2018 (3) TMI 28 - AT - Customs

Tribunal decision clarifies burden of proof in network switches classification disputes

The tribunal partially allowed Appeal Nos. C/969, 970, 971 & 972/07 regarding the classification of network switches, emphasizing the department's ... Classification of goods - Network Switches - It claimed that such switch was only useable in the local area network which was rightly classified under CTH 8471.80, but for no reason, department disturbed the classification to bring the same under CTH 8517.50 - Held that: - It is settled principles of law that in classification, the onus is on the Department to prove that the classification claimed by the assessee is incorrect based on evidence and good reason as well as the scope of the tariff entry. Revenue failed to bring out whether the network switches can be otherwise usable to fall under CTH 8517.50 as per scope of the entry depicted at the outset - appeal allowed in part. Issues: Classification of Network Switches under CTH 8471.80 or CTH 8517.50, Pecuniary jurisdiction, Small demand on specific goodsClassification of Network Switches under CTH 8471.80 or CTH 8517.50:The appellant contended that the network switches were only usable in the local area network and should be classified under CTH 8471.80. However, the department classified them under CTH 8517.50 as data communication equipment for local area networks. The tribunal noted that the onus is on the department to prove the correctness of their classification. The tribunal found that the revenue failed to establish whether the network switches could be used otherwise to fall under CTH 8517.50. Consequently, there was no demand upheld for the network switches in Appeal Nos. C/969 to 972/2007.Pecuniary Jurisdiction:Appeal Nos. C/754 and 968/2007 were dismissed on pecuniary jurisdiction due to the small amount involved in these appeals, as per the appellant's averment. The tribunal upheld the dismissal on this ground.Small Demand on Specific Goods:In Appeal Nos. C/971 & 972/07, a small demand was levied on specific goods like Transeivers, Bluetooth Adopter, Mini Gigabit Interface Converter, etc. The appellant did not press this demand. Considering the smallness of the demand on these goods, the tribunal confirmed the demand.In conclusion, the tribunal partially allowed Appeal Nos. C/969, 970, 971 & 972/07 concerning the classification of network switches, while Appeal Nos. C/754 & 968/2007 were dismissed. The decision emphasized the importance of the department proving the correctness of classification in such disputes and highlighted the significance of evidence and the scope of tariff entries in determining classification outcomes.