2024 (1) TMI 683 - AT - Customs

Classification of imported goods - goods imported by the appellants for providing support services in respect of telecommunication networking equipment - whether, the goods merits classification as parts under CTH 8517 70 as claimed by the appellants; or, is it classifiable as apparatus under CTI 8517 6290 as contended by the Department - eligibility for exemption under the Notification No. 11/2014 Customs dated 11.07.2014 for deciding on the appropriate levy of customs duty. HELD THAT - It is obvious that as the impugned goods in this case relates to reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing function, for providing services of telecommunication networking equipment, the classification is feasible either under the second single dash entries or classification under third single dash entry as parts . The classification under first single dash entry is not relevant for the impugned goods, as these are for telephony. The appropriate classification of the imported goods at Serial No.1 of Table at paragraph 12, would be under Customs Tariff Item 8517 70 10 covering Populated, loaded or stuffed printed circuit boards and for other impugned goods at Serial No. 2 to 13 of Table at paragraph 12, under Customs Tariff Item 8517 70 90 of the First Schedule to the Customs Tariff Act, 1985. Reliance placed in the Co-ordinate Bench of the Tribunal in the case Reliance Jio Infocomm Ltd. 2022 (6) TMI 1051 - CESTAT MUMBAI where the issue of classification of goods of similar nature such as Optical Transponder, Optical Amplifier, Mux Ponder, Multiplexers etc., being parts of Ciena 5430 model Packet Optical Switch Platform was decided by holding that the goods are appropriately classifiable as Parts under CTH 85177010. Since the products under the present dispute are different from antenna forming part of Basic Transmission Station dealt in that pending case, and that the factual matrix of both cases are different, the argument made by AR cannot be agreed upon that the decision of Hon'ble Supreme Court in a similar case of Reliance Jio Infocomm Ltd. 2023 (1) TMI 1297 - SC ORDER should not be followed. Accordingly, these arguments do not have any force, in determining the classification of the goods, in the present case. Scope of exemption contained in the relevant entry in the N/N. 11/2014-Customs dated 11.07.2014 - HELD THAT - On careful examination of the exemption entry at serial No. 13, at notifications dated 01.03.2005, 30.12.2006 and amendment introduced on the said exemption entry on 11.07.2014 indicate clearly that the exemption initially extended to All goods covered under the heading 8517 was restricted in its scope of coverage to All goods of heading 8517, other than the specified goods at (i) to (iv) above namely, (i) soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones, media gateways, gateway controllers and session border controllers; (ii) optical transport equipments, combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS), Optical Transport Network (OTN) products, and IP Radios; (iii) Carrier Ethernet Switch, Packet Transport Node (PTN) products, Multiprotocol Label Switching-Transport Profile (MPLS-TP) products; (iv) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) Products. Thus, the aforesaid specified products are not eligible for exemption under the above Serial No.13 after the amendment vide notification dated 11.07.2014. However, in terms of the exemption entry at Serial No.40, newly introduced with effect from 11.07.2014, the parts of all the goods which are excluded from the scope of entry at Serial No.13, have been made eligible for basic customs duty exemption, which enables domestic manufacture of such goods, by allowing the parts of such goods to be imported under the duty exemption to encourage capacity building in indigenous production of such goods - thus, all parts of such goods at serial No.40, irrespective of its classification under any chapter of the First Schedule to Act of 1975, would be eligible for basic customs duty exemption. Inasmuch as, firstly the impugned goods needs to be classified under appropriate CTI and thereafter eligibility to exemption benefits has to be determined, we find that the impugned order had not followed this properly in terms of legal provisions of Customs Act, 1962 and the Customs Tariff Act, 1985. Further, inasmuch as All goods of heading 8517, other those specified goods in (i) to (iv) above are exempt from payment of basic customs duty (BCD), and in the absence of any conclusion that the impugned goods are of those category, which are specifically excluded by drawing proper classification and testing by authorised agencies in the form of test report or other evidences, it cannot be said that the impugned goods are excluded from availing the said duty exemption. Thus, the impugned goods under consideration would appropriately be classifiable under CTH 8517 70 and not under CTH 8517 62 90, as claimed by Revenue - the impugned orders passed by the learned Additional Director General (Adjudication) cannot be sustained on merits. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Eligibility for exemption under Notification No. 11/2014-Customs dated 11.07.2014.

Summary of Judgment:

1. Classification of Imported Goods:
The primary issue was whether the imported goods should be classified as 'parts' under CTH 8517 70 or as 'apparatus' under CTI 8517 6290. The appellants argued that the goods were parts necessary for the operation of specific telecommunication equipment and should be classified under CTH 8517 70. The Tribunal examined the detailed descriptions and functions of the goods, including line modules, pluggables, controller cards, switch modules, and others. Based on the Harmonized Commodity Description and Coding System (HS) and the General Rules for Interpretation (GIR), the Tribunal concluded that the goods did not function independently as machines or apparatus but were integral parts of larger telecommunication systems. Therefore, the correct classification was under CTH 8517 70.

2. Eligibility for Exemption:
The second issue was whether the imported goods were eligible for exemption from Basic Customs Duty (BCD) under Notification No. 11/2014-Customs dated 11.07.2014. The Tribunal noted that the exemption initially extended to 'All goods' under heading 8517 was later restricted to exclude specific items such as soft switches, VoIP equipment, optical transport equipment, and others. However, the Tribunal found that the impugned goods did not fall under these excluded categories. Furthermore, the Tribunal emphasized that parts of the excluded goods were still eligible for exemption under a newly introduced entry in the notification. Consequently, the Tribunal held that the imported goods were eligible for the claimed exemption.

Conclusion:
The Tribunal set aside the impugned orders passed by the Additional Director General (Adjudication) and allowed the appeals in favor of the appellants, concluding that the goods should be classified under CTH 8517 70 and were eligible for the exemption under Notification No. 11/2014-Customs dated 11.07.2014.