TaxTMI 
TaxTMI 
2015 (12) TMI 1200
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....21/2002-Cus. dt. 1.3.2002. 2. On the basis of information that M/s. Vodafone Essar Group of Companies (hereinafter referred as VEG) were misclassifying imported OFC and evading duty, 3 consignments totally valued at Rs. 4.65 Crore imported by M/s. Vodafone Essar South Ltd. (VES) from M/s. Corning Cable Systems Pvt. Ltd. were placed under seizure. Samples of the 3 consignments were drawn and sent to Telecommunication Engineering Centre (TEC), Ministry of Communication and Information Technology, Department of Communications, Government of India for expert opinion. TEC vide letter dt. 14.1.2009 opined that the cables contain bundles of optical fibres which were not individually sheathed and, therefore, are covered under Customs Tariff Heading 9001. During investigation VEG paid Rs. 1.83 Crores towards differential duty liability. Investigations culminated in issuance of show cause notice dt. 17.3.2009. In adjudication, Commissioner of Customs imports confirmed the classification under Tariff Item 90011000 and demanded differential duty amounting to Rs. 3,25,19,948/- under Section 28(2) of the Customs Act. Recovery of interest was ordered under Section 28AB. However, the seizure of g....
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....inst abrasion. The outer diameter of the primary coating is 245 microns. The primary or buffer coating is easily strippable by means of a mechanical stripping tool to enable splicing of two optical fibres. Each fibre in a cable is coated with colour for identification of the fibre for joining dining installation. The contention is that each of the strands of optical fibre is individually cladded, coated with dual acrylate coating and colour coated. Therefore it should be treated as a fibre individually sheathed, hence classifiable under CTH 8544 & eligible for exemption. We were taken extensively through Technical Literature in support of this contention. 3.1 The Ld. Counsel relied on the Order-in-Appeal No. 165/2008/MCH/AC/Gr.VB/07-08 dt. 25.3.2008 passed by Commissioner (Appeals) Mumbai I holding the said goods to be classifiable under CTH 8544. 4. Ld. A.R. appearing for Revenue questioned at the outset whether the importer can file appeal in case of assessment made by themselves or whether Commissioner (Appeals) has rightly rejected the appeals filed by the importers in case of self assessement made by appellant themselves. Accordingly to Ld. AR the OFC were being regularly a....
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....008 may be quashed. He submitted that the opinion obtained from Associate Professor, IIT Chennai by the appellant cannot have legal basis as the samples presented before him were not drawn in the presence of a Customs Officer. Further, the Director IIT had refused to give technical opinion. Therefore, the opinion given by the Associate Professor has no evidentiary value. 5. On the 23 rd September when the hearing took place before this Bench, the Ld. A.R. objected to the samples produced by the appellant questioning whether they represent the imported goods. Therefore, the Bench decided to examine the samples seized by DRI which were presented on 9 th October in the presence of the DRI Officer. 5.1 The OFC cable was cut across its section. It was found to consist of six tubes and within each tube there were eight optical fibres, each fibre being coated with different colour. Each OFC therefore consists of forty eight numbers of optical fibres. 5.2 The appellants submit that this OFC is made up Single Mode fibres with step index, conforming to ITU-T G652D standards International Telecommunication Union (ITU). 6. We have given careful thought to the contentions of both sides. Th....
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.... duty is wholly unjustified............ ..........The fact that the petitioners themselves were classifying the goods in the past under Heading 90.01 would not preclude them from classifying the goods under Heading 85.44 in the light of the order passed by Commissioner of Customs (A), Mumbai....................................... ...............The contention of the revenue that the petitioners have voluntarily paid the amount towards the differential duty is equally unacceptable, because, in the covering letters all dated 19-12-2008 the petitioners have specifically stated that the amount is being paid in view of the threat given by the D.R.I. officers to arrest the directions / employees if the differential duty is not paid." It is seen that the Hon'ble High Court vindicated the stand of the appellant in changing the long standing practice of classification. 8. We may now briefly relate the judgments on this issue referred by both sides to have an idea of the judicial views so far on the issue of classification (i) In a case of classification of similar goods, the Tribunal in the case of M/s. Bharat Airtel & Others - 2008-TIOL-2069-CESTAT-MAD dt. 22.9.2008 held that"C....
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....s case to be unique in that it involves meticulous interpretation of the Tariff entries coupled with the basic question of fact as to whether the cables in question were made up of individually sheathed fibres. In this nature of the case, we are of the view that it will not be just and fair to impose any penalty on the importer even in the event of a decision being taken against them. The learned Commissioner shall have regard to these aspects while taking up the case of de novo adjudication. The impugned order is set aside and the appeal is allowed by way of remand." It is seen that the Tribunal directed that the classification should be decided after examining the goods. (iii) In the case of Optel Telecommunication Ltd. (supra) the department itself desired the goods to be classified under Heading 8544 instead of Heading 9001. The duty at that time was higher under Heading 85.44. The Tribunal had observed that "No material has been brought on record by the Revenue to show that coating of UV cured acrylate amounts to sheathing of optical fiber cables. Explanatory Notes of HSN under Heading No. 90.01 also does not support the findings of the learned Commissioner that the coating ....
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....fibre is defined as "an optical fibre with a small core, propagating only on mode of light above the cut-off wavelength". Multi mode fibre is defined as "a large core fibre that support more than one propagation mode." In multi mode fibre, the light can be fed into the fibre at different angles, at the same time. However, in single mode, the light can be fed from one angle. Fibre Type - Step index fibre and graded index fibre In step index fibre, the core refractive index is uniform throughout the fibre so that a sharp step in refractive index occurs at the core-to-cladding interface. Graded index fibre means a fibre in which core is composed of concentric rings of glass where the refractive indices deco as from the centre axis whose purpose is to reduce modal dispersion. Optical fibre for telecommunication is made of very pure silica. It consists of the following components: i) core ii) cladding iii) buffer coating iv) colour coating 10. Having seen the structure and design of the OFC, we may look at the Technical references which throw light on the issue at hand The following Technical Books/Articles have been referred by the appellant (i) The Book "Mastering Op....
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....nstruction and structure for these two end-uses is different. Technical books state that optical fiber bundles consist of thousands of fibers. "Mastering Optics by John Blackwell and Shane Thornton" states that optical fiber bundles are used for illumination when incoherently bundled and image transmission when coherently bundled. It also states that bundle can contain many hundreds of fibres. The most common applications of incoherent bundles are in endoscopes or in any medical instrument used to obtain an image from within the human body. Introduction of Fibre Optics by John Crisp says that "As the light travels down the fiber, light rays get thoroughly jumbled up. This means that a single fiber can only carry on average value of the light that enters it. To convey a picture along a single fiber is quite impossible. To produce a picture, a large number of optic fibers must be used in the same way that many separate points of light, or pixels, can make an image on a cathode ray tube. 10.3 If we look at the structure of the imported OFC and the cables used in endoscopy as shown by the Counsel we find that the imported cable is not a bundle of optical fibers or cable containing tw....
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.... fiber bundles and optical fiber cables. Optical fiber bundles---- If coherently bundled, they are used for transmission of images, but if randomly bundled they are suitable only for transmission of light for illumination. The optical fibre cables consist of a sheath containing one or more optical fibre bundles, the fibres of which are not individually sheathed. Optical fibre bundles and cables of Heading 9001 are used primarily in optical apparatus, particularly in endoscopes. 11.1 OFC imported has, in all 48 optical fibres (6 tubes X 8 fibre each). They cannot be called as optical fibre bundle as the optical fibre bundle of Heading 90.01 consist of hundreds or thousands of optical fibres. The fibres used in the present case are for transmission of data. The 48 fibres as such, cannot transmit light or image as required by endoscope or an optical apparatus. As per HSN, optical fibre bundles are used only for illumination or image transmission, that too in endoscope etc. Reading the HSN notes, and seeing the construction and use of the product, it appears that Heading 8544 is more appropriate in the present case. Reliance is placed on the Hon'ble Supreme Court decision in the c....
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...."dry core" technology to prevent ingress of water. Two water blocking yarns are placed around the central strength member (one longitudinally and one helically) and over the core, is applied a longitudinal water swellable tape. (ii) Letter from the appellants and Opinion by M/s. Prysmian Wuzi Cable Co. Ltd., China who supply the cables stating that "The following features of the cable are highlighted a) the fibers in the cabel are silicon glass fibers b) the fibers are single mode, step index fibers c) the fibers are used for long distance telecommunications d) the fiber is protected by dual acrylate coating e) the fibers are identified with colour code, a coat applied on the dual acrylate coating 13) According to us, the dual acrylate coating together with colour coding constitutes a 'sheath'. Thus, each fiber is individually sheathed and hence, the cable in question is made up of individually sheathed fibers. 14) We hereby confirm that the description of the OFC as given in HSN Explanatory Notes is satisfied in the OFC supplied by us. Therefore, in our view, the OFC supplied by us satisfy the tariff description of Heading 85.44 and as such are classifiab....
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....in the optical fiber trade such coating is considered as a sheath around the optical fiber to form individually sheathed optical fiber. The coating of acrylate itself enhances the structural integrity and provides additional physical protection to the optical fibers and acts as a sheath to the optical fiber and is as such individually sheathed, classifiable under Heading 85.44." (iii) Certificate dt. 29.3.2009 of the manufacturer M/s. Corning Cable Systems as reproduced below- "To whomsoever it concerns, Corning Cable Systems confirms that we have supplied optical fibre cables to major customers in countries like USA, Canada, Europe (Germany, France, Great Britain, etc.) Middle East, china, Japan, Australia, New Zealand, Thailand, Singapore, Philippines etc. and in all these countries the customs authorities have classified these cables as tariff codes HSN 8455.70.00. Under this classification, the optical fibers are said to be made up of individually sheathed fibers. The import duty under this classification is free". (iv) Certificate from the Department of Electrical Communication Engineering, Institute of Science, Bangalore stating that This is to certify that the test....
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....ent case. Interestingly we note that in the Optel case, Revenue was seeking classification under 8544. Significant to note that the duty under CTH 9001 was more than the duty under CTH 8544 at that time. Revenue has changed its stance from the earlier one. 14. We find from records that another party namely Reliance Communications Infrastructures Ltd. had been classifying their similar goods described as "G652 Optical Fiber Cable with 48 Core" and "Optical Fiber Cable 12F G652" for the period April 2003 to December 2004 at Navi Mumbai and their goods were assessed under Heading 8544. They have produced copies of 25 B/Es as evidence. At the same time the decision of Tribunal in their own case Reliance Communication Infrastructure Ltd. Vs. CC - 2015 (320) ELT 306 (T) referred to above arose from reopening of their import classification at Nava Sheva during 2005-2006 and department sought to reclassify their goods i.e. OFC under CTH 9001. This shows that Customs were taking a different stand at different times and in different ports. 15. CESTAT in the case of Reliance Communications Infrastructure Ltd. Vs. CC - 2015 (320) ELT 306 (T) held that Optical Fibre Cables of a type imported ....
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....;s obligation Information Technology Agreement (ITA) is only restricted to cables classifiable under Heading 8544. 15.1 We may also refer to some main points, other than above, which were advanced by the Commissioner in the impugned Order. He states that the dual acrylate coating is an integral part of the fibre and the coating is removed only at the fibre ends to facilitate proper joins at the terminal end. He also refers to the Explanatory Notes under Heading 9001 which state that the fibres have a thin coating of plastics which render the fibres less prone to fracture. Even the International Telecommunication Union (ITU) technical specifications provided by the supplier M/s Prysmian show the parameters of primary coating which indicates that the coating is an integral part of the fibre. 15.2 We observe that AAR did not have the benefit of technical books referring to the specific use of the word 'sheath'. We also note from the cross-examination of the TEC officials that their opinion was not based on any technical books. However we have related above various technical books and articles which clearly refer to the word 'sheath' on a fibre, which is over and abov....
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....ee that this may not be the ultimate determining factor for arriving at the correct classification. 17. Moreover the Ruling of AAR will apply only in respect of the party that applied for such Ruling in terms of Section 28J of the Customs Act. 18. We have seen the opinion of the Telecommunication Engineering Centre (TEC). Without passing any judgement on the authority of the Centre to give opinion on an issue with wide ramifications, we do find that the opinion does not deal with the issue as extensively as it should have. Considering the importance of the issue, we would expect a technical opinion to refer to details of design, features and construction of such cables and the use of modern technology behind the manufacture of such cables. It is significant to note that the cross examination of the official of TEC showed that the officials did not refer to any technical literature on the subject while expressing their opinion. In the face of voluminous technical literature referred by the appellant, it would only be proper to reexamine the issue in detail. 19. We note that the following technical materials and experts' opinions considered by us in the present case, were eith....