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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 ..... ory notifications may be looked at for the purpose of ascertaining the scope of goods covered under the exemption notification, they cannot be used to determine the classification of goods. The Co-ordinate Bench in the case of COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S RELIANCE JIO INFOCOM LTD [ 2019 (11) TMI 451 - CESTAT 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, it is dealt with interface cards , whose features are entirely different than the products dealt with by the Co-ordinate Bench. Hence, the ratio of the judgement of Co-ordinate Bench does not apply to the facts of this case. The decision of the Tribunal in the case of COMMISSIONER OF CUSTOMS-MUMBAI (AIR CARGO IMPORT) AND COMMISSIONER OF CUSTOMS-MUMBAI (ACC) VERSUS RELIANCE JIO INFOCOMM LTD. [ 2022 (6) TMI 1051 - CESTAT MUMBAI] deals with classification of cards i.e., Populated Printed Circuit Boards (PCBs) incorporated in photonic service switch. Thus, the imported goods in the present case interface cards being functionally similar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 (Appeals), after giving a personal hearing to the appellants on 24.01.2022, had passed the impugned order dated 15.02.2022, holding that the imported goods are covered under the category of Optical Transport Network (OTN) which are mentioned in exclusion product list under the entry Sl. No.20 of notification No.75/2018- Customs dated 11.10.2018 as amended by notification No.02/2019- Customs dated 29.01.2019. Accordingly, learned Commissioner (Appeals) rejected the appeal filed by the appellants and upheld the original authority s order. Being aggrieved against the impugned order, the appellants have preferred this appeal before the Tribunal. 3.1. The learned Advocate appearing for the appellants stated that the imported goods are interface cards which is a kind of Populated Circuit Board Assembly (PCBA) and forms a part of Packet Optical Transport Switch (POTS). It is used in cloud engine switches providing the function of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 penalty. He also submitted that in terms of exemption entry at Sl. No. 20 of notification No.75/2018-Customs dated 11.10.2018 as amended, Optical Transport Network (OTN) products are classifiable under tariff item 85176290. The Order-in-Appeal had confirmed the imported goods as OTN products and thus rightly classified the same under customs tariff item 8517 6290 attracting 20% BCD. Hence, he stated that the impugned order is sustainable and the appeal is liable to be rejected. 5. Heard both sides and perused the records of the case, written submissions made in the form of paper book by both parties. 6. In the impugned order, the learned Commissioner (Appeals) has concluded on the issue of classification and applicable rate of duty on imported goods, as follows: The relevant paragraphs 6 to 8 of the impugned order, for ease of reference, is extracted as below: 6. In view of the above, I hold that the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the above legal provisions, in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act, by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., Harmonized Commodity Description and Coding System (HS or HSN). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 12 -- Telephones for cellular networks or for other wireless networks : 8517 12 10 --- Push button type . . . . . . . . . . . . . . . . . . . . . . . . . . u 20% - 8517 12 90 --- Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u 20% - 8517 69 ---Other: 8517 69 10 ---ISDN System. . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 20 ---ISDN terminal adaptor. . . . . . . . . . . . . . . . . . u Free - 8517 69 30 ---Routers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 40 ---X25 Pads. . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 50 ---Subscriber end equipment. . . . . . . . . . . . . . . . u Free - 8517 69 60 ---Set top boxes for gaining access to internet. u Free - 8517 69 70 ---Attachments for teleph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needs to look further into relative Section or Chapter notes. In this regard, we find that Section Note 1 to Section XVI covering Chapters 84 and 85, as well as Chapter Note 1 to Chapter 85 provide for the list of goods that are excluded from the scope of coverage under the said Chapters. As there is no specific note relevant to the imported goods, this Section Note 1 / Chapter Note 1 are not relevant. Section Note 2 provide for classification of parts of machines or articles falling under these Chapters and rest of the Notes 3 to 5 provide for specific basis for classification of machines/apparatus. Thus, we find that Section Notes 2 to 5 to Section XVI generally guide classification of goods under Chapter 84 and 85. The relevant Section Notes are extracted as below: SECTION XVI MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES NOTES : 1. This Section does not cover : .. 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73, 8487, 8503, 8522, 8529, 8538 and 8548 would get classified therein. As the first part of this note does not enumerate the machines of chapter heading 8517, this is not relevant here for the purpose of classification in this case; however, the second part of this note which specifically provide that irrespective of the other parts being used in machines of heading 8517 and 8525 or 8526 or 8527 or 8528, would continue to be classified under heading 8517, then more specifically under sub-heading 851770. Further, in terms of Section notes 3 to 5 describing about the classification of machines, state three aspects i.e., (a) machine means all types of machine so as to include in its ambit all machinery, plant, equipment, apparatus or appliances of chapter 84 or 85; (b) machine consists of individual components which are intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85; and (c) the classification of machines, shall be determined by its principal function; further, in case of combination of machines, by clearly defined function to which such machines contribute together as combination of machines. From the read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8517.69 -- Other 8517.70 - Parts This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks. The Explanatory Notes to HSN describe the goods that are being covered by the second and third single dash entry for 85.17 i.e., 8517 60 and 8517 70 as follows: (II) OTHER APPARATUS FOR 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) (A) Base stations. The most common types of base stations are those for cellular networks, which receive and transmit radio waves to and from cellular telephones or to other wired or wireless networks. Each base stati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich have the capability of transmission and reception of digital information. (6) Pulse to tone converters which convert pulse dialled signals to tone signals. (III) PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the apparatus, of this heading are also classified here. In this regard, we find that the Show Cause Notice dated 13.12.2019 alleges at para 4 and 6, that by application of Para II(G) of HSN Explanatory Notes to the heading 8517 covering other communication apparatus , and as in the present case, the impugned goods interface card refers to Ethernet interface cards which is specifically covered under the category of other communication apparatus , and therefore the imported goods are rightly classifiable under CTH 85176290. However, we find that the original authority though quoted such allegation in para 4 of the order, did not give any specific finding or conclusion on this aspect for arriving at the conclusion for classification of goods under CTH 85176290. Similarly, learned Commissioner (Appeals) had also not discussed these aspects for upholding the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find it is necessary to examine the exemption entries in the said notification. The relevant entry in the above notification which cover Optical Transport Network (OTN) products are extracted below: [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) Notification No. 75/2018 Customs New Delhi, the 11thOctober, 2018 G.S.R. (E). In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act,1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 57/2017-Customs, dated the 30th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 798 (E), dated the 30th June, 2017, namely:- In the said notification, in the Table, for serial number 20and the entries relating thereto, the following serial number and entries shall be substituted, namely: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (PTN) products, Multiprotocol Label Switching-Transport Profile (MPLS-TP) products (h) Multiple Input/Multiple Output (MIMO) and Long Term Evolution (LTE) products 10% - 13.2 On careful perusal of the above exemption entries, we are of the view that it could be concluded that the government had provided concessional rate of basic customs duty of 10% on all products covered under the scope of tariff item 8517 6290 or 8517 6990, except for eight specified products specified therein. These include Optical Transport Network (OTN) products under entry 20(d). The said exemption notification does not perse provide for any aid for cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 products dealt with by the Co-ordinate Bench. Hence, the ratio of the judgement of Co-ordinate Bench does not apply to the facts of this case. Thus, we are unable to accede to the argument placed by learned AR in this regard. 15.2. Furthermore, the decision of the Tribunal in the case of Commissioner of Customs, Mumbai (Air Cargo Import) Vs. Reliance Jio Infocomm Ltd. (supra), deals with classification of cards i.e., Populated Printed Circuit Boards (PCBs) incorporated in photonic service switch. Thus, the imported goods in the present case interface cards being functionally similar, the decision of the Co-ordinate Bench of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS 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 filed by the Department. The above said order of the Tribunal was also upheld by the Hon ble Supreme Court, by dismissing the appeal filed by the Revenue. The extract of the said order is given below : 16. In view of the above detailed discussions and the conclusions arrived at paragraphs 11 to 14, and on the basis of the decision of the Tribunal which was upheld by the Hon ble Supreme Court as discussed in paragraph 15.2, we are of the considered view that the impugned order is not sustainable. Accordingly, we set aside the impugned order passed by the Commissioner of Customs (Appeals), Mumbai-III and allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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