TaxTMI 
TaxTMI 
2020 (12) TMI 870
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....d March 1, 2005 [Notification dated March 1, 2005] for payment of 0% basic customs duty. The custom authorities, however, by order dated November 19, 2019, classified the goods imported by the appellant under CTH 8517 69 90 and ordered for re-assessment of the goods. 2. The issue, therefore, that is involved in this appeal is regarding classification of the goods under CTH 8517 18 10 (as claimed by the Appellant) or under CTH 8517 69 90 (as contended by the Department). 3. The appellant had imported one consignment of the goods from a manufacturer in Taiwan under a Commercial Invoice dated February 12, 2019. In the said invoice of the manufacturer, the goods were declared classifiable under H.S. Code 8517.18.0020. Goods were imported at the IGI Airport, New Delhi and a Bill of Entry dated February 21, 2019 was filed by the appellant, classifying the goods under CTH 8517 18 10. The goods were examined under the first check, after which a query dated February 23, 2019 was raised by the Assessing Group requiring the appellant to justify the CTH under which the appellant had classified the goods. The appellant submitted letters dated February 25, 2019, March 1, ....
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....es require external power supply. 3.4 Further, Customs Notification No. 57/2017 dated 30.06.2017 amended as 02/2019 dated 29.01.2019 vide sl. no. 20 classified the VoIP phones under CTH 85176990 without benefit of this notification. ORDER 4. In view of discussion & findings hereinabove, I order re-assessment of goods imported under B/E no. 2146635 dated 21.02.2019 under, CTH 85176990 in terms of provisions contained in subsection (4) of Section 17 of the Customs Act, 1962." [emphasis supplied] 5. Feeling aggrieved by the aforesaid order passed by the Deputy Commissioner, the appellant filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) also did not accept the submissions made on behalf of the appellant and rejected the appeal. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below: "5.2 ****** The IP Phone works on voice over Internet protocol. The product catalogue also indicates that the product has various network features like power over Ethernet, network access control etc. and also works over Web management portal. Thus the product is an apparatus for transmi....
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....ry at single dash "-" level. The goods imported undisputedly being an IP Phone are therefore, covered by CTH 8517 18 10, which falls under the first entry at single dash "-" level; (iii) The second entry at single dash "-" level starts with the words "Other apparatus .........". Use of the words 'Other apparatus' indicates that only those goods which are not covered by the first entry at the single dash "-" level are covered under the second entry at single dash "-" level. Reliance has been placed on the judgement of Supreme Court in Collector of Central Excise vs. Delton Cables Ltd. [2005 (181) E.L.T. 373 (S.C.)] ; (iv) The Commissioner (Appeals) decided classification of the goods by straightaway resorting to rule 3(c) of the General Rules, which is impermissible as it is settled law that they have to be considered sequentially. The goods in question are, therefore, clearly classifiable under CTH 8517 18 10; (v) The findings of the Commissioner (Appeals) are factually incorrect; and (vi) Similar goods have been held to be classifiable under CTH 8517 18 10 by the Commissioner (App....
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....us for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network) under CTI 85176990 is justifiable. It is settled that functional utility is more important than name used in trade or common parlance, and hence the former needs also to be considered while determining classification of an item. Reliance has been placed on the judgement of Supreme Court in O.K.Play (India) Ltd vs. Commissioner of Customs Excise, Delhi-III, Gurgaon [2005 (180) E.L.T. 300 (S.C.)] . It is for this reason that the Commissioner (Appeals) applied rule 3(c) of the General Rules and accorded preference to CTI 8517 69 90 over CTI 8517 18 90; and (vii) The contention of the appellant that the Exemption Notification grants exemption to goods and the same cannot be relied upon for the classification of goods is not correct. 9. The contentions advanced by learned counsel for the appellant and the learned Authorized Representative of the Department have been considered. 10. The classification of the goods und....
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....17 62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus: 8517 62 10 --- PLCC equipment . . . . . . u Free - 8517 62 20 --- Voice frequency telegraphy u Free - 8517 62 30 --- (modulators-demodulators) u Free - 8517 62 40 --- High bit rate digital subscriber line system (HDSL) u Free - 8517 62 50 --- Digital loop carrier system (DLC) u Free - 8517 62 60 --- Synchronous digital hierarchy system (SDH) u Free - 8517 62 70 --- Multiplexers, statistical multiplexers u Free - 8517 62 90 ....
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....g to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. (b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3. 3. When by application of rule 2(b) or for any other....
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.... charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable." 13. The product under consideration is an Executive Level IP Phone-FON-670i. The various brands of FortiFone IP Telephones, as mentioned in the literature contained in the Appeal, are FON175, 375, 475, 570, 670i/675i, C71, D71, H25, H35, and FortiFone soft client. The literature contained in the Appeal memo relating to FON-670i/675i is as follows: FON-670i/675i Introducing the FON-670i/675i, a great combination of business-class features and vivid touchscreen. An executive phone with programmable appearance keys and the features you need at your fingertips. With an optional HD video camera and HDMI out port to compliment these features, this new FortiFone is a power house. 14. The Specifications are also contained in the literature. These mention the telephone features of various brands. The relevant features relating to....
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....  xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx 15. The Order Information is also contained in the literature. What is important to the notice is that there is no video facility provided in FON-670i, though video facility is provided in FON750i. The relevant portion of the Order Information is reproduced below: ORDER INFORMATION PRODUCT SKU DESCRIPTION Desktop phones FortiFone FON-670i FON-670i Executive IP phone with 7-inch color touchscreen, 100 programmable keys, PoE and 10/100/1000 LAN and PC connections FortiFone FON-675i FON-675i Executive video IP phone with 7-inch color touchscreen, 100 programmable keys, PoE and 10/100/1000 LAN and PC connections 16. It would, therefore, be seen from the aforesaid that Model No. FON 670i imported by the appellant is an executive IP Phone with 7-inch color t....
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....ETWORKS This group includes: (A) Line telephone sets. Line telephone sets are communication apparatus that convert voice into signals for transmission to another device. Upon receipt of a signal, a line telephone set will convert the signal back to voice. They consist of: (1) The transmitter, (2) The receiver, (3) The anti-sidetone circuit, (4) The ringer, (5) The switching device or "switchhook", (6) The dialing selector, When separately presented, microphones and receivers (whether or not combined as hand-sets), and loudspeakers are classified in heading 85.18 while bells and buzzers are classified in heading 85.31. Telephone sets may incorporate or have fitted: a memory for storing and recalling telephone numbers; a visual display for showing the number dialed, incoming caller's number, date and time, and duration of call; an extra loudspeaker and microphone to enable communication without using the handset; devices for automatically answering calls, transmitting a recorded message, recording incoming messages and playing back the rec....
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....ks. The description of goods under the Sub-Heading 8517 11 (first double dash) are line telephone sets with cordless sets, while under Sub-Heading 8517 12 (second double dash) are telephones for cellular networks or for other wireless networks. 23. The appellant imported, as noticed above, an Executive Level IP Phone of model FON 670i. It is, therefore, an IP Phone. The description of the goods under consideration will not fall in either of the two Sub-Headings 8517 11 or 8517 12. Being an IP telephone it would fall under Sub-Heading 8517 18 (third double dash) under which the description of the goods is 'others'. It is a push button type telephone and, therefore, would fall under Tariff Item No. 8517 18 10. 24. Rule 1 of the General Rules also provides that the titles of Section, Chapters and Sub-Chapters are provided for ease of reference. In Commissioner of Central Excise, Nagpur vs. Simplex Mills Co. Ltd. [2005 (181) E.L.T. 345 (S.C.)], the Supreme Court held that rule I gives primacy to the Section and Chapter Notes along with the terms of the Headings and so this rule should be applied first. It is only when a clear picture is not emerging that the subsequen....
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.... of base stations are those for cellular networks, which receive and transmit radio waves to and from cellular telephones or to other wired or wireless networks. Each base station covers a geographical area (a cell). If the user moves from one cell to another while telephoning, the call is automatically transferred from one cell to another without interruption. (B) Entry-phone systems. The systems usually consist of a telephone handset and keypad or a loudspeaker, a microphone and keys. These systems are usually mounted at the entrance of buildings housing a number of tenants. With these systems, visitors can call certain tenants, by pressing the appropriate keys and talk to them. (C) Videophones. Videophones for buildings, which are a combination consisting principally of a telephone set for line telephony, a television camera and a television receiver (transmission by line). (D) Apparatus for telegraphic communication other than facsimile machines of heading 84.43. These apparatus are essentially designed for converting characters, graphics, images or other data into appropriate electrical impulses, for trans....
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....n reliance has been placed on the decision of the Supreme Court in O.K. Play The observation are as follows: "7. In the case of A. Nagaraju Brothers vs. State of Andhra Pradesh reported in [1994 (72) E.L.T. 801], it has been held by this Court that no one single universal test can be applied for correct classification. There cannot be a static parameter for correct classification. 8. Further, the scheme of the Central Excise Tariff is based on Harmonized System of Nomenclature (for short "HSN") and the explanatory notes thereto. Therefore, HSN along with the explanatory notes provide a safe guide for interpretation of an Entry. 9. Further, equal importance is required to be given to the Rule of Interpretation of the Excise Tariff. Under Rule 3(a), it is provided that the heading which provides a specific description shall be preferred to a heading having a more general description. For example, in the case of "toys" referred to in the HSN Heading and the Tariff Heading, the description refers to reduced size model of an Article used by adults. This test helps us to understand the difference between "toys" and "furniture". 10. La....
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....ill date appeal has not been filed to assail the order dated February 27, 2020 passed by the Commissioner (Appeals) at Chennai. 34. In the order dated February 27, 2020, the Commissioner (Appeals) noticed that the product under consideration was IP Phone FON-175 and though the goods were classified by the importer under CTH 8517 18 10, but the Adjudicating Authority classified the goods under CTH 8517 69 90. The Commissioner (Appeals) held that the goods would be classified under CTH 8517 18 10 and for coming to this conclusion placed reliance upon the HSN Explanatory Notes. The relevant portion of the order is reproduced below: "6. I have carefully gone through the facts given in the appeal, the speaking order and both the submissions, written and oral, made by the Advocate of the appellant company, during the personal hearing. The issue to be decided is, i. whether the imported CISCO IP Phone Model 8841 and FON175 Entry Level Phone of FortiFone are to be classified under CTH 85176990 or under CTH 85171810? 7. It is seen from the catalogue that Fortinet Companies Forti IP Telephones has various models including FON 175. These IP....
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.... used for video call, they have to be essentially classified under CTH 851718 only. In the case of video screen phones, it can be classified under CTH 85176990 as "others". As these phones are meant only for audio calls, the classification claimed by the appellant M/s. Ingram Micro India Pvt. Ltd., appears to be correct. It is not understood why they have cleared the impugned goods earlier under CTH 85176990. Therefore, in view of the above discussions, the AA's order classifying the impugned VoIP (Voice over Internet Protocol) Phone is set aside and he is directed to reassess the goods vide classification CTH 85171810. It is further directed to verify their earlier dearances of such VoIP Phones under CTH 85176990 and whether they availed wrongly any benefit of exemption notification." (emphasis supplied) 35. The second order dated March 9, 2020 of the Commissioner (Appeals) relies upon the aforesaid order dated February 27, 2020 passed by the Commissioner (Appeals). After noticing that the 6 models of CICO IP Phone are not capable of making video call and are meant only for audio call, the Commissioner (Appeals) observed that the goods would be classifiable under C....
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.... forming the subject matter of the writ petition have been illegally and arbitrarily subjected to discriminatory treatment. 30. It is not open to the Customs authorities to contend that the subject goods were complete measuring instrument in view of the decision of the Customs Excise & Gold (Control) Appellate Tribunal, West Regional Bench at Bombay in the case of M/s. Sushu Electronic v. Collector of Customs & Central Excise, Rajkot, in which similar goods have been classified as spares and not as complete instruments. It is a settled law that different Collectorates of Customs cannot adopt different stands on a particular issue." (emphasis supplied) 38. Learned counsel for the appellant also pointed out that another consignment of similar goods imported by the appellant at Air Cargo Complex, Chennai by Bill of Entry No. 8380173 dated August 5, 2020 was allowed to be cleared by the Department on September 8, 2020. 39. Thus, for the reasons stated above, the goods under consideration also require classification under CTH 8517 18 10. 40. Learned counsel for the appellant, in the alternative, submitted that even if the product under ....
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.... which satisfies most specific description. For instance, taking the case of the appellant the item manufactured by the appellant is described and used as flow meter. It is an instrument for measuring volume as well. Flow meter is specifically classified in Heading No. 90.24. Whereas the Heading 90.26 is general in nature. It applies to every production meter or calibrating meter for gas, liquid and electricity supply. Therefore, on the finding recorded by the Assistant Collector, the goods produced by the appellant specifically fall in Heading No. 90.24. They may also fall in Heading No. 90.26 but that being more general entry preference should have been given to the entry 90.24 as the goods satisfy most specific description of being flow meter. The Tribunal or the appellant authority without adverting to it applied clause (c) and levied duty under 90.26 as it was a latter heading. But clause (c) would apply only if clauses (a) and (b) do not apply. Since the goods manufactured by the appellant satisfied the specific description of Tariff Heading 90.24 being a flow meter, the Tribunal committed an error of law in classifying it under Tariff Heading 90.26 as it was a latter item un....