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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 ..... nufacture of telecommunication equipment through the port of Chennai. 2. Applicant has stated as follows in their statement of the relevant facts having a bearing on the question(s) on which the advance ruling is required enclosed with the CAAR-1 application : 2.1 The Applicants are engaged in the manufacture of telecommunication equipment and deals with a wide range of telecommunication equipment like GPON OLTS and ONTS, optical fibers and other internet accessories. 2.2 Fiber-to-the-Home (FTTH) is a technology that delivers communication signals from a central point to the individual customer over optical fiber. The two important types of systems that make FTTH broadband connections possible are Active Optical Networks (AON) and Passive Optical Networks (PON). 2.3 AON refers to a network in which the signal is transmitted using 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 acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It may be noted that a printed circuit board (PCB) is a medium used to connect electronic components to one another in a controlled manner, further, populated PCB is a circuit board with electronic components. Electrical components may be fixed to conductive pads on the outer layers in the shape designed to accept the component's terminals, generally by means of soldering, to both electrically connect and mechanically fasten them to it. In general, populated PCBA (Printed Circuit Board Assembly) plays a crucial role in handling data processing, optical interface, service provisioning, management, and control functions in GPON OLTS and ONTs. It enables the efficient operation and delivery of high-speed internet, voice, and other services over the GPON network to both the service provider and end-users. 2.9 The following are the essential 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 85 of the Customs Tariff Act, 1975 deals with classification of electrical machinery and equipment and parts thereof, sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such article. It may be noted that Tariff Heading 8517 provides for classification of 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. 3.2 They further submitted that on scrutiny of the entries covered under fourth one dash ["-"J under Tariff Heading 85 17 "Parts", it can be seen that populated, loaded, stuffed 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 networks 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 stations 8517 62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus : 851762 10 --- PLCC equipment 8517 62 20 --- Voice frequency telegraphy 8517 62 30 --- Modems (modulators-demodulators) for xDSL based Wireline Telephony 8517 62 40 [** ** **] 8517 62 50 --- Digital loop carrier system (DLC) 8517 62 60 --- Synchronous digital h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted circuit boards of Packet Optical Transport Product or Switch (POTP or POTS) products. 3.4 The applicant has submitted that Packet Optical Transport Product (POTP) is a network communication device or system designed to efficiently and seamlessly transmit data across telecommunications networks using a combination of packet-switching and optical transport technologies. It integrates packet-based traffic with traditional optical transport capabilities, allowing for the high-speed and reliable transmission of data over long distances: POTP devices typically combine the advantages of both packet switching and optical transport by converting incoming data into packets, which are then transported over optical wavelengths for rapid and efficient long-distance transmission. 3.5 Further, Packet Optical Transport Switch (POTS) is a specific component within a Packet Optical Transport Product that focuses on the switching and routing of packet-based traffic. It enables the dynamic management of data packets at the network layer, facilitating efficient and optimized routing across the network. The POTS component operates in conjunction with the optical transport capabilities of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adapter-APC stuffed on the PCBA. and thereby the subject item does not function only as a PCBA, but having an essential component for GPON the subject item is capable of functioning as a GPON device. 4.3.2 Attention is invited to the photographs of the product proposed to be imported by the applicant clearly mention GPON (GPON0006B6CAK and GPON00C4K77A). It appears that the Populated PCBA proposed to be imported is a GPON Board in itself, capable of functioning as GPON apparatus. 4.3.3 PON apparatus are fiber optic products that are meant to transport optical signals, transmission or reception of voice, images or other dale, including apparatus for communication in a wired or wireless network (such as a local or wide area network) Given the intent of Finance Ministry Notification dated 11-7-2014 to levy duty on optical transport equipment, it can be deduced that PON devices including GPO, EPON etc., are primarily optical transport network equipment. Hence, the subject goods appear to be correctly classifiable under 85176290. 4.4 The above said reply dated 17-3-2024 was forwarded to the applicant for further rebuttal in the matter. 5. Details of Personal Hearing : 5.1 A persona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject goods. I have gone through the submissions and additional submission made by the applicant during the personal hearing. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. The issue before me is whether the applicant is eligible to claim the benefit of reduced duty of 10% vide Sl. No. 22 of Notification No. 57/2017 Customs, dated 30-6-2017 in respect of Populated Printed Circuit Boards, imported by them, for the manufacture of telecommunication equipment. 7. Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/Section notes along with HSN explanatory notes. I find that the applicant has suggested that the subject goods merits classification under CTI 85177990, however the jurisdiction is of the view that the subject goods merit classification under CTI 85176290. 7.2 Relevant portion of CTH 8517 is reproduced below for ease of reference : 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 8517 79 10 --- Populated, loaded or stuffed printed circuit boards u 20% - 8517 79 90 --- Other u 15% - I find that the product intended to be imported by the Applicants is not a finished product but a part of the finished product GPON ONT/OLT device. From the assembling process illustrated in the pictures provided in Annexure-2 of the reply letter dated 4-4-2024 it can be seen that this process includes putting the accessories to the PCBA (configuring/Connecting and checking all the cables) adding CMOS battery, adding PON modules and testing thereof and adding the software before it is finally packed. The configuration, testing and addition of software apparently play a crucial role in giving 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. I find that parts of machines covered under 8517 will have to be classified under 8517 79 and not elsewhere. The product in question finds specific mention under 8517 79 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products or equipment. 2. In this context, the Board was apprised that some of these technology related descriptions, specifically those at (b) to (h). amongst (a) to (h). in the notification, need to be better understood by all stakeholders for a more effective identification of products and equipment covered therein. 3. Accordingly, in order to make stakeholders more aware in the mailer, and in consultation with the Department of Telecommunications (DoT) (a) the identification of products/equipment covered thereunder, at (b) to (h) of the notification, is illustrated in Annexure-1; (b) it is decided that, in terms of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018, an identification of products/equipment under 85176290 and 85176990 shall he enabled from the beginning, that is, from the lime of filing of import declarations itself, bringing certainly, for which an alpha numeric code/identifier as provided for in Annexure-2 will need to be additionally declared in bill of entry by the importer with effect from 1-4-2023. Annexure-1 Notifi-cation Notification Description Iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case the PCBA appears to be parts of the GPON/OLT/ONT and PCBA is categorically provided entry in the Tariff as 85177910. 8.1 Furthermore, the decision of the Tribunal in the case of Commissioner of Customs, Mumbai (Air Cargo Import) v. 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 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 [2024 (388) E.L.T. 269 (S.C.) ], by holding that they do not think it is appropriate to interfere in the impugned order, is relevant to the present case. The relevant paragraphs of the above order of the Tribunal are extracted below : "2. Brief facts of the case are that M/s. Reliance Jio Infocom Ltd., the respondent herein has imported "Cards" (Populated Printed Circuit Boards) OSLM-5-100G-WL3N for DWDM Equipment-Photonic Service Switch (PSS) 1830 imported by them and have classified the same under Customs Tariff Sub-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals filed by the Department." In the above said case the Hon'ble Supreme Court, upheld the view of the Tribunal and dismissed the appeal filed by the Revenue. 8.2 The above view has been further referred in the final Order No. A/86763/2023, dated 6-6-2023 by Hon'ble CESTAT Mumbai in case of M/s Huawei Telecommunication (India) Company Private Limited v. Commissioner of Customs (Appeals), Mumbai-III wherein Appeal has been allowed in favour of appellant. 8.3 I further find force in the contention of the applicant that residuary entry should not be resorted to unless the product cannot be classified under any of the such entries. In the case of Western India Plywoods Ltd. v. Collector of Customs, Cochin [2005 (188) E.L.T. 365 (S.C.) ] Hon'ble Supreme Court has held that : Application of residuary entry to be made with extreme caution, being attracted only when no other provision expressly or by necessary implication applies to goods in question. The same view was taken by Hon'ble Supreme Court in the case of CCE v. Wockhardt Life Sciences Ltd. [2012 (277) E.L.T. 299 (S.C.) ] and it was held that : Residuary entry can be taken refuge of only in absence of specific entry. [pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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