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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 ..... 3 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 by them. They are — (a) OALC; (b) URC & (c) Terrestrial (Land). The first two models are 'submarine' while the third is 'terrestrial (land)'. As per the generic description of goods given for the category OALC in the corresponding applications, these submarine telecommunication cables are a hybrid of optical and mechanical operations that form part of a submarine telecommunication system for use in transmission of aggregate data. The ASN OALC cable design can accommodate up to 48 fibre pairs. The fibres are housed in a jelly-filled (non-hygroscopic filling compound) steel tube s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 requisite "made up of individually sheathed fibres", the Authority gave the parties opportunity to submit their further response, if any, in this regard. The Authority directed the applicant to clarify whether the optical fibre cables are made up of individually sheathed fibres and also to produce before the Authority the samples of the goods which are the subject- matter of classification. 6.It appears from the record that at this stage, the Commissioner suo motu sought the opinion of the Department of Information Technology, Ministry of Communications and Information Technology, Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect 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 be taken to have been made up of individually sheathed fibres. In this context, what is regarded in the modern technology as individually sheathing of optical fibres may also please be elaborated. In our technical opinion and on physical examination of the samples in question, these optical fibre cables are not made up of individually sheathed fibres." 9.The letter containing the above comments was forwarded by the Authority to the applicant as well as to the Commissioner and the Joint CDR for their further response, if any. While giving detailed comments, the applicant relied upon certain ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 qualify as an optical fibre; such a coating cannot be called a 'sheath' which has necessarily to be something to be placed over the optical fibre as an additional cover to make it an "individually sheathed fibre" — the expression which appears in the Heading 8544. The DIT has not elaborated "what is regarded in the modern technology as individually sheathing of optical fibre," though it has been categorical in giving the technical opinion on all the other queries of the Authority. Since this is the issue which forms the basis of the applicant's contention before us, we consider it necessary and appropriate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les. 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 fibres of which are not individually sheathed'. In so far as the Section/Chapter Notes to Chapters 85 & 90 of the Act are concerned, terms 'sheath' or 'sheathing' have also not been defined or explained. 13.Since the terms 'sheath' and 'coating' are not defined or explained in the HSN or the Act, we have to understand them in the sense in which they are understood by English speaking people ordinarily as well as in scientific/technical context. Therefore, necessarily, we have to look for the meaning of these words in the dictionary which, in our view, would give a reasonably clear perception of what a 'sheat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed 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 generally used and in certain cases the insulation is obtained by anodizing or by a similar process (e.g. the production of a surface coating). In fact, in the same Explanatory Note, the word 'sheath' has been used in contradistinction to coating when it clarifies that in certain cases a metal sheath (e.g., lead, brass, aluminium or steel) serves as a protective covering for the insulation of a conductor. It is, therefore, clear that the coating and sheathing are two different entities, though both of them may have the same function, namely, insulation of conductors. We are, therefore, unable to appreciate as to how the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation 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 designs produced by Alcatel were based on an individual additional protection of the fibres, either in the form of buffer sheath tightly applied around the fibre or of a soft material, coating the fibre individually and housed in a protective sheath or slot. The evolution of the telecommunications market requiring telecommunications cable designs to be smaller; or to accommodate a greater number of fibres in the same space; and the rapid evolution of transmission technologies requiring the use of optical fibres of more and more complex design and with a higher sensitivity to bending effects (i.e. when the fibre bends it does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 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 core in order to keep the light in the core. The outer coating which is also called a buffer coating or a primary coating, is a protective layer applied over the fibre cladding to provide physical and environmental protection for the fibre. Optical fibres are made of extremely pure optical glass. The first step in the manufacture of optical fibre is making a 'preform' glass cylinder which is usually done by a process called 'modified chemical vapour deposition (MCVD)'. The process of making preform blank is highly automated and takes several hours. After the preform blank cools, it is tested for quality control (index of refraction). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this problem two first level protections of fibre have been developed namely, loose buffer and tight buffer. (i)Loose Tube In:- the loose buffer construction, the fibre is contained in a plastic tube that has an inner diameter considerably larger than the fibre itself. The loose tube isolates the fibre from the exterior mechanical forces acting on the cable. For multifibre cables, a number of these tubes, each containing single or multiple fibres, are combined with strength members to keep the fibres free of stress, and to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would go to show, sheath is a separate cover or shell and each fibre is enclosed in its own protective sheath to add further protection. Subsequently, these individually sheathed optical fibres are fitted with a common sheath and/or armour and other protective mechanisms to form a telecommunication cable. The individual sheathing on each fibre provides protection from damage should such fibres rub against each other. That technologically improved quality of coating on each fibre ensures as good a protection as a 'sheath' can poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 logical to assume that the framers of the expression in the HSN and in the Act would not have used the word "sheathed" to mean "coated" in the context of optical fibre cables covered by the Heading 8544. 20.We have gone through the various rulings given by the USA Customs, copies of which have been furnished to us by the applicant. All these rulings excepting one have been issued by the Commercial Rulings Division of USA Customs, New York while the Customs ruling HQ964632 detailing the process of coating and why this is considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dually 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 drawn from glass have a very thin coating of plastics, invisible to the naked eye, which renders the fibres less prone to fracture. Optical fibres are usually presented on reels and may be several kilometers in length. They are used to make optical fibre bundles and optical fibre cables". This, only gives the general description of an optical fibre and does not in any way exclude from the purview of Heading 90.01 optical fibres having thicker coatings or a coating which is visible to naked eye. What is actually excluded from the coverag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 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 extended staging of reductions and, before implementation, expansion of product coverage may be necessary in limited circumstances." As can be seen from the above Declaration, each party shall bind and eliminate Customs duties and other duties and charges of any kind with respect to (i) all products classified (or classifiable) with HS (1996) headings listed in Attachment A to the Annex to this Declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appreciate the contention of the applicant that India would be going against the principles of ITA if their products are classified under the Heading 9001. 22.Having carefully examined the question posed by the applicant, both from the technical as well as legal angles, we are inevitably led to the conclusion that the products involved in these applications, namely, optical fibre cables are not "made up of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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