TaxTMI 
TaxTMI 
2021 (10) TMI 1416
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....5- Customs, dated 01.03.2005 and Sr. No. 20 of Notification No. 57/2017-Customs, dated 30.06.2017 on these devices. 2. The applicant is a distributor of information technology and telecommunication products. They intend to import the following models of data centre switch routers from Arista: 1) DCS-7280CR2K-60-F 2) DCS-7816R3-BND 3. The aforementioned devices are called data centre switch routers (hereinafter referred to as DSCRs). DCSRs are devices capable of performing the functions of a network switch and a router. A network switch connects devices on a computer network by using packet switching to receive and forward data. They connect multiple devices such as computers, wireless access points, printers, and servers. A switch enables connected devices to share information and interact with each other. A router is a device that connects computers and other devices to the internet. While a switch connects various devices in a network, a router connects devices across multiple networks. DCSRs perform the function of a network switch and a router. In other words, it is capable of connecting the devices within the network as well as across multiple networks.....
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....g fabric and the routing component together make up the composite platform/system. However, the said product is principally used as a non-carrier ethernet switch as evidenced by the product catalogue and its non-carrier ethernet characteristic. 4. As per the applicant, impugned devices are eligible for benefits under Sr. No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005 or Sr. No. 20 of Notification No. 57/2017- Customs, dated 30.06.2017. 4.1 Sr. No. 13N of Notification No. 24/2005-Customs, dated 01.03.2005 exempts routers of sub-heading 85176290. The applicant submits that the above exemption is based on the functionality of the goods. This can be seen from the fact that the CTH 85176290 includes a routing apparatus. Thus, any apparatus that performs the function of routing will be covered under the said tariff item. DCSRs under consideration in the present application are capable of performing routing functions. The fact that the DCSRs can also perform the function of switches would not dis-entitle them from the exemption granted. The applicant further stated that it is a settled legal position that when an exemption is granted for a machine performing a functio....
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....he objective of the legislature was to exclude types of equipment that are used in the telecommunication industry from the purview of the exemption. 3) The impugned products are LAN/WAN information products and therefore, covered under the ITA. India is a signatory to ITA, which aims to lower all taxes and tariffs on information technology products to zero. The World Trade Organisation (WTO) has always considered network switches within the scope of the IT products which can avail the benefit of the ITA. 4.2.2 Further, the Department of Telecommunication has issued clarifications regarding the classification of carrier and non-carrier ethernet switches, in the context of Customs duty exemption, vide office letter bearing F. No. TEC/IT/TecDisc/2015, dated 03.05.2016 and office memorandum no. 18-33/2013-IP, dated 18.11.2016. It was clarified that there is no definite technical classification between carrier ethernet switch and enterprise ethernet switch based on features or services supported. Classification can only be ascertained based on the purchase order from the ultimate consignee. They can be classified based on usage of such devices by TSP/ISP or customer location....
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....raiser, ACC, Chennai). The applicant explained their application in detail and argued that the classification proposed by them is correct and that they are eligible for exemption under both the notifications mentioned in the application. They reiterated that the case law, Ingram Micro India Private Ltd vs. Commissioner of Customs Chennai reported in 2020 (II) TMI 9, mentioned in the application pertaining to similar enterprise-class switches similar, but not identical to the product under consideration. Shri. Anurag Hooda stated that the devices are classifiable under sub-heading 85176290 and since the main function of the devices is that of switches, exemption benefit as a router is not available. However, they are eligible for benefit under Notification No. 57/2017. 8. I have considered all the materials placed before me for the subject products. I have gone through the submissions made by the applicant during the personal hearing and reply received from the jurisdictional Principal Commissioner/ Commissioner and the submissions of the departmental officers at the time of the hearing. The issue at hand is to decide the classification of Data Centre Switch Router models (CS-728....
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....s and combinations thereof. They may be configured, for example, as public switched telephone networks, Local Area Networks (LAN), Metropolitan Area Networks (MAN) and Wide Area Networks (WAN), whether proprietary or open architecture. This group includes: (1) Network interface cards (e.g., Ethernet interface cards) (2) Modems (combined modulators; demodulators) (3) Routers, bridges, hubs, repeaters and channel to channel adaptors (4) Multiplexers and related line equipment (e.g., transmitters, receivers or electro-optical converters) (5) Codecs (data compressors/decompressors) which have the capability of transmission and reception of digital information (6) Pulse to tone converters which convert pulse dialed signals to tone signals. 8.3 Sub-heading 851762 covers machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus. DCSRs are capable of performing functions such as reception, conversion and transmission of data. Further, the sub-heading specifically covers switching and routing apparatus. Therefore, the DCSRs performing both switching and routing functions are clearly classifiable under....
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....ance is also placed upon the judgment of Delhi CESTAT in the case of Twenty First Century Printers vs CC [2003 (162) E.L.T. 1045 (Tri.=Del) where it was observed that "... The principal function of the machine is of printing. The mere fact that it is a composite machine, it cannot be taken out from the heading of the printing... Since principal function of the machine is printing and as such, the item is correctly classifiable under Heading 84.43.... ". Therefore, impugned devices are classified as switches based on principal function. 9.2 It is a settled position of law that notification should be read and construed strictly. It is apparent that notification benefit is only available to routers. In support of the above, reliance is placed upon the judgment of the Hon'ble Supreme Court of India in the case of Commnr. of Customs (Import) vs M/S. Dilip Kumar and Company (2018) 9 SCC 1 (FB)(SC), where it was held that "When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue". The present goods are principally switches h....