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2024 (4) TMI 42
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....he basis of Risk Management System (RMS) and in rest of the cases imported goods were assessed by the department by classifying the products in dispute under Customs Tariff Item (CTI) 8517 6990. The appellants had filed an appeal before the Commissioner of Customs (Appeal) claiming that the self-assessment/assessment made in this regard by the proper officer of Customs were incorrect and seeking reclassification of goods under CTI 8517 1810. Subsequently, the appellants had given additional submissions before the Commissioner (Appeal) vide letters dated 16.03.2020, 24.06.2020 and 13.11.2020, for claiming classification of imported goods in terms of assessment agreed by the department at the level of review of Commissioner (Appeal)'s order for classification of similar goods in other jurisdiction. Accordingly, the appellants claimed that the correct classification of IP Audio phones and IP Audio Conference phones under category (i) and (ii) above shall be under CTI 8517 1810 and Wireless IP Phones of category (iii) as under CTI 8517 1210, on which applicable Basic Customs Duty (BCD) is 'NIL'. As regards import of IP Video phones they had accepted the classification under CTI 8517 69....
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....ustoms, New Delhi reported in2023 (383) E.L.T. 204 (Tri.-Del). 2.2. Further, the learned Advocate had also submitted that as against the total 59 B/Es covering the imported goods of all four categories, in respect of fourth category i.e., (iv) IP Video phones, the appellants had accepted the classification under CTI 8517 6990 even before the Commissioner (Appeals) and they have not filed appeal before the Tribunal in these cases. Thus in their present appeal before the Tribunal, the imported goods covered under the above three categories (i) to (iii) are covered in respect of 48 B/Es, the details of which were furnished by them as additional submission dated 28.06.2022. 2.3. The learned Advocate also stated that the imported IP phones of different types of 'CISCO' brand IP Phones were initially brought into the country through their distributor i.e., Ingram Micro India Private Limited, the appellants, as in the above case. However, subsequently due to various reasons, CISCO themselves had started importing the IP phones. 3. Learned Authroised Representative appearing for the Revenue reiterated the findings recorded by the learned Commissioner (Appeals) in the impugned orde....
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....relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute. "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Section 2. Duties specified in the Schedules to be levied. - The rates at which duties of customs shall be levied under the ....
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....nd 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. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long- term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its esse....
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....rst four-digits of which correspond to that number; (b) "sub-heading", in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number; (c) "tariff item" means a description of goods in the list of tariff provisions accompanying eight digit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub- Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics." 7. From the plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the C....
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....lassification shall be effected as per the rules provided under 3(a), 3(b) and 3(c) [GIR-3] (iv) Goods which cannot be classified in accordance with the aforesaid rules, then the same shall be classified under the heading appropriate to the goods to which they are more akin. (GIR-4) (v) For legal purposes, the classification of goods in the sub-headings shall be determined according to the terms of those sub-headings and any related sub-heading Notes (GIR-6) (vi) When the description of the goods under a heading is preceded by 'single dash' i.e., "-", the said goods shall be taken to be a sub- classification of the article or group of articles covered by the said heading. (GEN-1) (vii) Where, however, the description of goods is preceded by "- -", the said goods shall be taken to be a sub-classification of the immediately preceding description of the goods or article or group of articles which has "-" single dash. (GEN-1) (viii) Where the description of goods is preceded by "---" or "----", the said goods shall be taken to be a sub-classification of the immediately preceding description of the goods or article or group of articles which ....
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.... . . . . . . . . . . . . . . . . . . . . . . . . u Free - - Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wireless network (such as a local or wide area network) : 8517 61 00 -- Base stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 10% - 8517 62 --Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus : u - 8517 62 10 --- PLCC equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 62 20 --- Voice frequency telegraphy . . . . . . . . . . . . . . . . . . u Free - 8517 62 30 --- Modems (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, statis....
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....tc. which facilitate voice communication between two persons. Similarly, B/Es filed for the second category of imported goods declaring these as (ii) 'IP Audio Conference phones' of models CP-8831 and CP-8832 with the facility of voice communication among multiple users, who could connect to each other, thus facilitating conference. 12. For ease of reference, the sample pictures of the 'IP Audio phones' of CP- 8841,of CP-8800 series, from the datasheet of manufacturer 'CISCO' as submitted by the appellants are picturized below: Illustrative pictures of the 'Cisco' IP Phone CP-8841 From the above picture, it could be seen the product essentially contain the telephone handset, push button keys for visual notification of phone state- mute or speaker on, amplifier, handset, display panel for details relating to the numbers/contacts, message etc., speaker phone, various functional keys, backlit indicator and a number of other features related to telephone. Product features and specifications of the Cisco IP Phone CP-8841 S.No. Features Specifications 1 Audio Automatic Gain Control, Comfort Noise Generation, Silence Suppression/Voice Activity Detection, Acou....
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....d goods declared as (ii) 'IP Audio Conference phones' of models CP-8831 and CP-8832, the representative picture of the 'IP Audio Conference phones' of CP-8832 from the datasheet of manufacturer 'CISCO' as submitted by the appellants are picturized below: Illustrative pictures of the 'Cisco' IP Audio Conference Phone CP-8832 In the datasheet of Cisco IP Audio Conference Phone CP-8832 it is stated that this provides a simple, flexible, scalable solution for the requirement of more participants. It is ideal for executive offices, conference rooms, and boardrooms. With the base unit alone, it provides 360-degree coverage for any 20x20-foot room and up to 10 participants. With the optional wired extension microphone kit, it covers any 20x34-foot room and up to 22 participants. With the optional wireless extension microphone kit (using Digital Enhanced Cordless Telecommunications [DECT] technology), it covers any 20x40-foot room and up to 26 participants. With a daisy-chain configuration of two 8832 units along with the optional wireless extension microphone kit, it covers up to a 20x57-foot room and up to 42 participants. From the above picture, it could be seen the product ess....
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....CLES NOTES : 1. This Section does not cover : .......................... 2. Subject to Note 1 to this Section, Note 1 Chapter 84 and to Note 1 to Chapter 85, parts of machines.... 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. 5. For the purposes of these Notes, the expression "machine" means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85." 17. The above Sec....
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....ess handsets 8517.12 --Telephones for cellular networks or for other wireless networks 8517.18 -- Other - 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): 8517.61 -- Base stations 8517.62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus 8517.69 -- Other 8517.70 - Parts This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio- telegraphy, local and wide area networks." The Explanatory Notes to HSN describe the goods that are being covered by the first single dash entry for 85.17 i.e., 8517 10 as follows: (I) TELEPHONE SETS, INCLUDING TELEPHONES FOR ....
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....TUS 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 (transmission by line). (D) Apparatus for telegraphic com....
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....uding apparatus for communication in a wired or a wireless network (such as a local or wide area network)'; and third one at 8517 90 is for 'Parts'. 20. It is obvious that since IP Phones are complete products by themselves, the classification is feasible either under the 'first single dash' or the 'second single dash' entries and classification under 'third single dash' entry is ruled out, as these are not 'parts'. 21. The description of goods covered under first single dash entry 8517 i.e., 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. Since the first two categories of IP phones viz., (i) IP Audio Phones(ii) IP Audio Conference Phones neither work as conventional line telephones or it works on cellular or other wireless network, classification under the above two double dash category of goods is not feasible. Thus, the third double dash entry 8517 18 is the only possible classification within the first group (I) of single dash entry for considering the classification of IP Phones. Further, in respect of thir....
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....view has also been considered favourably by the Hon'ble Supreme Court in the case Moorco (India) Ltd. Vs. Collector of Customs, Madras (Civil Appeal No. 4342 of 1986), reported in 1994 (74) E.L.T. 5 (S.C.). The relevant paragraphs in the said judgement are extracted below: "4. Does classification change and the goods are liable to be placed in Heading 90.29 by virtue of the Interpretory Rules appended to the Customs Schedule? These Rules are framed on Brussels Convention so that same description may apply to a particular class and character of goods in the world trade. The First Schedule appended to the Customs Act lays down general principles for the interpretation and classification of goods for import tariff. Rule 2(b) of the Rules provide that, `the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.' Rule 3 of the Rules is reproduced below :- "R. 3. - When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows : (a) The heading which provides the most specific description hall....
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....fies 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 appellate 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 under the clas....