Exemption under customs notification denied for imported telephone exchange system containing excluded electronic components.

Imported electronic telephone exchange, music on hold unit and billing system were held to fall within the exclusion clause of Notification No. 172/77-Cus. because the goods contained electronic components, including thermionic valves, transistors and loaded PCBs integral to the system. Although the goods were declared and priced as separate items, the importers described them as a complete system capable of independent working, and the notification excluded goods containing the specified semiconductor and electronic parts. The claimed exemption under Heading 85.17 was therefore unavailable, and the appeal failed against the assessee.

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Issues: Whether the imported electronic telephone exchange, music on hold unit and billing system were entitled to the benefit of Notification No. 172/77-Cus., or were excluded because the goods contained electronic components and parts falling within the exclusion clause.

Analysis: The goods were declared as an electronic telephone exchange, music on hold and billing system, and separate prices were shown for the three items. The notification granted exemption to goods under Heading 85.17, but excluded parts containing thermionic valves, transistors, similar semiconductor devices, electronic micro-circuits, or capacitors other than paper capacitors. The imported goods were found to contain electronic components, including thermionic valves, and the importers themselves described the goods as a complete system capable of working independently. The record also showed that the loaded PCBs were integral to the imported goods.

Conclusion: The imported goods were covered by the exclusion in the notification and were not entitled to the claimed exemption; the appeal was decided against the assessee.

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