2007 (8) TMI 227 - AT - Customs

Tribunal Corrects Classification of Secure Communication Devices

The Tribunal allowed the appeals, finding the appellants' classification of Fax Secrecy Device Model and Link Secrecy Device Model under Chapter Heading ... Fax secrecy model & Link secrecy device model definitely form part of the communication set up and would be classifiable as part of the line telephony apparatus under 8517 of Custom Tariff Act – Heading 8543.89.89 is not suitable even these equipment are based on principle of encryption & decryption Issues involved: Correct classification of Fax Secrecy Device Model and Link Secrecy Device Model under Customs Tariff Act.Analysis:The case involved an appeal against a common Order-in-Appeal passed by the Commissioner of Customs (Appeals), Bangalore. The appellants imported Fax Secrecy Device Model and Link Secrecy Device Model under three Bills of Entry. The main issue was the correct classification of these items under the Customs Tariff Act. The appellants argued for classification under Chapter Heading 8517.80.20 and 8517.80.90 as Line Telephony equipments, while the Revenue sought to classify them under Chapter Heading No. 8543.89.99 as Others. The appellants claimed that if their classification was accepted, they would be entitled to a refund due to overpayment of duty based on the department's classification decision.During the hearing, it was established that the imported items, Fax Secrecy Model and Link Secrecy Device Model, were used by the Home Ministry for secure communication to prevent interception and maintain secrecy. These devices operated on encryption and decryption principles to ensure secure transmission. The Commissioner (Appeals) argued that these items were not apparatus for line telephony equipment, as they did not directly participate in communication but rather encrypted and decrypted messages. However, the Tribunal disagreed with this reasoning, noting that the devices played a crucial role in the communication setup by converting messages into coded form for transmission over telephone lines. The Tribunal found a contradiction in the Commissioner's order regarding the necessity of these devices for communication, similar to Voice Secrecy Secure Telephone, which was classified as line telephony equipment. Therefore, the Tribunal concluded that the appellants' classification was correct, and the Commissioner's decision was deemed improper and not legally sound. As a result, the appeals of the appellants were allowed with any consequential relief granted.In conclusion, the judgment resolved the issue of classification of Fax Secrecy Device Model and Link Secrecy Device Model under the Customs Tariff Act, emphasizing the role of these devices in secure communication and their classification as part of line telephony apparatus. The decision highlighted the importance of encryption and decryption in maintaining communication secrecy and upheld the appellants' claim for the correct classification of the imported items.