of HSN explanatory notes and the classification adopted by the exporting country. The Department issued a show-cause notice alleging misclassification and confirmed a differential duty of Rs. 12,16,783. The Commissioner (Appeals) upheld the classification and duty, leading to the appellant's appeal before the Tribunal.

The appellant argued that they had consistently classified the imported item under 85177090, which was accepted by Customs for years. They emphasized the functionality of the 'Patch Panel' in connecting telecommunication and computer networks, supporting their classification argument. The appellant also raised procedural objections, citing legal precedents regarding challenging Bill of Entry assessments and the need for proper justification for reclassification.

The Tribunal analyzed the nature and purpose of the imported goods, considering their use as an interface between telecommunication and computer network cabling. They examined the relevant Customs Tariff chapters and concluded that the impugned goods did not fit the criteria for classification under 8538. The Tribunal highlighted that the goods were not related to electrical circuits or optical fibers, as specified in other headings. They emphasized that the imported item facilitated data, voice, and image transmission between networks, distinguishing it from equipment primarily for electricity transmission.

Consequently, the Tribunal ruled in favor of the appellant, holding that the correct classification of the imported goods was under Customs Tariff Item Entry 85177090, aligning with the appellant's consistent classification practice. The appeal was allowed, and any consequential relief was granted as per law. The judgment emphasized the importance of proper classification based on the goods' functionality and purpose, ensuring alignment with the Customs Tariff entries.

This comprehensive analysis of the issues involved in the classification dispute showcases the Tribunal's meticulous review of the facts, legal arguments, and precedents to arrive at a well-reasoned decision in favor of the appellant.