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2022 (10) TMI 328 - AAR - CustomsClassification of imported goods - Gigabit Passive Optical Networks Optical Network Termination (hereinafter referred to as GPON ONT) for the purpose of trading - classifiable under sub-heading 8517 69 50 or under sub-heading 8517 69 30 of the Customs Tariff Act, 1975 - eligibility for a nil rate of duty as per Sr. No. 13P of Notification No. 24/2005-Customs, dated 1-3-2005 - HELD THAT - FTTH is a technology that delivers communication signals from a central point to the individual customer over optical fibre. A Gigabit Passive Optical Network (GPON) is a point-to-multipoint FTTH network architecture in which unpowered optical splitters are used to enable a single optical fibre to serve multiple customers. The network topology of GPON is as follows an Optical Line Terminal (OLT) at the provider s central office, Optical Network Terminals (ONTs) at the end user s premises and an Optical Distribution Network (ODN) in between the OLT and ONT to split and distribute the signal travelling along the GPON. Therefore, ONT is the access node in FTTH architecture for network termination installed within user premises. The applicant has proposed sub-heading 8517 69 50 (Subscriber end equipment) and sub-heading 8517 69 30 (Routers) for the classification of these devices. However, it is to be noted that the import tariff of Customs Tariff Act, 1975 does not have sub-heading 8517 69 30 as a router. Routers are covered under sub-heading 8517 62 90. Note 4 of Section XVI states that where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function - the impugned good is a combination of devices performing different tasks which are intended to contribute together to a clearly defined function covered by sub-heading 8517 69 50. Accordingly, the appropriate classification for said goods is under Tariff Entry 8517 69 50. Whether the impugned devices are classifiable as routers under sub-heading 8517 69 30? - HELD THAT - The device is covered under 8517 69 50, therefore, it is not classifiable under sub-heading 8517 62 90 as routers. In respect of applicability of Sr. No. 421 of Notification No. 50/2017-Customs, it is observed that the impugned device is not a standalone router. It is a settled position of law that notification should be read and construed strictly. It is apparent that notification benefit is only available to routers - the said goods are not eligible for the benefit under Sr. No. 13N of Notification No. 24/2005-Customs, dated 1-3-2005, as amended. In regards to the question type of products covered under Heading 8517 69 50 Chapter 85 of the Customs Tariff Act, 1975, the Telecom Regulatory Authority of India issued a document dated 22-4-2020 containing recommendations on network testing before commercial launch of services for wireline access services is refereed. As per this document, the subscriber end equipment covers, inter alia, customer premises equipment that is required in wireline access services, including landline telephone set, ONT (Optical Network Terminal), ISDN TA (Terminal Adapter), Broadband modem, PABX, etc. Therefore, Entry 8517 69 50 covers abovementioned devices, unless there is a specific entry for such device elsewhere. The imported goods are classifiable under sub-heading 8517 69 50 of the First Schedule to the Customs Tariff Act, 1975 and would be eligible to avail benefit of Sr. No. 13P of the Notification No. 24/2005-Customs as amended - benefit under Sr. No. 421 of the Notification No. 50/2017-Customs, dated 30-6-2017 would not be available as a router.
Issues Involved:
1. Classification of GPON ONT under sub-heading 8517 69 50 of the Customs Tariff Act, 1975. 2. Eligibility for nil rate of duty under Sr. No. 13P of Notification No. 24/2005-Customs, dated 1-3-2005. 3. Classification of GPON ONT as a router under sub-heading 8517 69 30 of the Customs Tariff Act, 1975. 4. Eligibility for nil rate of duty under Sr. No. 421 of Notification No. 50/2017-Customs, dated 30-6-2017. 5. Classification of GPON ONT if not under the above sub-headings and applicable rate of duty. 6. Products covered under sub-heading 8517 69 50 Chapter 85 of the Customs Tariff Act, 1975. Detailed Analysis: 1. Classification under sub-heading 8517 69 50: The applicant argued that GPON ONT, being a customer premise equipment used for transmission or reception of voice, images, or other data, falls within the ambit of subscriber end equipment and should be classified under sub-heading 8517 69 50. The judgment concurred, noting that the device performs functions of an optical modem and a wi-fi router, but is more than just a combination of these devices. It is a device performing varied functions located at the customer’s premises, thus classifying it under sub-heading 8517 69 50. 2. Eligibility for nil rate of duty under Sr. No. 13P of Notification No. 24/2005-Customs: The judgment confirmed that since the GPON ONT is classifiable under sub-heading 8517 69 50, it is eligible for a nil rate of duty as per Sr. No. 13P of Notification No. 24/2005-Customs, dated 1-3-2005. 3. Classification as a router under sub-heading 8517 69 30: The applicant alternatively proposed classification under sub-heading 8517 69 30, arguing that GPON ONTs perform similar functions to routers. However, the judgment clarified that routers are covered under sub-heading 8517 62 90, and although the GPON ONT performs routing functions, it also has additional functionalities. Therefore, it cannot be classified under sub-heading 8517 62 90 as a router. 4. Eligibility for nil rate of duty under Sr. No. 421 of Notification No. 50/2017-Customs: Since the GPON ONT is not a standalone router but performs additional functions, it is not eligible for the benefit under Sr. No. 421 of Notification No. 50/2017-Customs, dated 30-6-2017, which is applicable only to routers. The judgment referenced the Supreme Court's ruling in Commer. of Customs (Import) v. M/s. Dilip Kumar and Company, emphasizing strict interpretation of exemption notifications. 5. Classification if not under the above sub-headings and applicable rate of duty: The judgment did not find it necessary to address this issue separately, as it had already determined the appropriate classification under sub-heading 8517 69 50. 6. Products covered under sub-heading 8517 69 50: The judgment referred to the Telecom Regulatory Authority of India's document, which includes devices such as landline telephone sets, ONTs, ISDN TAs, broadband modems, and PABXs under the category of subscriber end equipment. Thus, sub-heading 8517 69 50 covers these devices unless there is a specific entry for such a device elsewhere. Conclusion: The imported goods are classifiable under sub-heading 8517 69 50 of the Customs Tariff Act, 1975, and are eligible for the benefit of Sr. No. 13P of Notification No. 24/2005-Customs, as amended. However, they are not eligible for the benefit under Sr. No. 421 of Notification No. 50/2017-Customs, dated 30-6-2017, as a router.
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