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TMI Blog2022 (9) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... not as a part . This is clear from the examples provided therein. In the case of a carburetor for an internal combustion engine, it is explained that the function performed by carburetor is distinct from that of the engine. A perusal of the catalogue of Router Line Cards shows that these cards/modules are only parts of the existing Routers which have already been imported or installed by the appellants. The Router chassis has dedicated slots marked for these line cards, switch cards and router processor cards. The line cards are simply inserted in these slots in the existing Routers. These line cards become functional only when plugged into the said slots in the Router chassis. The line cards source intelligence from control and processor module of the Router. These line cards cannot perform its function on a stand-alone basis in the imported condition - The line cards are proprietary of the Original Equipment Manufacturer. These line cards are, therefore, not cross compatible with devices of other manufacturers but are only usable for the purpose for which they are designed for e.g., a line card manufactured by Cisco would be usable only in a Cisco Router and nowhere else. Router ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed classification under CTI 8517 70 90. The appellant also claimed exemption from payment of duty under serial no. 5 of the notification no. 57/17-Cus dated 30.06.2017 the notification . 3. A show cause notice dated 04.10.2018 was, however, issued to the appellant inter alia proposing to re-classify the Product under CTI 8517 69 90 and consequently, differential customs duty of Rs.60, 11, 615/- was proposed to be demanded under section 28(1) of the Customs Act. The show cause notice mentions that the imported Product is a communication apparatus in itself and, therefore, would not be classifiable as parts of Router under CTI 8517 70 90. 4. The Principal Commissioner held that the imported Product is classifiable under CTI 8517 69 90 for the reason that though the line cards cannot function on their own and infact work as a component to extend the functionality of Router, but as these cards are used for providing network connectivity to the Router, they act as an interface between the network and the Router and, therefore, would be covered under the category of other communication apparatus explained in the Harmonized System of Nomenclature HSN Explanatory Notes to Heading 85. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 is not correct for the reason that they have independent function, more in the nature of an accessory than as a part. Learned special counsel made the following submissions; (i) The line cards are specifically meant to provide network connectivity to the Router and they act as interface between network and Router. These allow the Router to connect to the network and receive the data packets which are again forwarded to the destination network by the Router using the line cards again for connecting to the network. The contention of the appellant that the cards should be classified as parts in HSN Heading 8517.70 is, therefore, not correct; (ii) Reliance on Explanatory Notes of a specific HSN Heading 84.79, which covers machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter to interpret the scope of Heading in a different Chapter i.e. 85 is incorrect; (iii) Straightway taking recourse to Section Note 2 (b), without exhausting Section Note 2 (a) to claim classification under CTI 8517 70 10 is also not correct; (iv) In arriving at classification of a particular item, HSN to be followed. HSN Explanatory Notes of Heading 851 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tworks; 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: -- Line telephone sets with cordless handsets: --- Push button type --- Other -- Telephones for cellular networks or for other wireless networks: --- Push button type --- Other -- Other: --- Push button type --- Other - 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): -- Base stations -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: --- PLCC equipment --- Voice frequency telegraphy --- Modems (modulators-demodulators) --- High bit rate digital subscriber line system (HDSL) --- Digital loop carrier system(DLC) --- Synchronous digital hierarchy system(SDH) --- Multiplexers, statistic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting processor performs processing in the electrical domain (and not the optical domain), the router would not be able to function without a transceiver to connect to the optical fibre network. 13. It has further been stated that these components are integral and inseparable parts of a Router and together form the complete Router. These components / parts operate and communicate in pure proprietary format within the box and are interdependent on each other for their functioning. 14. The HSN Explanatory Notes to Heading 85.17 provide that the 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. 15. The goods covered under HSN 85.17 have been divided into the falling two categories: (I) Telephone sets, including telephones for cellular networks or for other wireless networks; and (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). 16. The aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all 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. 20. The HSN Explanatory Notes to Note 2 of Section XVI are reproduced below: (II) PARTS (Section Note 2) In general, parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the existing Routers which have already been imported or installed by the appellants. The Router chassis has dedicated slots marked for these line cards, switch cards and router processor cards. The line cards are simply inserted in these slots in the existing Routers. These line cards become functional only when plugged into the said slots in the Router chassis. The line cards source intelligence from control and processor module of the Router. These line cards cannot perform its function on a stand-alone basis in the imported condition. Further, communication between the line cards and the other components of the Router, most importantly, the switch processor board, is in the electrical domain and in completely proprietary data protocols. These facts are decisive to conclude that the line card/modules in question are parts, as they cannot perform independently of the Router because unless and until the said cards/modules are slotted into the dedicated slots into the chassis of the equipment, the said cards/modules cannot function. The cards/modules are dependent on the intelligence (i.e. timing information) provided by the control and timing modules. The timing information pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be treated as an Apparatus . I find merit in the argument of the Deputy Commissioner of Customs. I therefore find that given the facts of the case, the impugned goods called modules are more appropriately classified as Parts under 8517.90 rather than ast Other Apparatus falling under 8517.80. I therefore uphold the order of the Deputy Commissioner of Customs (Air Cargo Complex) and reject the Departmental Appeal. 3. Shri R.V. Ramakrishnappa, the learned JDR, appeared for the Revenue who is the appellant and Ms. Rukmani Menon, the learned advocate appeared for the respondent. 4. The learned advocate for the respondent stated that the original authority has dealt with elaborately on the issue before coming to a conclusion. Our attention was brought to the decision in Indchem Electronics Ltd. v. CC, Chennai - 1997 (95) E.L.T. 580 (Tribunal), wherein it has been held that Add-on Cards and Mother Boards, which are capable of use only when linked up with certain other components, cannot be classified as automatic data processing machines but parts of machines falling under 84.71 of Central Excise Tariff Act, 1985. On the same analogy the impugned goods, which are in the nature of compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aces of copper foil form the circuit that connects components such as silicon chips mounted on the board. See also printed circuit board. 29. The same dictionary defines the term printed circuit board as : Printed Circuit Board (PCB): A substrate of dielectric material on which a printed circuit, silicon chips, and other components are mounted, and to which connectors are affixed so that the board can plug into a system chassis. A PCB serves a defined purpose. In telecommunications systems, for example, a PCB may provide the physical and logical interface to one or more digital or analog lines or trunks, may provide voice mail service, or may provide call processing logic. See also printed circuit. 30. A similar definition of PCB Assembly is available on website accessible at https://www.customdesigntechnologies.com/custom- assembly/custom-printed-circuit-board-pcb-assembly-glossary/ as: a) Printed circuit board assembly: Printed circuit board assembly, also known as PCBA, is the process of soldering or assembly of electronic components to a PCB or printed circuit board. b) Circuit board assembly: Printed circuit board assembly, also known as printed circuit board assembly (PCBA), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accessories of regulating and controlling apparatus classifiable under Chapter 90. In this connection, one needs to examine the nature and function of I.O. Modules and Chassis which we have already discussed hereinabove. To put it briefly, at the cost of repetition, we may say that the primary function of I.O. Modules (Boards) is to function as a part of measuring and control System. It is for this reason that such Modules are required to be classified as parts and accessories of regulating and measuring System. For this purpose, it is necessary to examine each of the imported items apart from Controllers in order to see whether the hardware coupled with the pre-installed software gives it a definite identity and function. From the catalogue and technological write-ups we find that each and every I.O. Module imported by the assesse is configured with a sensor at one end. This aspect is very important. Take the example of Data Acquisition Boards (DAQ). The purpose of DAQ Boards is to acquire data from external sensor, usually in the form of analog voltage of +/- 10 volts. This data is converted by DAQ Boards into digital signals which the personal computer can understand. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with which it is associated. A NIC works with the network software and computer operating system to transmit and receive messages on the network. 38. Thomas Concise Telecom Networking Dictionary defines Network Interface Card as follows: Network interface card (NIC): A network interface device in the form of a circuit card that is installed in an expansion slot of a computer to provide network access. Examples of NICs are cards that interface a computer with an ethernet alien and cards that interface of computer with an FDDI ring network. 39. Thus, the NIC is effectively a translator which allows a computer to communicate with a network by translating the output of the computer into a format understandable by the network and vice versa. If a computer is not to be connected to a network, there is no need for NIC of computer to function. Computer is complete in itself and does its job of data processing without any need for NIC. 40. The function of a NIC is, therefore, distinct from that of the overall equipment (i.e. computer/data processing machine). Also, the said NIC is also clearly separable from the overall equipment. 41. NIC, therefore, satisfies the two tests as they perform ..... X X X X Extracts X X X X X X X X Extracts X X X X
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