TaxTMI 
TaxTMI 
2024 (7) TMI 561
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....he imported goods by the appellant, the classification adopted by the appellant in the three Bills of Entry and the classification determined by the department are as follows: Description of the imported goods Classification by appellant under CTI Classification by department under CTI DW011707 ZTE TS4 100G Transponder Card (Non-WPC Item) (Captive Consumption) (For Cellular Telephony Network) 8517 70 90 8517 62 90 DW011706 ZTE MX2 100G Muxponder Card (Non-WPC Item) (Captive Consumption) (For Cellular Telephony Network) 8517 70 90 8517 62 90 DW021613 ZTE Optical Splitter Card SOP2 (Non-WPC Item) (Captive Consumption) (For Cellular Telephony Network) 8517 70 90 8517 62 90 3. In respect of the classification by appellant, the Basic Customs Duty is NIL (S. No. 5 of NN 57/2017), Education Cess is Nil and ISGT is @ 18%. In respect of the classification by the department, the Basic Customs Duty is @ 10%, Education Cess is @ 3% and IGST is @ 18%. 4. The appellant cleared these goods under CTI 8517 70 90 as 'parts' by virtue of Section Note 2(b) of Section XVI. However, the department believed that these goods were kind of Network Interface Cards [NIC cards] classifiable un....
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....d in support of this contention reliance has been placed upon a Division Bench decision of the Tribunal in M/s. Vodafone Idea Limited vs. Principal Commissioner of Customs (Import), New Delhi Customs Appeal No. 52287 of 2019 decided on 20.09.2022; and (v) The subject goods are not NIC Cards. To support this contention reliance has been placed upon the aforesaid decision of the Tribunal Vodafone Idea. 7. Shri Mihir Ranjan, learned special counsel appearing for the department, however, supported the impugned order and contented that it does not call for any interference in this appeal. In this connection, learned special counsel placed the order passed by the Principal Commissioner. 8. The submissions advanced by the learned counsel for the appellant and the learned special counsel appearing for the department have been considered. 9. The relevant tariff entries are reproduced below: Tariff Item Description of goods Unit Rate of Duty (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 i....
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....t goods: (i) The subject cards are to be used in ZTE ZXONE 8000 ('main equipment'); (ii) The main equipment is optical transport network equipment classifiable under CTI 8517 62 90; (iii) The main equipment consists of a modular chassis i.e., chassis with dedicated slots for various populated printed circuit boards ('Populated PCBs') ('Cards', for short); (iv) The subject cards have terminal pins on one end which enable connection with the respective dedicated slots in the chassis; (v) All the cards in the main equipment communicate with each other via backplane interface in the chassis of the main equipment; and (vi) This backplane interface is proprietary of the manufacturer and not universal. Thus, these cards will function solely with the chassis of the main equipment (when put in the dedicated slots) and will not function with the chassis of any other vendor. 11. According to the appellant, the goods are an integral and inseparable part of the main equipment, which together form the complete main equipment. The goods cannot function on a standalone basis and function only when put in the slot of the main equipment chassis. It is, therefore, the submission that the....
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.... network equipment chassis. 14. It is now necessary to examine the decisions on which reliance has been placed by learned counsel for the appellant. 15. In Ciena Communications India, the Tribunal held that the goods Hybrid/Matrix Cards and Small Form Factor Pluggable for OTN equipment are correctly classifiable under 8517 70. The Tribunal also noted that the goods do not perform their function independently, without being fitted in the chassis of the main equipment. It also needs to be noted that while making reference to Section Note 2(b) to Section XVI, the Tribunal held that the goods are classifiable as 'parts'. The Tribunal also relied upon the earlier decision of the Tribunal in Commissioner of Customs, Mumbai (AIR Cargo Import) vs. Reliance Jio Infocomm Ltd. decided on 22.06.2022, which decision was upheld by the Supreme Court in the judgment rendered on 30.01.2023 in Civil Appeal No's. 586-598 of 2023. It also needs to be noted that the Tribunal held, in view of the decision of the Supreme Court rendered on 30.01.2023, that goods of similar nature (Amplifier Cards, Transponder Cards, Muxponder Cards and Optical Add-Drop Multiplexer Cards used in Dense Wavelength Division....
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....) Cards are parts of equipment which cannot function independently - Similar to subject cards used in the main equipment, the cards used with DWDM equipment are specifically designed for use with the said equipment. Such cards draw power and intelligence from the DWDM equipment and cannot function unless incorporated in the DWDM equipment. The subject cards in the present appeal are dependent on the backplane components of the main component for drawing power and intelligence. Consequently, the subject cards cannot function unless they are incorporated in the main equipment. Thus, the subject cards and the cards of DWDM equipment are different from NIC Cards. 19. Thus, as in the case of cards of DWDM equipment, the subject cards in the present appeal cannot be considered as complete communication apparatus having an independent function. The subject cards cannot function independently without the other components of the main equipment and become functional only when plugged into the slot of modular chassis of the main equipment. Since the subject cards cannot be considered as an 'independent machine', like the machines mentioned under the heading 'Other Communication Apparatus' in....
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....subject cards are in the nature of Populated PCB. Undisputedly, the main equipment is classifiable under CTI 8517 62 90. The subject cards are not specifically covered under any heading of Chapter 84 or 85. Thus, they do they do not merit classification as per Note 2(a). Sub Heading 8517 70 specifically identifies and recognizes populated PCBs as 'parts'. The subject cards (Hybrid/Pure Matrix Cards) are populated PCB and thus merit classification under CTI 8517 70 10 as 'parts' of goods falling under Heading 8517 by virtue of Section Note 2(b) of Section XVI. 24. HSN Explanatory Notes to CTH 8534 distinguishes PCBs and PCBs mounted with mechanical/ electrical components (i.e., populated PCBs). It clarifies that populated PCBs are classified in accordance with Section Note 2 to Section XVI. It is, therefore, seen that even HSN Explanatory Notes treat populated PCBs as 'parts' of the primary apparatus. 25. In this regard, reliance can be placed on the decision of the Tribunal in Modicom Network, wherein the Tribunal held that the modules in the form of populated PCBs are 'parts' and are correctly classifiable under Sub-Heading 8517 90 and not under Sub-Heading 8517 80 as 'other app....