TaxTMI 
TaxTMI 
2021 (10) TMI 392
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.... Appeal No. 87665 of 2019 by Reliance Jio and Customs Appeal No. 87872 of 2019 by the Commissioner. 2. The aforesaid order dated 14.06.2019 passed by the Commissioner records the following findings : i. Reliance Jio did not mis-declare the goods since they are 'Base Stations', especially in normal terminology; ii. Thus, if the goods have not been mis-declared, then the payment of duty/differential duty on account of short payment or non-payment of duty has to be restricted to the normal statutory period prescribed under sub-section (1) section 28 of the Customs Act, 1962 [the Customs Act] and the extended period contemplated under sub-section (4) of section 28 cannot be invoked; iii. It is true that on a plain reading of the term 'Base Station', the goods appear to be classifiable under CTH 8517 61 00, which is specific for 'Base Stations', but as the technology involved in these goods goes beyond the basic functionalities of a 'Base Station', the goods would more appropriately be classifiable under CTH 8517 62 90; iv. Reliance Jio had itself, for the period prior to January 01, 2016, classified the goods under CTH 8157 62 90 and claimed....
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....ing the period from October 2014 to May 2017. Initially, upto December, 2015, Reliance Jio classified the goods under CTH 8517 62 90 and claimed exemption of duty under a Notification dated 17.03.2012. Thereafter, w.e.f. January 2016, Reliance Jio started claiming classification under 8517 61 00 for which the rate of duty was 'NIL', as it realized that 'Base Stations' were specifically covered under CTH 8517 61 00. 6. Before adverting to the submissions advanced by Shri J.C. Patel, learned Counsel for Reliance Jio and Ms. Manisha Goel and Shri Ramesh Kumar, learned Authorized Representatives for the Department, it would be useful to reproduce the findings recorded by the Commissioner in the impugned order, the gist of which have been stated above, and they are as follows : "67. The goods in question have been described as E-node B BTS, Microcell BTS, Air Synergy/Air Harmony/Air Velocity BTS etc. and these have either been classified under Customs Tariff item 85176290 or 85176100 as per the details given in Annexure I & II attached with the subject show cause notice. As far as description of the goods is concerned, while averring that the Show Cause Notice itself admits ....
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.... handsets {User Equipment (UEs)}. Traditionally, a Node B of 3G wireless technology has minimum functionality, and is controlled by a Radio Network Controller (RNC). However, with an eNB, there is no separate controller element. BTS functions on centralised intelligence control system operating on single band connecting to one user through one BTS at a time, while eNode-B functions on distributed intelligence control system simultaneously operating on multiple band through 4 or more eNode-B at a time on the principle of multiple input multiple output (MIMO) technology, having flat architecture. This has simplified the architecture and allows lower response times. ********* ********* ********* Aforesaid diagram clearly reveals the distinction between BTS as used in 2G technology, NodeB as used in 3G technology & ENodeB as used in 4G/LTE Technology. 6.5 eNodeB is an LTE/4G equipment which has built in functionality of Base Transceiver Station (BTS) and Base Station Controller (BSC) of 2G wireless network or NodeB and Radio Network Controller (RNC) of 3G wireless network Although it may be commercially referred as 'Base Station' of LTE network,. its functi....
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....from the purview of the exemption, the exemption benefit if availed shall be denied and consequential differential duty and interest shall be demanded and recovered. Similarly the above would be applicable to finally assessed Bills of Entry listed in Annexure B to the show cause notice mutatis mutandis but for the fact that only the Bills of Entry falling within the statutory period of Section 28(1) shall be covered for re-assessment for re-classification." (emphasis supplied) 7. Learned Counsel for Reliance Jio submitted that : (i) There is enough material to establish that eNodeB, Femto Cells/ Pico Cells are 'Base Stations' in the 4G network which communicate with the User Equipment. Thus, the goods have correctly been classified under CTH 8517 61 00; (ii) Every cellular network, whether, it be 1G Network (First Generation Network), 2G Network (Second Generation Network), 3G (Third Generation Network) or 4G Network (Fourth Generation Network), necessarily has to have a Base Station and it is inconceivable to have a Cellular Network without a Base Station. Therefore, 4G network must necessarily also have Base Station, which is the eNodeB. eNdodeB, therefore....
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....eB, therefore, cannot be classified as 'Base Stations' under CTH 8517 61 00; (iii) Even under the Harmonized System of Nomenclature [HSN], a BTS receives and transmits radio waves to and from cellular wireless networks. CTH 8517 60 00 is a specific entry for 'Base Stations' and covers only those products which are covered under the definition of 'Base Stations' as given in HSN. Any equipment which is not functioning on the aforesaid definition of 'Base Stations' in HSN cannot be classified under CTH 8517 61 00; (iv) Any equipment which performs a combined function of BTS and 'Base Station Controller' (BSC) should be a machine and as the principal function performed by the machine is to decide when the mobile should perform 'Handover' and to which neighbouring cell, the correct classification would be for Base Station Controller, by virtue of Note 3 to section XVI based on the performance of the principal function; (v) Base Station Controllers are apparatus covered under sub-heading 8517 62 and since no tariff item is specified, they would be classifiable under CTH 8517 62 90 under the residual tariff item entry of sub-heading 8517 62; (vi) Even i....
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....nes for cellular networks or for other wireless networks; other apparatus for the 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), other than transmission or reception apparatus of heading 8443, 8525,8527 or 8528 - Telephone sets, including telephones for cellular networks or for other wireless networks: 8517 11 -- Line telephone sets with cordless handsets: 85171110 --- Push button type u Free - 85171190 --- Other u Free - 851712 -- Telephones for cellular networks or for other wireless networks: 8517 12 10 --- Push button type u 20% - 8517 12 90 --- Other u 20% - 8517 18 -- Other: 8517 18 10 --- Push button type u Free - 8517 18 90 --- Other u Free - - Other apparatus for transmission or reception of voice, images or other....
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....te or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. THE GENERAL EXPLANATORY NOTES TO IMPORT TARIFF 1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "--", the said ....
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....under CTH 8517 61 00, while the contention of the Department is that the description of the goods would be under CTH 8517 62 90 for 'Other'. The Department contends that eNodeB performs many more functions than performed by the earlier Base Stations and a 'Base Station' should cover only an apparatus which can perform the functions of transmission or reception of voice, images or other data and if the apparatus performs other functions also, the goods cannot be classified under 'Base Stations'. 20. It would also be useful to reproduce the relevant portions of Heading 8517 to the Explanatory Notes of HSN and they are: Harmonized Commodity Description and Coding System Explanatory Notes 8517- Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the 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), other than transmission or reception apparatus of heading 84.43, 85.25, 85.27 or 85.28(+). - Telephone sets, including telephones for cellular networks or for other wireless networks: ....
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....legraphic 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 transmitting those impulses, and at the receiving end, receiving these impulses and converting them either into conventional symbols or indications representing the characters, graphics, images or other data or into the characters, graphics, images or other data themselves. Examples are: (1) Apparatus for transmitting messages, such as dial or keyboard transmitters and automatic transmitters (e.g., teleprinter or teletypewriter transmitters). (2) Apparatus for receiving messages (e.g., teletypewriter receiver). In some cases the receiver and the transmitter apparatus are combined into one receiver-transmitter. (3) Picture telegraphic apparatus. The ancillary photographic equipment used with this apparatus (e.g., developing equipment) falls in Chapter 90. 21. To appreciate the contentions advanced by the learned Counsel for Reliance Jio and the learned Authorized Representatives for the Department, it would be useful to unders....
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....Reliance Jio, this drawback was overcome in 4G Technology and a 'Base Station' of 4G Technology was evolved enough to provide the Base Station the required intelligence to communicate with and 'Handover' calls directly to other 'Base Stations' without intervention of any Base Station Controller. Such an evolved Base Station of 4G technology, according to Reliance Jio, is the evolved Node B i.e. eNodeB. 26. It has, therefore, to be examined whether the evolved Node B i.e. eNodeB, would be a Base Station in the 4G network. According to the learned Counsel for Reliance Jio, in the 4G network, the Base Station which communicates/interfaces with the Mobile/Cellular Phone and by means of which the User Mobile Phone gets access to the Network, is eNodeB. Further contention of the learned Counsel for Reliance Jio is that the Micro Cells BTS/Femto cells BTS/Pico Cells BTS are miniature eNodeB or Home eNodeB, which cater to smaller areas such as residential complex or office complex. 27. To substantiate the aforesaid statements, learned Counsel for Reliance Jio referred to websites and literature/books on this aspect and they are: (i) The 3GPP Standards, which have also been r....
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.... Base stations such as eNodeB are typically distributed throughout the networks coverage area, each eNodeB residing near the actual radio antennas." (emphasis supplied) (iii) In the preface of the Book Physical Layer Multi-Core Prototyping, the authors Maxime Pelcat - Slaheddine Aridhi and Jonathan Piat - Jean-Francois Nezan have written:- "The consequence of the evolution of the mobile wireless standards is an increased need for the system to support multiple standards and multi-component devices for backward compatibility. These two requirements greatly complicate the development of telecommunication systems, imposing the optimization of device parameters over numerous constraints, such as performance, area and power. Achieving device optimization requires a deep understanding of application complexity and the choice of an appropriate architecture to support this application. Of particular note, the new, feature-rich wireless standard called long-term evolution (LTE) is a complex application that needs a large amount of processing power. LTE is the next evolutionary step after 3G for mobile wireless communication, and is aimed at increasing the....
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.... centralized node for more centralized deployment optimization. xxxxxx xxxxxx xxxxxx As a terminology issue in this chapter, the term femtocell denotes a small cell, typically an indoor one with a radius in the order of up to several tens of meters. It is the cell hosted by an HNB. When we talk about the specific 3GPP radio technology for the femtocell including the specifications side, the term HNB is used. When touching upon the topic of architecture for the HNB, the tem 3G Femto denotes an HNB which uses the 3GPP UMTS Femto architecture to connect to the core network which is discussed in Section 19.4. Although this chapter specifically addresses the 3G HNB, most of the information is relevant to both 3G and LLTE. In 3GPP, a large amount of the home base station work for the two radio technologies is done jointly although some differences apply, related to e.g. architectural aspects. Some of the key differences are briefly outlined throughout the chapter. The LTE version of the femto access point is the Home eNode B (HENB). Femto is a complete new way or building the mobile network. It covers a number of new aspects including interference cont....
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....ed to Base Station Controller (BSC) and performs many functions under its control. Various BTS configurations are used to divide the cell into sectors using directional antennas. 3. Femtocell is a small cellular base station, typically designed for use in a home or small business. It connects to the service provider's network via broadband (such as DSL or cable); current designs typically support 2 to 4 active mobile phones in a residential setting, and 8 to 16 active mobile phones in enterprise settings. A femtocell allows service providers to extend service coverage indoors, especially where access would otherwise be limited or unavailable. The concept is applicable to all standards, including GSM, CDMA2000, TD-SCDMA, WiMAX and LTE solutions. (ii) Base Station Controller (BSC) 4. BSC provides the direction and coordination for allocating resources and coordinating the access of multiple mobile in a cell. It manages a large number of BTSs in the network. BSC connects to a Mobile Switching Center (MSC) and coordinates to route signalling and traffic for all mobiles in the BSCs coverage area. BSC also determines when the mobile should perform handover ....
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....and charging rules." 29. It clearly transpires from the aforesaid that: i. A 'Base Station' is a fixed equipment in the Access part of a Cellular Network which communicates with the User Equipment i.e. Mobile Phone/Cellular Phone. It receives and transmits radio waves to and from cellular telephones. Since the user mobile phone accesses the network by communicating with the Base Stations by radio waves, this portion of the network is known as Radio Access Network. As a Base Station transmits and receives radio waves to and from the user mobile phone, it is also referred to as Base Transceiver Station; ii. A Cellular network is divided into Cells (Geographical areas) and each Base Station covers 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. Such automatic transfer of the call from the Base Station in one cell to the Base Station in another cell, to which the user moves while telephoning, is referred to as "Handover"; iii. Every Cellular Network, whether, it be 1G Network (First Generation Network), 2G (Second Generation Network), 3G Network (Thir....
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....for 'Base Stations'. This classification, however, has not been accepted in the impugned order solely for the reason that when seen from the perspective of the technology involved in the goods which encompass certain other control features that go beyond the basic functionalities of a Base Station, eNodeB should be classified under CTH 8517 62 90. 32. The aforesaid factors have to be kept in mind while considering the submissions advanced by the learned Counsel for Reliance Jio and the learned Authorized Representatives appearing for the Department. 33. Every cellular network, whether it is 1G Network (First Generation Network), 2G Network (Second Generation Network), 3G Network (Third Generation Network) or 4G Network (Fourth Generation network), must necessarily have a Base Station, as a Cellular Network cannot be without a Base station. 4G Network, therefore, must also have a Base Station, and it has been contended on behalf of Reliance Jio that eNodeB is the Base Station of 4G Network and would, accordingly, be classified as 'Base Stations' under the specific sub-heading for 'Base Stations' i.e. 8517 61 00. It is not the case of the Department that there is some other equ....
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....commercially referred to as 'Base Station' of LTE network but the reason why eNodeB has not been classified under CTH 8517 61 00 is that its functions go beyond the functions performed by the earlier 'Base Stations' of 2G network or 3G network. 37. What is important to note is that the classification of a product has to be determined on the basis of the tariff entries and the Instructions issued by the Board have also to be examined in the light of the tariff entries. 38. It is seen that eNodeB is an evolved Base station of 4G Technology, which does not have the drawback of the Base Stations of 2G and 3G technology of having to communicate via a separate Controller owing to inability to communicate directly, which results in slowing down the speed of the connection. In that sense, the Base Stations of 4G Technology (digital signals) are at par with the Base Stations of 1G Technology (analog signals) in the sense that 'Handover' in both takes place at the Base Stations itself and not via a separate Controller. 39. This has also been explained in the 3GPP website http://www.3gpp.org/techno1ogies/keywords-acronyms/98-lte. It states that in 4G Technology there is no separate C....
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....t entitled to the concessional rate of import duty. The stand of the Customs authorities was, ultimately, assailed in the writ petition filed by the respondent before the High Court. The Writ petition was allowed. An appeal was preferred and it is the judgment in appeal which is under challenge before us. 3. The High Court in the impugned order noted that the stand of the Customs authorities was that the words "switches, miniaturised" as component parts of hearing aids should be understood to mean only those types of switches which were generally used in the manufacture of hearing aids at the time of publication of the Import Policy for the relevant year, namely 1977, and that these words could not be said to include any other type of switch even if such other type of switch could be used in the manufacture of hearing aids. The Division Bench observed, in our view, very rightly, that such an interpretation overlooked that industry was not static and that there was continuous technical progress therein. New processes and new methods developed from time to time and new material and components or types of components superseded others. It was unreasonable to give a st....
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....dash of 8517 62, there are eight triple dash entries and since eNodeB/LTE BTS is not specifically mentioned, it will fall in the last triple dash entry of 'Other'. 45. Sub-heading 8517 61 00 is a double dash (--) description for 'Base Stations' and sub-heading 8517 62 is a double dash (--) description for "machines for the reception, conversion transmission or regeneration of voice, images or other data, including switching and routing apparatus". Both these double dash (--) descriptions appear under the single dash (-) description of "Other apparatus for transmission or reception of voice, images or other date, including apparatus for communication in a wired or wireless network (such as a local or wide area network)." The said single dash (-) description covers all transmission and reception apparatus other than Telephones. Under the said single dash (-) description, the transmission and reception apparatus in the network (i.e. a Base Station) is specifically covered under double dash (--) sub-heading 8517 61 00. All other transmission and reception apparatus i.e. other than 'Base Stations' are covered under double dash (--) sub-heading 8517 62. Sub-heading 8517 62 90 is a tri....
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.... 49. The Gujarat High Court in McGAW - Ravindra Laboratories (India) Ltd. vs. Union of India [1992 (60) E.L.T. 71 (Guj.) ] also pointed out that though the importer and the Department had all along in the past proceeded on the footing that the goods were classifiable under a particular tariff heading, the Department is not estopped from later contending that the goods were rightly classifiable under a different entry. The understanding or conduct of the Department, even for a long period, cannot amount to estoppel against operation of a statute. 50. The Tribunal in Commissioner of Customs (Prev.), Jamnagar vs. Nayara Energy Ltd. [2019 (370) E.L.T. 1201 (Tri. Ahmd.)] held that no estoppel can be pleaded against law and that a mistake in claiming of classification in the past cannot become the sole basis for shutting out a plea for proper classification of the product in future. The High Court, further held that matters of classification have to be decided with reference to the statutory provisions and not merely on the basis of what the Department or assessee claimed or did in the past. 51. The Tribunal in Asian Granito India Ltd. vs. Commissioner of Customs, Mundra [2021 (3....
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....uded from Notification dated 1.03.2005 and simultaneously rate of duty for goods of CTH 8517 62 90 and 8517 69 90 was changed from Free to 10%. Thus, goods of the said two headings would not be eligible for exemption under Serial No. 372 (i) of Notification dated 17.03.2012. 56. The contention advanced by the learned Authorized Representatives appearing for the Department cannot be accepted. The exemption granted under the Notification dated 17.03.2012 is distinct from the exemption granted under the Notification dated 01.03.2005 as its grants exemption subject to fulfillment of condition no. 52 only to importers licensed by the Department of Telecommunication of the Government of India for providing cellular mobile telephone service. However, the exemption granted under the Notification dated 01.03.2005 was unconditional and available to all persons. Thus, when the goods are covered by the plain terms of Serial No. 372(i) of the Notification dated 17.03.2012, the exemption cannot be denied by reference to some other Notification or any amendment made therein. 57. The Commissioner, therefore, was justified in holding that the goods were eligible to exemption under Notificatio....