TaxTMI 
TaxTMI 
2022 (8) TMI 76
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....als was decided by the above cited order, another issue of classification of Small Factor Pluggable (SFP) and alternative claim of exemption under Notification No. 24/2005-Cus dated 1.3.2005 remained to be decided in respect of the three appeals mentioned above. This Bench vide Miscellaneous Order No. M/85546/2022 dated 12.07.2022 has ordered that these three appeals be delinked and placed before the Bench for a fresh hearing on 13.07.2022. Accordingly, the hearing was held on 13.07.2022. 2. Learned Counsel for the respondents submits that SFP are parts of various telecommunication equipment viz. Alcatel-Lucent 1830 Photonic Service Switch (PSS), Ethernet Switch and eNodeB; SFPs are fitted in the said equipment and function as integral part of such equipment; SFP cannot perform any function on its stand-alone basis as a machine or apparatus by itself; it lacks power and intelligence and derives the same from the equipment in which it is fitted as a part; function performed by the SFP is integral and inseparable from the function performed by the telecommunication equipment; SFP purchased from any Original Equipment Manufacturer (Cisco or others) are exclusively used inside the equ....
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....rm Factor Pluggables' etc. are used and all of them are placed on a Switch called Photonic Service Switch (PSS), which gives a platform to the devices. 3.1 Learned AR takes us through the HSN Notes for Heading CTH 8517 and submits that part 'E' of HSN for Heading 3517 describes 'Automatic switchboards and exchanges'; Switch Board incorporates various devices classifiable under 8517 62 such as analogue to digital converters, digital to analogue converters, data compression/ decompression devices, modems, multiplexers are parts of Switch Board and have specific function to perform in such switch board, even though they are classified under sub-heading 8517 6230 and 8517 6270. He submits that by applying the above logic/principles, the imported apparatus being parts of Photonic Service Switch are to be classified under CTH 8517 6290; as per Explanation 'G' for Heading 8517, it is clear that the apparatus which allows connection to communication network or the transmission or reception within such a network are to be classified under sub-heading CTH 8517 62. HSN specifically mentions that this group i.e. 851762 includes (1) Network Interface cards (e.g. Ethernet Interface cards), (2) ....
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....ch can be plugged into any computer or networking such as Ethernet switch, IP Routers etc and could act as connector providing interface between two domains i.e. electrical and optical; that it gives information about optical power levels and electrical supply parameters, but only when SFP is plugged into Ethernet switch which has the requisite software to report these values, The appellant have demonstrated that after SFP transreceiver is inserted into the Cisco switch which has lockable front doors, the doors are to be closed and the functioning of the apparatus can start only thereafter. Therefore, it is found that the SFP trans-receiver itself does not lead to operation of the switch. The original manufacturer of impugned goods i.e. Cisco, Netherlands vide their letter dated 03.08.2015 has clarified that all Cisco nexus switches consist of a chassis with designated slots for power supply module, fan module tray, supervisor modules, fabric modules and input/output (1/0) modules and that 1/0 module is one of the parts of Ethernet switch providing ethernet interfaces of 1/10/40/100 Gbps using Small Form Factor Pluggable (SFP/SFP+/QSFP) to inter-connect switches, servers and router....
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.... As such, they are parts and are correctly classifiable under CTH 8517 7090 of the Customs Tariff. As regards the treatment of the impugned goods as OTN products by the original authority, I find that the original manufacturer Le. Cisco have categorically stated that the impugned goods are not OTN products and instead are interface and modules goods which is consistent with the literature on their website. It is noted that the OTN products provide for functionality of transport, multiplexing, switching, management, supervision and survivability of optical channels carrying client signals, whereas as explained by the appellant and the original manufacturer, the impugned goods do not perform such functions. Therefore, I hold that the impugned goods i.e. SFPs are classifiable as being parts of telecom equipment i.e. Ethernet switch falling under CTH 8517 7090 and thereby are entitled to the benefit of Notification 24/2005- Cus dated 01.03.2005 as claimed by the appellant. Accordingly the order passed by original authority denying the benefit of exemption is also not correct and is liable to be set aside." 6. We also find that learned Commissioner (Appeals), Mumbai vide order dated 30....