AI Drafter 
TaxTMI 
TaxTMI 
2023 (10) TMI 323
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....Printed Circuit Board Assembly (PPCBA) under customs tariff item 85177010. During post-clearance audit verification of self-assessment, the department did not agree with the classification adopted by the appellants, and a show cause notice dated 13.12.2019 was issued for reclassifying the imported goods under customs tariff item 8517 6290 for reassessment and consequently demanding differential duty under Section 28 of the Customs Act, 1962, besides proposing for confiscation of imported goods and for imposition of penalties under Sections 112(a), 117 ibid. The original authority upon receiving written submission dated 14.02.2019 and after giving the appellants a personal hearing on 26.10.2020, had passed an order rejecting the classification under tariff item 8517 7010 claimed by the appellants and reclassified the goods under Customs tariff item 8517 6290. Further, the original authority vide Order-in-Original dated 24.11.2020 confiscated the imported goods and imposed penalty of Rs.2,30,000/- on the importer under Section 112(a) of the Customs Act, 1962. 2.2 Feeling aggrieved of the above order, the appellants had preferred an appeal before the Commissioner of Customs (Appeal....
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....x 96 (Tri.-Bom) in which import of goods viz., 'cards (Populated Printed Circuit Boards)' were classified under CTH 85177010 rejecting the department's for classification under CTH 8517 6290. He further submitted that the said order of the Tribunal was upheld by the Hon'ble Supreme Court in Civil Appeal Diary No.31965 of 2022 stating that they did not think it appropriate to interfere in the impugned order and consequently dismissed the appeals filed by the Revenue. Thus, learned Advocate submitted that the imported goods cannot be classified as a machine or apparatus under CTH 8517 6290 and have to be classified as parts of Packet Optical Transport Switch (POTS) and appropriately classifiable under CTH 8517 7010. He also submits that the issue has also been decided in their favour by the following judgements: (i) Commissioner of Customs, Bangalore Vs. N.I. Systems (India) Pvt. Ltd. - (2010) 11 S.C.C. 638 (ii) Inter Continental (India) Vs. Union of India - 2003 (154) E.L.T. (Guj.) 4. Learned Authorised Representative appearing for the Revenue reiterated the findings of the impugned order and stated that since there is mis- classification of the imported goods, ....
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....detail as to how they have concluded the imported goods as PPCB, he declined to accept the same. (iii) The imported goods, even if, considered as optical circuit switch or optical switching and routing device will be covered in exclusion product list of impugned notification or PPCB of CTH 8517 7010, as they are nothing but OTN (Optical Transport Network) product. 7. In the case before us, the brief issue for consideration is the classification of imported goods as to whether, the same merits classification under Customs Tariff Item 8517 7010 as claimed by the appellants; or, is it classifiable under Customs Tariff Item 8517 62 90 as contended by the Department, for deciding on the appropriate levy of customs duty, in respect of such imported goods under the First Schedule to the Customs Tariff. 8.1 From careful perusal of the legal provisions of the Customs Tariff Act, 1975, it transpires that imported goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. For legal purposes, classification....
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....ppellants and the department. The dispute in classification lies in the narrow compass of the Sub-headings and the respective Tariff Items falling there under. Now, we may closely examine the scope of the contending Sub-headings and Tariff Items thereof for determining correct classification of the imported goods. The relevant tariff entries in the First Schedule to the Customs Tariff Act are extracted as below : Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 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 8443, 8525,8527 or 8528 - Telephone sets, including telephones for cellular networks or for other wireless networks: ....
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....ree - 8517 62 90 ---Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 20% - 8517 69 ---Other: 8517 69 10 ---ISDN System. . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 20 ---ISDN terminal adaptor. . . . . . . . . . . . . . . . . . u Free - 8517 69 30 ---Routers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 40 ---X25 Pads. . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 69 50 ---Subscriber end equipment. . . . . . . . . . . . . . . . u Free - 8517 69 60 ---Set top boxes for gaining access to internet. u Free - 8517 69 70 ---Attachments for telephones. . . . . . . . . . . . . . . u Free - 8517 69 90 ---Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8517 70 -Parts : ....
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....of 'parts' of machines or articles falling under these Chapters and rest of the Notes 3 to 5 provide for specific basis for classification of machines/apparatus. Thus, we find that Section Notes 2 to 5 to Section XVI generally guide classification of goods under Chapter 84 and 85. The relevant Section Notes are extracted as below: "SECTION XVI MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES NOTES : 1. This Section does not cover : .......................... 2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules : (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or pr....
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.... or 8527 or 8528, would continue to be classified under heading 8517, then more specifically under sub-heading 851770. Further, in terms of Section notes 3 to 5 describing about the classification of machines, state three aspects i.e., (a) 'machine' means all types of machine so as to include in its ambit all machinery, plant, equipment, apparatus or appliances of chapter 84 or 85; (b) machine consists of individual components which are intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85; and (c) the classification of machines, shall be determined by its principal function; further, in case of combination of machines, by clearly defined function to which such machines contribute together as combination of machines. From the reading of the above Chapter notes, we are of the considered view that the imported goods namely 'interface cards', which are concluded in the impugned order as product of Optical Transport Network (OTN), and is being used in cloud engine switches providing the function of data packet processing and traffic management, would not be categorised as an 'apparatus or machine' but it could only be a....
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....7 i.e., 8517 60 and 8517 70 as follows: (II) OTHER APPARATUS 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) (A) Base stations. The most common types 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 ....
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....the impugned goods 'interface card' refers to Ethernet interface cards which is specifically covered under the category of 'other communication apparatus', and therefore the imported goods are rightly classifiable under CTH 85176290. However, we find that the original authority though quoted such allegation in para 4 of the order, did not give any specific finding or conclusion on this aspect for arriving at the conclusion for classification of goods under CTH 85176290. Similarly, learned Commissioner (Appeals) had also not discussed these aspects for upholding the original order. From the reading of the above HSN Explanatory notes, it is clear that products covered under II(G) category are the apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network and such networks include carrier-current line systems, digital-line systems and combinations thereof. In the present case, the imported goods are 'interface cards' for use in cloud engine switches providing the function of data packet processing and traffic management. From the function performed by the ....
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....ssary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 57/2017-Customs, dated the 30th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 798 (E), dated the 30th June, 2017, namely:- In the said notification, in the Table, for serial number 20and the entries relating thereto, the following serial number and entries shall be substituted, namely: - S. No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard Rate Condition No. (1) (2) (3) (4) (5) 20 8517 62 90 All goods other than following goods, namely: -(a) Wrist wearable devices (commonly known as smart watches) (b) Optical transport equipment (c) Combination of one or more of Packet Optical Transport Product or Switch (POTP or POTS) (d) Optical Transport Network (OTN) products (e) IP Radios - 10% - S.No. Chapter or Heading or Sub-heading or tariff item Description of goods Standard Rate Condition No. (1) ....
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.... Commissioner (Appeals) in the impugned order for excluding the classification of the imported goods under CTH 8517 7010 and for deciding the classification under CTH 8517 6290 on the basis of entries under exemption notification. 14. In this regard, we find that it is a settled law that while statutory notifications may be looked at for the purpose of ascertaining the scope of goods covered under the exemption notification, they cannot be used to determine the classification of goods. Our above views is supported by the decision of the Tribunal in the case of Collector of C. Ex. Vs. Roha Dye Chem Pvt. Ltd., reported in 1989 (41) E.L.T. 667 (Tribunal) and which is also upheld by the Hon'ble Supreme Court in Civil Appeal No. 2927 of 1989 with C.A. No. 4992 of 1995, holding that no interference is called for in the judgement of the Customs, Excise and Gold (Control) Appellate Tribunal under appeal by the Revenue, by dismissing the appeal filed by the Revenue. The relevant portion of the above cited order of the Tribunal in the case of Roha Dye Chem Pvt. Ltd. (supra), is extracted below: "14.... It is settled law that while statutory notification may be looked at for the p....
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....23 arising out of Diary No.31965/2022, by holding that they do not think it is appropriate to interfere in the impugned order, is relevant to the present case. The relevant paragraphs of the above order of the Tribunal are extracted below: "2. Brief facts of the case are that M/s Reliance Jio Infocom Ltd., the respondent herein has imported "Cards" (Populated Printed Circuit Boards) OSLM-5-100G-WL3N for DWDM Equipment-Photonic Service Switch (PSS) 1830 imported by them and have classified the same under Customs Tariff Sub-heading 8517 7010. The Department accessed the bills of entry changing the classification to CTH 8517 62 90; the appellants preferred an appeal before the Commissioner (Appeals); Commissioner (Appeals) vide impugned orders has upheld the contention of the appellants and allowed their appeals. xx xx xx xx 18. On going through the relevant HSN notes, we find that the apparatus or equipments referred in the notes are complete apparatus and not Populated Printed Circuit Boards of such apparatus. As submitted by the respondent the Network Interface Cards referred to in the notes are not PCB of any transmission or reception apparatus of headin....