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2025 (1) TMI 556 - AT - CustomsClassification of imported goods - Hybrid/Pure Matrix Cards for PTN Equipment - to be classified under under CTI 8517 70 90 or under CTI 8517 70 10 as parts of goods falling under Heading 8571 and CTI 8517 70 90 for Small Form Factor Pluggable for PTN Equipment? - HELD THAT - As in the case of cards of DWDM/OTN equipment, the subject goods in the present appeal cannot be considered as complete communication apparatus having an independent function. The subject goods cannot function independently without the other components of the main equipment and become functional only when plugged into the slot of modular chassis of the main equipment. Since the subject goods cannot be considered as an independent machine , like the machines mentioned under the heading Other Communication Apparatus in HSN Explanatory Notes to CTH 8517, the same will be classifiable as parts . A Division Bench of the Tribunal in Vodafone Idea Limited 2022 (9) TMI 1600 - CESTAT NEW DELHI in the matter of the appellant had examined the classification of router line cards imported for use in Cisco Routers. The Tribunal recorded a finding that in contrast to network interface cards, the cards under consideration were router line cards which were essential for the routers to operate. Thus, the Tribunal held that the correct classification of the cards would be under CTI 8517 70 90 as parts and not CTI 8517 69 90 as other communication apparatus . In the present case, the subject goods under dispute are not cross compatible with devices of other manufacturers and hence are solely usable for the pre-determined purpose i.e., usage with the main equipment. Thus, the subject goods also have no separable function of their own. It is also seen that the main equipment has modular chassis i.e., chassis has dedicated slots for the subject goods. Unless the subject goods are slotted in the chassis in their designated slots, the cards do not source power and intelligence and hence cannot operate independently of the main equipment - the twin tests laid down in Vodafone Idea Limited, are satisfied by the subject goods imported in the instant case and would be classifiable as parts of CTI 8517. It has been clearly established in Vodafone that NIC cards are distinct and separable from the overall equipment and thus satisfy the twin tests laid down by this Tribunal. Using the analogy laid down in Vodafone, the subject goods which are tailor-made for the main equipment are in contrast to the NIC cards and are very much essential for the main equipment to operate - the subject goods are not similar in nature to NIC Cards and any reliance on the classification of NIC Cards to determine appropriate classification for the subject goods is misplaced. Conclusion - Hybrid/Pure Matrix Cards for PTN Equipment would be classifiable under CTI 8517 70 10 as parts of goods and Small Form Factor Pluggable for PTN Equipment would be classifiable under CTI 8517 70 90. Appeal allowed. 1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Classification of Hybrid/Pure Matrix Cards and SFP Transceivers Relevant Legal Framework and Precedents: The classification of goods under the Customs Tariff Act is guided by the Harmonized System of Nomenclature (HSN) and relevant legal precedents. The appellant argued for classification under CTI 8517 70 10 and 8517 70 90, citing previous decisions such as Reliance Jio Infocomm Ltd. and Ciena Communications India Pvt. Ltd., where similar goods were classified as parts. Court's Interpretation and Reasoning: The Tribunal examined the nature of the goods and their function within the Packet Transport Network (PTN) equipment. It considered whether the goods could function independently or were integral parts of the main equipment. The Tribunal noted that the goods are designed to work specifically with the PTN equipment and cannot operate independently. Key Evidence and Findings:
Application of Law to Facts: The Tribunal applied Section Note 2(b) of Section XVI and relevant HSN Explanatory Notes, concluding that the goods are parts of the PTN equipment and should be classified under CTI 8517 70 10 and 8517 70 90. Treatment of Competing Arguments: The Tribunal rejected the department's argument that the goods were network interface cards (NICs) under CTI 8517 62 90, emphasizing that NICs are distinct and separable from the main equipment, unlike the subject goods. Conclusions: The Tribunal concluded that the goods are not independent apparatus but parts of the PTN equipment, thus classifiable under CTI 8517 70 10 and 8517 70 90. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "The subject goods cannot function independently without the other components of the main equipment and become functional only when plugged into the slot of modular chassis of the main equipment." Core Principles Established:
Final Determinations on Each Issue:
The judgment underscores the importance of accurately classifying goods based on their function and integration within a larger system, aligning with established legal precedents and technical definitions.
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