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TMI Blog2025 (1) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... ng character GPON ONT/OLT device. Hence it appears that the department contention that the subject import goods is not parts but is a complete goods does not appears sound and tenable. It is clear from above that under CTI 85176290 the products sought to be covered are to be finished products and not parts. In the instant case the applicant proposes to import the Populated Printed Circuit Board for the manufacturing of Telecommunication equipment and more specifically for the purpose of manufacturing of GPON ONTs/OLTs which is aptly covered under Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) . The decision of the Tribunal in the case of Commissioner of Customs, Mumbai (Air Cargo Import) v. 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, the decision of the Coordinate Bench of the Tribunal, which has been upheld by the Hon ble Supreme Court in Civil Appeal No. 000586-000598/2023 arising out of Diary No. 31965/2022 [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a photoelectric conversion device, active optical components, and fiber optics. AON is a type of network that enables point-to-multipoint optical communication for a variety of industrial applications such as optical fiber transmission lines and optical remote terminals. 2.4 PON refers to an optical distribution network (ODN) that doesn t use any active devices or components for its operations. PON is designed as an access network for optical fiber applications because it doesn t use any active component that requires a power source to function. There are two major PON standards: Gigabit Passive Optical Network (GPON) and Ethernet Passive Optical Network (EPON). 2.5 EPON is a technology used in telecommunications and networking to provide high-speed broadband connectivity. EPON is a type of Passive Optical Network (PON) that uses Ethernet as the medium for communication between the Central Office (CO) and the customer premises. 2.6 They submitted that GPON is a point-to-multipoint access network. The main characteristic of GPON is the use of passive splitters in the fiber distribution network, enabling one single feeding fiber from the provider to serve multiple homes and small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l functions performed by PCBA in GPON OLTs and ONTS: 2.9.1 Role of PCBA in the functioning of OLTs : 2.9.1.1 Data Processing: The PCBA consists of a powerful processor, memory, and specialized network processors that handle the processing of data packets. It performs functions such as encapsulation/decapsulation, routing, and forwarding of data between the GPON network and the wider IP network. 2.9.1.2 Optical Line Interface: - The PCBA incorporates optical transceivers and line cards that interface with the optical fiber network. It receives and transmits data in the form of optical signals, converting them to electrical signals for processing and vice versa. 2.9.1.3 Management and Control: The PCBA includes management and control modules responsible for monitoring, configuring, and managing the GPON OLT. It handles tasks such as subscriber authentication, service provisioning, quality of service (OoS) management, and network monitoring. 2.9.1.4 Redundancy and High Availability: In larger GPON deployments, the PCBA may include redundancy features like dual power supplies, redundant processors, and interfaces to ensure high availability and fault tolerance. 2.9.2 Role of PCBA in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed printed circuit boards find specific mention under 8517 79 10. CTH 8517 of Chapter 85 of the Customs Tariff Act, 1975 has been extracted below for reference : Tariff Item Description of goods 8517 Telephone sets, including smartphones and other 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 smartphones and other telephones for cellular networks or for other wireless networks : 8517 11 -- Line telephone sets with cordless handsets : 8517 11 10 --- Push button type 8517 11 90 --- Other 8517 13 00 -- Smartphones 8517 14 00 -- Other telephones for cellular networks or for other wireless network 8517 18 - Other : 8517 18 10 --- Push button type 8517 18 90 --- 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) : 8517 61 00 -- Base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 --- Digital loop carrier system (DLC) 8517 62 60 --- Synchronous digital hierarchy system (SDH) 8517 62 70 --- Multiplexers, statistical multiplexers for PDH based Wireline Telephony 8517 62 90 --- Other 851769 Other : 8517 69 10 --- ISDN System 8517 69 20 --- ISDN terminal adaptor 8517 69 40 --- X 25 Pads 8517 69 50 [** ** **] 8517 69 60 --- Set top boxes for gaining access to internet for Wireline Telephony 8517 69 70 --- Attachments for telephones 8517 69 90 --- Other - Parts : 8517 71 00 -- Aerials and aerial reflectors of all kinds: parts suitable for use therewith 8517 79 -- Other : 8517 79 10 --- Populated, loaded or stuffed printed circuit boards 8517 79 90 --- Other From the above, it may be noted that populated printed circuit board has been specifically classified under Tariff Entry 8517 79 10 and is liable for basic customs duty of 20%. 3.3 The Applicants submit that Notification No. 57/2017-Cus., dated 30-6-2017 prescribes basic custom duty in respect of certain electronic goods. Sl. No. 22 of the Notification No. 57/2017-Cus., dated 30-6-2017, prescribes reduced rate of 10% of basic customs duty for Printed Circuit Board Assembly (PCBA) of Optical Transport Networ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tures of POTP/POTS, it can be understood that GPON OLT and ONT fall within the ambit of POTP/POTS. The Applicants further place reliance on Circular No. 08/2023, dated 13-3-2023, providing clarification with respect to products and equipment covered under Packet Optical Transport Product or Switch. The relevant portion has been extracted hereinbelow : Notification Item Notification Description Identification of products/equipment covered (c) Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) The Machines/apparatus covered under this category include (i) Optical Line Terminal (OLT) for FTTX (GPON)/EPON/XGSPON/I0GEPON/NG-PON2/25GPON/50GPON etc.); (ii) Optical Network Terminal (ONT) for FTTX (GPON/EPON/XGSPON/10GEP ON/NG-PON2/25GPON/50GPON etc.). Since GPON OLT and ONT fall within the ambit of POTP/POTS products, the Printed Circuit Board Assembly (PCBA) used for the manufacture of GPON OLT and ONT would qualify for reduced customs duty rate of 10% as per Sl.No.22 Notification No. 57/2017-Cus., dated 30-6-2017. 4. Port of Import and reply from jurisdictional Commissionerate : 4.1 The applicant in their CAAR-1 indicated that they intend to import th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough their representatives who appeared in personal hearing in this office physically. The Learned Advocate submitted that there is specific tariff entry i.e. CTI 85177910 (CTH 85 177-covered under parts) CTI 85177990-Others and that the subject goods are not a complete machine but is a part. He also submitted that the department contention of classifying it the same under CTI 85176290 is not correct. However he sought one week time to give further written submission/rebuttal on the department comments which was accepted. Nobody appeared from the department side to attend the PH neither through physical nor vide virtual mode. 5.2 The applicant through their advocate Shri Jose Jacob submitted a point wise rebuttal dated 4-4-2024 on the comments dated 17-3-2024. The Applicants has inter alia submitted the step wise process involved in assembling of the finished product using the imported product along with a detailed write up of other components involved in the process other than the populated printed circuit board. The same has been detailed in Annexure-2 and Annexure-3 of the submission dated 4-4-2024. Further the applicant has contended that it is very evident that the product i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including smartphones and other 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 13 00 -- Smartphones u 20% - 8517 14 00 -- Other telephones for cellular networks or for other wireless networks u 20% - 8517 18 - Other : 8517 18 10 --- Push button type u Free - 8517 18 90 --- Other u Free - - 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) : 8517 61 00 -- Base stations u 20% - 8517 62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus : 8517 62 10 --- PLCC equipment u Free - 8517 62 20 --- Voice frequency telegraphy u Free - 8517 62 30 --- Modems (modulators-demodulators) for xDSL based Wireline Telephony u Free - 8517 62 40 [* * *] 8517 62 50 --- Digital loop carrier system (DLC) u Free - 8517 62 60 --- Synchronous digital hierarchy system (SDH) u Free - 8517 62 70 --- Multiplexers, statistical multiplexer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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) products (i) Long Term Evolution (LTE) products 10% 7.3.1 From the above it is evident that Printed Circuit Board Assembly (PCBA) of following goods, namely : (c) Combination of One or more of Packet optical Transport Product or Switch (POTP or POTS) will be eligible for exemption benefit available as per Notification No. 57/2017-Cus., dated 30-6-2017. 7.4 I find that the Board vide its Circular No. 8/2023, dated 13-3-2023 has clarified items under said entries specifically those at (b) to (h), amongst (a) to (h), in the Notification No. 57/2017-Cus., dated 30-6-2017, for better understanding by all stakeholders for a more effective identification of products and equipment covered therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IC has issued the Circular No. 8/2023, dated 13-3-2023 in consultation with the Department of Telecommunication and Annexure-1 to the said circular clearly states that Notification description of Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) covers following Machines/apparatus : (i) Optical Line Terminal (OLT) for FTTX (GPON/ EPON/ XGSPON/10GEPON/NG-PON2/25GPON/ 50GPON etc.); (ii) Optical Network Terminal (ONT) for FTTX (GPON/ EPONVXGSPON/10GEPON/NG-PON2/25GPON/ 50GPON etc.) 7.5 In the instant case the applicant proposes to import the Populated Printed Circuit Board for the manufacturing of Telecommunication equipment and more specifically for the purpose of manufacturing of GPON ONTs/OLTs which is aptly covered under Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) as per para above. 7.6 In a US Cross Ruling No. NY N024619, dated 24-3-2008 it was observed that:- the process of assembling the PCBAs and telecommunications chassis together is followed by the installation of proprietary software, calibration, configuration, and testing, it is only after these processes that the WDM system becomes function ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the imports have been taking place over a period of time. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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