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TMI Blog2006 (2) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl. No. Application No. Description of goods 1. 1/2005 Submarine Telecommunication Cable OALC7 2. 2/2005 Submarine Telecommunication Cable OALC6 3. 3/2005 Submarine Telecommunication Cable OALC5 4. 4/2005 Submarine Telecommunication Cable OALC4 5. 5/2005 Submarine Telecommunication Cable URC4 6. 6/2005 Submarine Telecommunication Cable URC3 7. 8/2005 Submarine Telecommunication Cable URC2 8. 9/2005 Submarine Telecommunication Cable URC1 9. 24/2005 Terr Telecom Cable - Rodent Prot Non-Metallic (2-96 Fibre) 10. 25/2005 Terr Telecom Cable - LAP (2-192 Fibre) 11. 26/2005 Terr Telecom Cable - Fibre Copper Quad (2-48 or 50-72 Fibre) 12. 27/2005 Terr Telecom Cable - Non-metallic (2-36 Fibre) 13. 28/2005 Terr Telecom Cable - Rodent Prot LAP (4-24 Fibre) 14. 29/2005 Terr Telecom Cable - Indoor Arm LAP (4-24 Fibre) From the above, it is clear that three different types of telecommunication cables are proposed to be imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tariff sub-heading 8544 70. 4.The Commissioner in his initial comments in respect of all these applications stated that on the basis of description of goods given in Annexure-II to the application, and general characteristics given in the Technical Documents, the classification under Tariff Item 8544 70 90 as proposed by the applicant may be accepted. 5.At this juncture, it would be useful to refer to the Tariff Heading 8544 which reads as under :- "8544Insulated (including enameled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors." Had it not been noticed at the first hearing itself before the Authority that for any optical fibre cable to be classified under the Heading 8544, it is essential to establish that it is made up of individually sheathed fibres, we would have proceeded on the comments of the Commissioner. Since neither the technical information furnished by the applicant nor the comments given by the Commissioner, apparently touched upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UV curable resin, which for identification of the individual fibre is coloured, in different colors. Several fibres are then housed in a single plastic tubing filled with jelly material. This does not amount to individually sheathing of the fibre. (b) In particular, whether the optical cables (in each of the samples) are made of optical fibres which have "individual protective sheath made of a UV-curable resin (also described as coating)", as claimed by the party in their letter dated 13-12-2005. The optical fibres itself (sic) consist of the core, cladding and UV coating. Thus, it is not correct to try to call the UV coating as a sheath in the context of the tariff heading. In fact, in the input-output norms for import of raw materials for production of optical fibres, the UV curable coating is listed under the list of raw materials for optical fibres. It is not listed under the raw materials for cabling the fibre into cables. The tariff heading refers to a further individual sheath, which is placed over the UV curable resin coated optical fibre. (c) Whether as per the description given and on examination/testing of the samples in question, these optical fibre cables can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le resin coating. According to the DIT, it is not correct to try to call this coating as a sheath in the context of the tariff heading which refers to a further individual sheath which is placed over the UV curable resin coated optical fibre. In support of this view, the DIT referred to the input-output norms for import of raw materials, for production of optical fibres, in which the UV curable coating is listed under the list of raw materials for cabling the fibre into cables. While disagreeing with this opinion, the applicant has contended that the answers given by the DIT to the points raised by the Authority, in the technical opinion of the applicant, did not reflect the depth of protection provided by coating which sheaths each fibre. It was further pointed out by the applicant that the DIT did not address the question raised by the Authority, namely "what is regarded in the modern technology as individually sheathing of optical fibres". According to the applicant, their cables do reflect this aspect. In its report the DIT has put emphasis on the fact that the UV curable resin coating is an essential part of optical fibre itself and without it the product cannot even qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eathing. The HSN Explanatory Note to the Heading 90.01 also refers to the word "sheath" while explaining that "optical fibre cables of this heading (which may be fitted with connectors) consist of a sheath containing one or more optical fibre bundles, the fibres of which are not individually sheathed". Though in this Note also, no definition or explanation of the word 'sheath' has been given, nevertheless some clue is available to discern as to what a 'sheath' is meant to be. In the first part of the sentence in this Explanatory Note, it has referred to 'sheath' as containing one or more optical fibre bundles. This, in turn, implies that 'sheath' has to be something in the form of a jacket or container. The same meaning should logically be attached to it when interpreting the expression "individually sheathed" appearing in the latter part of the same sentence. The distinction in the description of the goods in question, namely, optical fibre cables in Headings 85.44 and 90.01 lies in the fact that the former refers to "individually sheathed fibres", whereas the latter (as the HSN Explanatory Note clarifies), refers to 'a sheath containing one or more optical fibre bundles, the fibr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial bonded to an optical fiber, over the cladding if any, to preserve fiber strength and inhibit cabling losses, by providing protection against mechanical damage, protection against moisture and debilitating environments, compatibility with fiber and cable manufacture, and compatibility with the jacketing process. Coatings include fluorpolymers, Teflon, Kynar, polyurethane, and many others….". In the website Answers Com, fiber optics glossary, the word 'coating' has been taken to mean "a protective layer applied over the fiber cladding during the drawing process to protect it from the environment". We think there is no need to multiply the references to drive home the point that 'coating' is not treated as 'sheathing' either in ordinary sense or in the scientific/technical field. In support of their contention that the products in question should be classifiable under Tariff Heading 8544, the applicant referred to the HSN Explanatory Note for Heading 8544 in which the issue of insulation of conductors has been dealt with. In our view, it is of no help to them. That Explanatory Note merely states that for insulation purpose, one or more coverings of insulating materials are gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a particular cable's outermost layer or jacket. The finished optical fibre cable is then imported. Each of the subject optical fibres is manufactured individually; with its dual-layer acrylate coating and colouring processes either integrated into a single-step of production, or separated in two steps, clad and coated. The industry standard specifications for coated, coloured optic fibres are 250+/-15 microns, and it's AFC3/Colour-Lock or additional coloured layer process exceeds this standards. The amount of coating applied to its optical fibre is 60 to 62.5 microns thick and reflects 'an industry standard'. The incorporation of AFC3 coating and Colour-Lock process as well as uncoloured coating further coloured during an additional manufacturing step protects the individual optical fibres from abrasions on the glass core and cladding that could cause short or long term failures. The AFC3 dual acrylate coating and 'Colour-Lock' are clearly visible to the naked eye, and are not proportionately 'very thin' with respect to the diameter of the optical fibre core and cladding." It has been further stated by the applicant in their letter dated 13-12-2005, that "early cable de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and provides a diagram of its construction i.e. core, cladding and buffer coating which is the same as the Alcatel products. 3. http://www.ciscopress.com/articles/article.asp?p=170740 seq Num=4 rl=1 : This is an article from Cisco who are a multi-national telecommunication supplier and the article describes in detail the construction of optical fibre cables. 4. http://www.itu.int/itudoc/gs/promo/tsb/85003.pdf. : The ITU (International Telecommunication Union) is an organization for developments on standards world-wide in the telecommunication sector. The diagram on Page 2 of this article shows the optical fibre and its configuration. 5. http://www.mrfiber.com/fiber-history.htm. : This website gives you a brief history of fibre optic technology and also the development of this technology." 15.An optical fibre consists of three main regions - (a) a central cylinder or 'core'; (b) a surrounding layer of material called 'cladding'; and (c) an outer coating over the cladding. The 'core' transmits the lightwaves; the 'cladding' keeps the lightwaves within the 'core' and provides some strength to the core. The cladding has a lower refractive index (faster speed) than that of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms relevant to the issue before us, need to be explained at this juncture. Optical fibres are broadly of two types :- (a) Multimode fibre - It has a bigger core (almost always 62.5 micrometer, but sometimes 50 micrometer) and is used with LED (Light Emitting Diode) sources at wavelengths of 850 and 1300 nm for short distance, lower speed networks like LANs (Local Area Network) [Mode' means a single electromagnetic field pattern that travels in a fibre] (b) Single mode fibre - It has a much smaller core, only about 9 micrometer and is used for telephony and CATV with laser sources at 1300 and 1550 nm. It can go very long distances at very high speeds. (Source : Tech Optics-Fibre Optic Jargon-www.techoptics.com) First level of fibre protection The optical fibre is a very small waveguide. In an environment free from stress or external forces, this waveguide will transmit the light launched into it with minimal loss, or attenuation. However, an unsupported fibre is subject to a loss of optical power caused by the microbending (microbends are minute fibre deviation caused by lateral forces which cause optical power loss from the core). To handle t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de individual sheathing of the fibres. We have checked up the textual contents of the websites referred to by the applicant but are unable to find any support therefrom to their claim that the improved technique of coating including the UV curable dual acrylate coating is recognized in the modern cable design technology as sheathing of individual fibre. In fact, the applicant has not produced any technical literature to show that primary or buffer coating of thickness 60-62.5 microns is accepted and acted upon in the industry as individually sheathing of the fibre. 17.While the Corning website informs us that the optical fibre coating has come a long way in the past three decades and the quest for the 'holy grail' of coating — the ideal coating — has changed over the years, from a coating that is infinitely stiff to one that is infinitely elastic, or one that is entirely resistant to temperature, it does not however, treat coating as identical to a 'sheath'. Therefore, it follows that a coating does not have the identity of a 'sheath' within the meaning of the expression used in the Heading 8544 with which we are ultimately concerned. As the definitions given in the dictionaries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or statement made by the applicant without any support from technical literature/documents. We are therefore not in a position to agree with this point of view. 19.While on this subject, we cannot but notice another point of considerable significance concerning the interpretation of the expression "individually sheathed fibres". From the manufacturing process of an optical fibre, which we have briefly narrated in the earlier part of this ruling, it is indisputably established that the primary or buffer coating is an integral part of the manufacturing of an optical fibre. In other words, a fibre is not a fibre unless it is complete with the coating. That being the factual position, if coating is to be treated as sheathing as the contention of the applicant is, then the 'fibre' should be taken to be already 'individually sheathed' once it gets born as a 'fibre' on completion of its manufacturing process. In that event, the expression "individually sheathed" before the word "fibres" as employed in the Tariff Heading 8544 would become completely redundant and superfluous. Obviously, such an interpretation cannot merit any support or acceptance. From this angle as well, it sounds logi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned industry, had been cited or analyzed in the rulings to show (a) that combination of 60 micron thick UV curable double acrylate coating with ColourLcok process is acknowledged and accepted as individually sheathing the fibre; (b) any norm or measure to judge what constitutes 'substantial sheathing protection' and (c) that any 'coating' which gives an optical fibre 'substantial sheathing protection' is regarded as a 'sheath'. It is worthwhile to mention that the Heading 8544 does not employ the expression 'made up of fibres individually having substantial sheathing protection'. The words used are 'made up of individually sheathed fibres'. The entire focus is on each fibre being individually sheathed and not on any mechanism which gives equal protection as what a sheath would normally give. Another reason given in these rulings relates to the exclusion of the optical fibre cables under consideration from the coverage of the Heading 9001. The particular portion of the HSN Explanatory Note to Heading 90.01 to which reference has been made in this context reads as follows - "Optical fibres consist of concentric layers of glass or plastics of different refractive indices. Those dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry, Department of Commerce, New Delhi through the Commissioner of Customs, Air Cargo Exports, New Delhi. We observe that the ITA came into force on 13th December, 1996 in the World Trade Organisation (WTO) Ministerial Conference at Singapore. India joined the ITA on 25th March, 1997. The parties to the said Agreement declared as follows:- "1. Each party's trade regime should evolve in a manner that enhances market access opportunities for information technology products. 2. Pursuant to the modalities set forth in the Annex to this Declaration, each party shall bind and eliminate Customs duties and other duties and charges of any kind, within the meaning of Article II:1(b) of the General Agreement on Tariffs and Trade, 1994, with respect to the following : (a) all products classified (or classifiable) with Harmonized System (1996) ("HS") headings listed in Attachment A to the Annex to this Declaration; and (b) all products specified in Attachment B to the Annex to this Declaration, whether or not they are included in Attachment A; through equal rate reductions of Customs duties beginning in 1997 and concluding in 2000, recognizing that ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment of India's obligation under ITA is restricted to the optical fibre cables classifiable under the HS Heading 8544 70 (same as in our tariff as well) and not in respect of optical fibre cables classifiable under the Heading 9001. In fact, Government of India, in fulfilment of its obligation under the ITA, has been periodically reducing the rate of duty on the products covered by the India's Schedule to the ITA over the last few years since 1997. The exemption Notifications No. 24/2005-Cus., dated 1-3-2005 as corrected by Corrigenda M.F. (D.R.) F. No. 334/1/2005 dated 2-3-2005 and No. 25/2005-Cus., dated 1-3-2005, issued as part of that process, now exempt goods falling under the specified Heading, sub-heading or Tariff item mentioned in the two notifications, from the whole of duty of customs leviable thereon. In so far as optical fibre cables are concerned, the exemption is only for those which are classifiable under Heading 8544 70 and not for those classifiable under Heading 9001 as is apparent from the Notification No. 24/2005. The other Notification does not cover optical fibre cables at all. This being the factual and legal position as at present, we are unable to appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to fall back upon the General Rules for the Interpretation of the First Schedule to the Act, for deciding the classification of such composite goods. Rule 3(b) which is the relevant rule for this purpose reads as follows — "(b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable." Since, undoubtedly, the optical fibre cable component in the composite goods under consideration gives them their essential character, they would have to be classified as if they consisted of optical fibre cable(s) only. This would mean that even these composite goods would be classifiable under the Heading 9001 and more precisely, under the Tariff Item 9001 10 00. 24.Thus, in view of the foregoing, we rule on the question posed by the applicant that each of the fourteen products proposed to be imported by them whose identifying descriptions have been enlisted in the Table in para 2 above and whose technical details ..... X X X X Extracts X X X X X X X X Extracts X X X X
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