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TMI Blog2023 (6) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal function of these devices is routing, they are classifiable as routers under sub-heading 85176290. Eligibility for the benefit under Sr. No. 20 of Notification No. 57/2021- Customs, dated 30.06.2017, as amended - HELD THAT:- When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must he interpreted in favour of the revenue. The notification clearly excludes carrier ethernet switches from the purview of the duty benefits. As per the technical expert TEC these goods can function as carrier-grade ethernet switches. Accordingly the benefit of Sr. No. 20 of Notification No. 57/2021 -Customs would not be available in the instant case. Notification benefit under Sr. No. 13N of Notification No. 24/2005, as amended - HELD THAT:- In the present case, the entry describes goods as Routers . It does not specify indentation, conditions or capacity and capability for such routers. It does not bar the routers used by telecom networks, support service providers and data centres. It does not exclude routers capable of performing secondary functions. The impugned goods, on the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter networking. The product is a combination of a network switch and a router. A network switch connects devices on a computer network by using packet switching to receive and forward data. They connect multiple devices such as computers, wireless access points, printers, and servers. A switch enables connected devices to share information and interact with each other. A router is a device that connects computers and other devices to the internet. While a- switch connects various devices in a network, a router connects devices across multiple networks. DCSRs perform the function of a network switch and a router. In other words, it is capable of connecting the devices within the network as well as across multiple networks. Thus, the need for a separate switch and a router for performing switching and routing functions can be overcome with the installation of the DCSR. 2.2 As per the applicant, these devices are deployed in a wide range of open networking solutions including large-scale layer 2 and layer 3 cloud designs, overlay networks, and virtualized or traditional enterprise data centre networks. They deliver advanced features for network monitoring, precision timing and networ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the function of switches would not disentitle them from the exemption granted. The applicant further stated that it is a settled legal position that when an exemption is granted for a machine performing a function, it cannot be denied merely because the machine is capable of performing other functions also. In support of the above, they have submitted decisions in Twenty-First Century Printers v. CC [2003 (162) E.L.T. 1045 (Tri. - Del.)], Escorts Tractors Ltd v. CC [1998 (98) E.L.T. 717 (Tribunal)] and Escorts Limited v. CC [1996 (88) E.L.T. 379 (Tribunal)]. 2.5 Sr. No. 20 of Notification No. 57/2017-Customs, dated 30.06.2017, as amended, provides for the levy of Customs duty at the concessional rate of 10%. In the said notification, the goods falling under sub-headings 85176290 or 85176990, except the goods specified therein, are eligible for a concessional rate of duty. Following are the goods for which such concessional rate of basic Customs duty is not applicable: (a) Wrist wearable devices (commonly known as smartwatches); (b) Optical transport equipment; (c) a Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS); (d) Optical Transport Net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itches based on features or services supported as there could be overlapping features. Classification can only be ascertained based on the purchase order from the ultimate consignee. They can be classified based on the usage of such devices by TSP/ISP or the customer location where these devices will be used. In the above clarification, it was also emphasised that the classification will be based on the findings of the customs authority. 2.6 In relation to the above-mentioned goods, the questions on which advance rulings have been sought are as follows: - 1) Whether DCSRs being imported by the applicant are classifiable under the Tariff Item 8517 62 90 of the Customs Tariff of India? 2) If the to the above question are negative then what would be the correct classification of the DCSRs under the Customs Tariff of India? 3) Whether DCSRs are eligible for claiming the benefit under Sr No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005? 4) Whether the DCSRs are eligible to claim the benefit under Sr. No. 20 of Notification 57/2017-Customs, dated 30.06.2017? 3. In the CAAR - 1 form, the applicant has declared that they would import these products through the Air Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no decision covering products under consideration 4. An opinion on the products under consideration was sought from Telecommunication Engineering Centre (TEC), Department of Telecommunication vide letter dated 13.09.2022. TEC vide their letter dated 23.09.2022 opined that, as per data sheets, these products have features which can support carrier ethernet. Accordingly, depending upon its use in the telecom network it may work as a carrier ethernet switch. TEC also mentioned that in some of the products under consideration features supporting MPLS-TP functionality are present and therefore, such products can work as MPLS-TP products, Further, vide letter dated 03.11.2022 TEC stated that from the available information it appears that these products are primarily routers. Further using customized product configurations these products may work as both switches and routers. Depending upon deployment in a telecom network, the products may work as carrier ethernet switches. Based on product configuration & its network use case, the product may work simultaneously as a router and a switch. 4.1 The application was listed for hearing on 21.09.2021. The applicant was represented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 186, Twenty-First Century Printers v. Collector of Customs Bombay 2003 (162) E.L.T. 1045 (Tri. - Del.). They have further submitted that the undertaking should be considered to determine the nature of the product as is usually done with respect to the products, the determination of whose end use is significant for ascertaining the rate of duty applicable. They have cited case laws of Segal's Pharmacy v. Collector of Customs 1993 (64) E.L.T. 209 (Tribunal), M/s Healthcare Pvt. Ltd. V. Commissioner of Cus (Imports), Mumbai 2013 (296) E.L.T. 375 (Tri-Mumbai) in support of the above argument. In response to TEC comments, the applicant has stated that the TEC has not deviated from its stance that the end-use of the product, that is whether it is being sold to carrier or non-carrier can help determine whether the same shall be of carrier-grade or noncarrier grade. Further, the applicant has stated by citing the case law in the case of Pappu sweets and Biscuits V. Commissioner of Trade Tax, UP., Lucknow, 2004 (178) E.L.T 48 (S.C.) that it is a settled law that exclusionary clauses in an exemption notification must be strictly construed and must be given a narrow meaning so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a wired or wireless network (such as a local or wide area network). This group includes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network. Communication networks include within, inter alia, carrier-current line systems, digital-line systems and combinations thereof. They may be configured, for example, as the public switched telephone networks, Local Area Networks (LAN), Metropolitan Area Networks (MAN) and Wide Area Networks.(WAN), whether proprietary or open architecture. This group includes (1) Network interface cards (e.g., Ethernet interface cards) (2) Modems (combined modulators-demodulators) (3) Routers, bridges, hubs, repeaters and channel-to-channel adaptors (4) Multiplexers and related line equipment (e.g., transmitters, receivers or electro-optical converters) (5) Codecs (data compressors/decompressors) which have the capability of transmission and reception of digital information (6) Pulse to tone converters which convert pulse dialled signals to tone signals. 5.2 Sub-heading 851762 covers machines for the reception, conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an accepted position that a notification should be interpreted on the basis of the language used therein and not on the basis of intendment or by supplying words or ignoring them. Further, in the case of Commissioner of Cus. (Import), Mumbai versus Dilip Kumar & Company, 2018 (361) E.L.T. 577 (S.C.), the Hon'ble court observed that indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that [he matter should be governed wholly by the language of the notification. Equity has no place in the interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Therefore, the indentation or undertaking would not influence the interpretation of the notification. 6.2 The applicant has opined that exclusionary clauses in an exemption notification must be strictly construed and must be given a narrow meaning so as to not frustrate the intention behind the exemption notification. However, in the case of Commissioner of Cus. (Import), Mumbai Versus Dilip Kumar & Company, 2018 (361) E.L.T. 577 (S.C.), Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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