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TMI Blog2023 (10) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... customs tariff item 85177010. During post-clearance audit verification of self-assessment, the department did not agree with the classification adopted by the appellants, and a show cause notice dated 13.12.2019 was issued for reclassifying the imported goods under customs tariff item 8517 6290 for reassessment and consequently demanding differential duty under Section 28 of the Customs Act, 1962, besides proposing for confiscation of imported goods and for imposition of penalties under Sections 112(a), 117 ibid. The original authority upon receiving written submission dated 14.02.2019 and after giving the appellants a personal hearing on 26.10.2020, had passed an order rejecting the classification under tariff item 8517 7010 claimed by the appellants and reclassified the goods under Customs tariff item 8517 6290. Further, the original authority vide Order-in-Original dated 24.11.2020 confiscated the imported goods and imposed penalty of Rs.2,30,000/- on the importer under Section 112(a) of the Customs Act, 1962. 2.2 Feeling aggrieved of the above order, the appellants had preferred an appeal before the Commissioner of Customs (Appeals), Mumbai-III. The learned Commissioner (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds (Populated Printed Circuit Boards)' were classified under CTH 85177010 rejecting the department's for classification under CTH 8517 6290. He further submitted that the said order of the Tribunal was upheld by the Hon'ble Supreme Court in Civil Appeal Diary No.31965 of 2022 stating that they did not think it appropriate to interfere in the impugned order and consequently dismissed the appeals filed by the Revenue. Thus, learned Advocate submitted that the imported goods cannot be classified as a machine or apparatus under CTH 8517 6290 and have to be classified as parts of Packet Optical Transport Switch (POTS) and appropriately classifiable under CTH 8517 7010. He also submits that the issue has also been decided in their favour by the following judgements: (i) Commissioner of Customs, Bangalore Vs. N.I. Systems (India) Pvt. Ltd. - (2010) 11 S.C.C. 638 (ii) Inter Continental (India) Vs. Union of India - 2003 (154) E.L.T. (Guj.) 4. Learned Authorised Representative appearing for the Revenue reiterated the findings of the impugned order and stated that since there is mis- classification of the imported goods, the imported goods are liable for confiscation and imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imported goods, even if, considered as optical circuit switch or optical switching and routing device will be covered in exclusion product list of impugned notification or PPCB of CTH 8517 7010, as they are nothing but OTN (Optical Transport Network) product. 7. In the case before us, the brief issue for consideration is the classification of imported goods as to whether, the same merits classification under Customs Tariff Item 8517 7010 as claimed by the appellants; or, is it classifiable under Customs Tariff Item 8517 62 90 as contended by the Department, for deciding on the appropriate levy of customs duty, in respect of such imported goods under the First Schedule to the Customs Tariff. 8.1 From careful perusal of the legal provisions of the Customs Tariff Act, 1975, it transpires that imported goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. For legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. 8.2 In terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Tariff Items falling there under. Now, we may closely examine the scope of the contending Sub-headings and Tariff Items thereof for determining correct classification of the imported goods. The relevant tariff entries in the First Schedule to the Customs Tariff Act are extracted as below : Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525,8527 or 8528 - Telephone sets, including telephones for cellular networks or for other wireless networks: 8517 11 -- Line telephone sets with cordless handsets: 8517 11 10 --- Push button type . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 11 90 --- Other . . . . . . . . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8517 69 70 ---Attachments for telephones. . . . . . . . . . . . . . . u Free - 8517 69 90 ---Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8517 70 -Parts : 8517 70 10 --Populated, loaded or stuffed printed circuit boards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [u] Free - 8517 70 90 --Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . kg 15% - 10. It could be seen that on applying the GIR 1 - rule that classification of goods shall be determined according to the terms of the headings and any relative Section or Chapter Notes, and by reading the description given in the Heading 8517 for ascertaining proper classification, it is made clear that the chapter heading 8517 covers within its scope and ambit, mainly of three broad categories of goods: (i) first one i.e., "Telephone sets, including telephones for cellular networks or for other wireless networks" ; (ii) the other, second one i.e., "other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517; (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by pipi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be categorised as an 'apparatus or machine' but it could only be a part of the apparatus, namely cloud engine switches. Thus prima facie, the imported goods would get covered under the scope of sub-heading 851770. 12. In order to further examine the classification in terms of HS explanatory notes of the WCO, which describe in detail the scope and coverage of the goods under the Customs classification, the extract of HS classification in respect of heading 8517 is given below: "Harmonized Commodity Description and Coding System Explanatory Notes "8517- Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28(+). - Telephone sets, including telephones for cellular networks or for other wireless networks: 8517.11 -- Line telephone sets with cordless handsets 8517.12 --Telephones for cellular networks or for other wirele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting characters, graphics, images or other data into appropriate electrical impulses, for transmitting those impulses, and at the receiving end, receiving these impulses and converting them either into conventional symbols or indications representing the characters, graphics, images or other data or into the characters, graphics, images or other data themselves. Examples are.... (E) Telephonic or Telegraphic Switching Apparatus. ..................... (F) Transmitting and receiving apparatus for radio-telephony and radio- telegraphy..... (G) Other communication apparatus. 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, inter alia, carrier-current line systems, digital-line systems and combinations thereof. They may be configured, for example, as 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een distinguished with the imported product 'interface cards' and it has been explained by the appellants through a technical opinion that it works as intermediate component in the network, and it will not initiate or terminate data communication; whereas, 'network interface cards' is an interface connecting the computer to transmission medium through LAN connection through RJ45 port, and works as terminal component in the network and all network data will be initiated or terminated by it. There is no detailed discussion either in the original order or in the impugned appellate order on this aspect and it simply declined to examine this aspect on the basis that the technical opinion was given by electrical engineers. Hence, we find that the conclusion arrived in the original order and the impugned appellate order on the classification of imported goods under CTH 85176290 is not legally sustainable. 13.1 We further find that the learned Commissioner in the impugned order for classification of the imported goods under CTH 85176290 had relied upon the exemption entry in serial No.20 of the notification No.57/2017-Customs dated 30.06.2017 as amended by notification No.75/2018-Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts (c) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) products 10% - 2. This notification shall be effective from the 12th October, 2018." Subsequently, vide amending notification No.02/2019-Customs dated 29.01.2019, the exemption entries 20 and 21 were merged by a single entry, without any change in the scope of goods covered under the exemption, as follows: "V. for serial number 20 and the entries relating thereto, the following serial number and entry shall be substituted, namely S. No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard Rate Condition No. (1) (2) (3) (4) (5) 20 8517 62 90 or 8517 69 90 All goods other than following goods, namely: -(a) Wrist wearable devices (commonly known as smart watches) (b) Optical transport equipment (c) Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) (d) Optical Transport Network (OTN) products (e) IP Radios (f) Soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones, media gateways, gateway controllers and session border controllers (g) Carrier Ethernet Switch, Packet Transport Node ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) Vs. Reliance Jio Infocomm Ltd. - (2023) 3 Centax 96 (Tri.-Bom) cannot be taken as a basis since the Hon'ble Supreme Court had dismissed the appeal filed by Revenue on the submissions of Revenue that in similar matter as mentioned in the order has not been challenged. He further, stated that in respect of another case of Reliance Jio Infocomm Ltd. - 2019 (369) E.L.T. 1713 (Tri.- Mumbai) against the order of the Tribunal for which Revenue has filed an appeal, the matter is pending in the Apex Court in Civil Appeal Diary No.14979/2020. Hence, he claimed that the case law cited by the appellants should not be taken into consideration for deciding classification of the imported goods. On careful examination of the above, we find that the Co-ordinate Bench in the case of Commissioner of Customs (Import), Mumbai Vs. Reliance Jio Infocom Ltd., reported in 2019 (369) E.L.T. 1713 (Tri.-Mumbai) had dealt with the product 'antenna' used with Base Transmission Station (BTS) for mobile telecommunication network, in which the matter is shown as pending in the Apex Court; whereas, in the case in hand, we are dealing with 'interface cards', whose features are entirely different than the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Learned Commissioner (Appeals) has been upholding the contention of the appellants. In one instance Revenue has accepted the order of Commissioner (Appeals). We find that the Department has not drawn any samples and did not obtain technical opinion to support their claim that the impugned goods are complete machines or equipment capable of independent function themselves so as to merit classification under CTH 85176270. On the contrary, the respondents could demonstrate by technical literature; samples and the ratio of judgments cited above that the goods imported by them are Populated Circuit Boards (PCBs) used in PSS 1830 and therefore, the impugned goods are parts of PSS and as such merit classification CTH 85177010. We also find that the appellants have submitted US Customs Rulings on the classification of the impugned goods, though they are not binding on us, they would certainly have a persuasive effect more so in the absence of any evidence to the contrary. In view of the discussion as above, and considering the fact that Commissioner (Appeals) has been consistent in rejecting the department's claim, we are of the considered opinion that there is no merit in the appeals f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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