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2023 (6) TMI 904 - AAR - CustomsClassification of goods proposed to be imported - Nokia 7210 SAS products - classifiable under the tariff entry 85176290 of the Customs Tariff of India or not - benefit under Sr. No. 13N of Notification No. 24/2005 Customs dated 1st March 2005 as amended on 30th December 2019 vid Notification No. 36 / 2019-Customs - HELD THAT - The goods under consideration are networking devices. Nokia 7210 SAS product family provides service providers with IP routing and carrier ethernet demarcation, access, and aggregation for mobile backhaul, business, and residential service delivery. For enterprise and mission-critical network operators, the 7210 SAS products address stringent requirements for high network resiliency, deterministic network performance, and scalability. The goods principally work as routers along with carrier ethernet switches. These products are Layer-3 routers running IP protocols, segment routing, BGP, etc. These devices provide Layer-3 IP-VPN, EVPN, Internet Enhanced Services (IES) and Layer-2 services like VPLS and VLL. They also provide sophisticated Quality-of-Service (QoS), rich operation management and security features, typically required for routed carrier grade networks. Subheading 851762 covers machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus. Nokia 7210 SAS products are capable of performing functions such as reception, conversion and transmission of data. Therefore, the impugned products performing various functions including switching and routing are clearly classifiable under subheading 851762 - it is evident that the manufacturer is listing these products under the product portfolio of service routers. Accordingly, in trade parlance, these products are known as routers. In respect of notification benefit under Sr. No. 13N of Notification Noe 24/2005, as amended, the entry exempts routers from 100% BCD. As discussed in previous paras, based on the datasheet, trade parlance and technical opinion of TEC, the subject goods are routers capable of performing some additional functions - it is clear that the goods under consideration are routers. The notification does not distinguish routers based on intended use or capability. It does not bar the routers used by telecom network and support service providers. Therefore, the goods under consideration appear to be covered by the said notification. Accordingly, they are eligible to claim benefit under the above-mentioned notification. Nokia 7210 SAS products are classifiable under subheading 85176290 as routers and are eligible to avail the benefit under Sr. No. 13N of Notification No. 24/2005-Customs, as amended.
Issues Involved:
1. Classification of Nokia 7210 SAS products under the Customs Tariff of India. 2. Eligibility of Nokia 7210 SAS products for exemption under Sr. No. 13N of Notification No. 24/2005-Customs. Issue-wise Detailed Analysis: 1. Classification of Nokia 7210 SAS products under the Customs Tariff of India: The applicant, engaged in manufacturing and trading telecommunication network equipment, proposed to import Nokia 7210 SAS products and sought an advance ruling on their classification. The Nokia 7210 SAS Router family includes several models of modular and fixed routers, which perform IP routing and carrier Ethernet functions. The applicant argued that these products should be classified under subheading 85176290 of the Customs Tariff Act, 1975, as they are primarily IP routers. The applicant emphasized that these routers perform multiple functions including switching, which is a subset of routing. They cited Note 3 to Section XVI, which states that machines designed for performing multiple functions should be classified based on their principal function. The applicant provided technical specifications and case laws to support their claim. The Telecommunication Engineering Center (TEC) confirmed that the Nokia 7210 SAS products primarily function as routers, despite their capability to perform switching functions. Based on the technical specifications, trade parlance, and TEC's opinion, the Authority concluded that the Nokia 7210 SAS products merit classification under subheading 85176290 as routers. 2. Eligibility of Nokia 7210 SAS products for exemption under Sr. No. 13N of Notification No. 24/2005-Customs: The applicant sought to avail the exemption under Sr. No. 13N of Notification No. 24/2005-Customs, which exempts routers under subheading 85176290 from 100% Basic Customs Duty (BCD). The applicant argued that since the primary function of the Nokia 7210 SAS products is routing, they should be eligible for this exemption. The Authority referred to the Supreme Court's ruling in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company, which mandates strict interpretation of exemption notifications. The Court held that the burden of proving applicability lies with the assessee and that any ambiguity should be resolved in favor of the revenue. In this case, the Authority found no ambiguity in the exemption notification, which simply refers to "routers" without specifying any conditions or capabilities. Since the Nokia 7210 SAS products are classified as routers and there are no exclusions based on their intended use or additional functions, the Authority ruled that these products are eligible for the exemption under Sr. No. 13N of Notification No. 24/2005-Customs. Ruling: The Authority ruled that the Nokia 7210 SAS products are classifiable under subheading 85176290 as routers and are eligible to avail the benefit under Sr. No. 13N of Notification No. 24/2005-Customs, as amended.
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