Router Line Cards classified as populated PCBs under CTI 8517 70 10, attracting NIL duty rate

CESTAT NEW DELHI allowed appellant's appeal regarding classification of imported Router Line Cards. The Principal Commissioner had classified the goods under CTI 8517 62 90, but CESTAT held they should be classified under CTI 8517 70 10 as populated PCBs (printed circuit boards with electronic elements), following precedent in Vodafone India Limited case. This classification attracts NIL duty rate. The tribunal set aside the Principal Commissioner's order dated 24.02.2022, ruling that Router Line Cards are populated PCBs rather than the department's claimed classification.

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Issues:
Classification of Router Line Cards under Customs Tariff Items, Demand of duty under Customs Act, Confiscation of goods under Customs Act, Imposition of penalty under Customs Act.

Classification of Router Line Cards:
The appeal was filed by M/s Vodafone Idea Limited challenging the reclassification of Router Line Cards imported by them. The Principal Commissioner rejected the appellant's classification under CTI 8517 69 30 and reclassified them under CTI 8517 62 90. The appellant argued that the Router Line Cards are parts of the main equipment and should be classified accordingly. The Tribunal found that the Router Line Cards can be classified under CTI 8517 70 90 or CTI 8517 70 10 based on their functionality and nature as parts of the main equipment. The Tribunal concluded that the classification by the Principal Commissioner could not be sustained, and the appellant's classification was upheld.

Demand of Duty under Customs Act:
The Principal Commissioner had demanded duty under section 28(1) of the Customs Act, 1962, along with interest. The appellant contended that they were entitled to exemption under specific notifications based on the classification of the Router Line Cards. The Tribunal's decision on the classification also impacted the duty demand, as the correct classification would determine the duty liability. The Tribunal's decision in favor of the appellant's classification also affected the duty demand, leading to the setting aside of the Principal Commissioner's order.

Confiscation of Goods and Imposition of Penalty:
The Principal Commissioner had also ordered the confiscation of the goods under section 111(m) of the Customs Act and imposed a penalty under section 112(a)(ii) of the Customs Act. The appellant argued against the confiscation and penalty, stating that their classification was correct and did not warrant such actions. The Tribunal's decision to set aside the reclassification by the Principal Commissioner also nullified the confiscation and penalty imposed, as they were based on the incorrect classification. Therefore, the Tribunal's decision to allow the appeal resulted in setting aside the orders for confiscation and penalty as well.

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