2025 (1) TMI 556 - AT - Customs

Hybrid Matrix Cards and Small Form Factor Pluggable components classified as parts under CTI 8517 70 10 and 8517 70 90

Vodafone Idea Limited (Previously Idea Cellular Limited) Versus Principal Commissioner of Customs, New Delhi

Vodafone Idea Limited (Previously Idea Cellular Limited) Versus Principal Commissioner of Customs, New Delhi - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the imported Hybrid/Pure Matrix Cards and Small Form Factor Pluggable (SFP) transceivers should be classified under Customs Tariff Item (CTI) 8517 62 90 as network interface cards or under CTI 8517 70 10 and 8517 70 90 as parts of telecommunications equipment.The applicability of previous legal decisions and precedents to the classification of these goods.Whether the goods in question can be considered as independent apparatus or parts of a larger equipment system.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Classification of Hybrid/Pure Matrix Cards and SFP TransceiversRelevant Legal Framework and Precedents:The classification of goods under the Customs Tariff Act is guided by the Harmonized System of Nomenclature (HSN) and relevant legal precedents. The appellant argued for classification under CTI 8517 70 10 and 8517 70 90, citing previous decisions such as Reliance Jio Infocomm Ltd. and Ciena Communications India Pvt. Ltd., where similar goods were classified as parts.Court's Interpretation and Reasoning:The Tribunal examined the nature of the goods and their function within the Packet Transport Network (PTN) equipment. It considered whether the goods could function independently or were integral parts of the main equipment. The Tribunal noted that the goods are designed to work specifically with the PTN equipment and cannot operate independently.Key Evidence and Findings:The goods are used within PTN equipment, which has a modular chassis with dedicated slots for these cards.The cards communicate with each other via a proprietary backplane interface, indicating they are not standalone devices.The Tribunal referenced technical descriptions and definitions from telecommunications dictionaries to support its findings.Application of Law to Facts:The Tribunal applied Section Note 2(b) of Section XVI and relevant HSN Explanatory Notes, concluding that the goods are parts of the PTN equipment and should be classified under CTI 8517 70 10 and 8517 70 90.Treatment of Competing Arguments:The Tribunal rejected the department's argument that the goods were network interface cards (NICs) under CTI 8517 62 90, emphasizing that NICs are distinct and separable from the main equipment, unlike the subject goods.Conclusions:The Tribunal concluded that the goods are not independent apparatus but parts of the PTN equipment, thus classifiable under CTI 8517 70 10 and 8517 70 90.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:'The subject goods cannot function independently without the other components of the main equipment and become functional only when plugged into the slot of modular chassis of the main equipment.'Core Principles Established:Goods that are integral to and inseparable from a larger equipment system should be classified as parts rather than independent apparatus.The classification of goods should consider their functionality and dependency on the main equipment.Final Determinations on Each Issue:The Tribunal set aside the Principal Commissioner's order classifying the goods under CTI 8517 62 90 and allowed the appeal, classifying the goods under CTI 8517 70 10 and 8517 70 90.The judgment underscores the importance of accurately classifying goods based on their function and integration within a larger system, aligning with established legal precedents and technical definitions.