2025 (2) TMI 1023 - HC - Customs

SFP devices classified under CTH 8517 7990 instead of CTH 8517 6290, entitled to Basic Custom Duty exemption

Delhi HC held that Small Form Factor Pluggable (SFP) devices should be classified under CTH 8517 7990 rather than CTH 8517 6290. The court relied on ... Classification of goods - Small Form Factor Pluggable (SFP) devices - whether the Small Form Factor Pluggable (hereinafter ‘SFP’) is a part of a machinery and is liable to be classified under CTH 8517 7990 or whether it is to be classified as an apparatus/ machine under CTH 8517 6290? - HELD THAT:- In IBM India Private Limited vs. Commissioner of Customs (Import) CESTAT, Mumbai [2024 (4) TMI 972 - CESTAT MUMBAI] had again considered the same products i.e., Transceiver for Ethernet Switch/ Transceiver modules of different models and had relied upon the Reliance Jio Infocomm [2022 (8) TMI 76 - CESTAT MUMBAI] and had observed that the SFP’s Optical Transceivers 9.1 were entitled to exemption from Basic Custom Duty and would be classified as held in Reliance Jio Infocomm. In view of the fact that the classification of SFP’s has already been decided in various decisions and has also been accepted by the Department, the impugned ruling dated 26th September, 2024 by which the Authority has observed that SFP’s would be classifiable under 85176290 with Basic Customs Duty Act of 20% would not sustain and the same is liable to be set aside. The goods i.e., SFPs shall stand covered under Entry 85177990 and shall also be entitled to applicable exemptions. Conclusion - SFPs should be classified under Entry 85177990 and be entitled to applicable exemptions. The impugned rulings are set aside - Appeal allowed. The Delhi High Court considered two appeals filed by M/s. Nokia Solutions and Networks India Private Limited challenging a ruling by the Customs Authority for Advance Rulings regarding the classification of Small Form Factor Pluggable (SFP) devices under the Customs Act. The core issue was whether SFPs should be classified as parts of machinery under CTH 8517 7990 or as apparatus/machines under CTH 8517 6290.The Appellant argued that the issue had been previously addressed by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) and the Supreme Court in cases involving similar parts. The Court examined a CESTAT order in the case of Commissioner of Customs-Mumbai vs. Reliance Jio Infocomm Ltd., where it was held that SFPs should be classified as parts under 85177090 and not as machines under 85176290. The Court noted that the Department had not appealed against this decision in other cases, indicating consistency in classification.In another case involving IBM India Private Limited, the Mumbai CESTAT held that SFPs are classifiable under 85177090, granting them exemption from Basic Customs Duty. This decision was also upheld by the Supreme Court. The Court emphasized the importance of consistent classification to avoid confusion and unnecessary litigation for importers.The Court further highlighted that the Customs Entry for SFPs had been updated to 85177990 and observed ongoing disputes related to the classification of SFPs in various cases. Considering the established classification of SFPs and the Department's acceptance of previous decisions, the Court set aside the impugned ruling classifying SFPs under 85176290 with a 20% Basic Customs Duty. The Court ruled that SFPs should be classified under Entry 85177990 and be entitled to applicable exemptions.In conclusion, the Court allowed both appeals, setting aside the impugned rulings and directing that SFPs be classified under Entry 85177990 in accordance with previous decisions and exemptions.