AI Drafter 
TaxTMI 
TaxTMI 
2025 (3) TMI 393
X X X X Extracts X X X X
X X X X Extracts X X X X
....5176290 as other machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus or otherwise? b) If the product is classifiable under CTI 85176290, then whether the product is eligible for concessional rate of duty under Sr. No. 20 of Notification No. 57/2017-Cus. Dated 30.06.2017 or otherwise? 2. Submission by the Applicant: 2.1 M/s Cisco Commerce India Private Limited ('the Applicant'), is a company is engaged in developing, importing and selling of networking hardware, software, telecommunications equipment and other high-technology services and products. 2.2 The company is engaged in regular import of goods into India since the year 2012. Amongst other products, the Company is importing transceivers (hereinafter referred to as 'Product under consideration'/'Product') from Cisco System Inc, USA. 2.3 The product under consideration is a Transceiver, which are of two categories, i.e., Optical transceivers and electrical transceivers. They are of different type modules, mentioned as follows: • Small Form-Factor Pluggable (SFP) transceivers mod....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er network device, which they transmit and convert, as required. Given their functional requirement, transceivers are necessarily used with the telecommunication equipment such as routers, switches etc., whether manufactured by CISCO or any other Company. Nonetheless, transceivers are stand-alone in performing their functions, but are not stand-alone in the sense of operating independently. In other words, transceivers are capable of performing their specific functions independently and execute their tasks of transmitting, receiving and converting without external assistance and the fact they need to be inserted into a device, does not change their functional independence. Newton's Telecom Dictionary, 31^st Expanded and Updated Edition, Harry Newton, 2018, defines transceiver as: "1. Any device that transmits and receives. In sending and receiving information, it often provides data packet collision detection as well. 2. In IEEE 802.3 networks, the attachment hardware connecting the controller interface to the transmission cable. The transceiver contains the carrier-sense logic, the transmit/receive logic, and the collision-detect logic. 3. A device to connect workstat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tro-optical converters). • Codecs (data compressors/decompressors) which have the capability of transmission and reception of digital information, • Pulse to tone converters which convert pulse dialled signals to tone signals. 3.4 Scope of Tariff Sub-heading 8517.62 can further be elaborated upon through reference to the WCO Opinions Compendium for Subheading 8517.62, which at item 4 lists: "Optical fiber converters, which convert the limited distance token-ring or other local area network (LAN) limited distance digital signals on copper wire cables into optical digital signals. These converters are used, for example, when an optical fiber cable is used in a token-ring LAN in order to extend it into a campus environment, or where the replacement of copper cable with optical fiber cable is important to reduce interference." 3.5 Based on a bare reading of the Tariff Heading and its relevant WCO Explanatory Notes, it appears that for a product to be classified under Tariff Heading 8517, it must meet the following criteria: 1. It must be an apparatus for the transmission or reception of voice, images, or other data. 2. Addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the same under the said Tariff Heading. 3.8 The following judicial pronouncements have determined the appropriate classification of transceivers/SFPs as CTH 8517.79 of the Customs Tariff, on the basis that they cannot function on standalone basis as a machine and can function only when used along with router, switches, or other telecom equipment: • Reliance Jio Infocom Ltd., (supra), and • IBM India Pvt Limited. 3.9 In its regard, it is submitted that the nature of functioning on a standalone basis has not been provided in the said judicial pronouncements. In other words, the moot point that merits consideration is what is exactly meant by ability to function on stand-alone basis. Additionally, it is essential to determine whether the capability of functioning on a standalone basis merit more importance than the WCO explanatory notes and GRIS for classification of a product under the Customs Tariff. 3.10 The Company submits that transceivers can undertake the functions relating to reception, conversion, and transmission of electrical or optical signals on stand-alone basis, albeit requiring electrical supply and devices to be plugged in to recei....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the said Notification, is it hit by the exclusion of Optical Transport Equipment / Optical Transport Network products or not. 4. Port of Import and reply from jurisdictional Commissionerate: 4.1 The applicant in their CAAR-1 indicated that they intend to import the subject goods i.e. SFP Transceiver at the jurisdiction of Office of the Commissioner of Customs, ACC, Mumbai. The application was forwarded to the Office of the Commissioner of Customs, Chennai Customs for their comments on 15.10.2024. The Commissioner of Customs, ACC, Mumbai vide their letter dated 12.11.2024 has submitted as follows: • It is pertinent to mention here, that the primary function of the product under consideration (SFP Transceivers) is to enable communication between the networking devices, such as switches, routers and servers, over long distances using fibre optic technology. An SFP transceivers can work on different type of media network such as fibre optic cable or copper cable. The copper SFP module is mainly used for short distance data transmission. On other hand, an optical interface module, also known as an optical transceiver or optical module is a device that converts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interface on the side that connects to the inside of the system and an optical interface on the side that connects to the outside world through a fiber optic cable. Thus, based on the functioning of SFP Optical Transceiver, they are required to convert the electrical signals to optical signals and vice versa for interconnecting two networking equipments functioning with electrical signals or optical signals, as the case may be. Therefore, it is evident that the Optical Transceivers, being capable of converting electrical signal to optical signal and vice versa are equipped to handle and be a part of Optical Transport Network and therefore would be termed as Optical Transport Equipment / Optical Transport Network Products. On the other hand, the Transceivers working on copper cable would be treated as "non OTE/OTN". c). In view of above, the SFP Transceivers working with a copper cable may be treated as Non OTE/OTN products and eligible for duty exemption under serial number 20 of the Notfn. No. 57/2017-Cus. dt. 30.06.2017, as amended. Whereas the SFP Transceivers working with a fiber optic cable, may be treated as OTE /OTN product and would not be eligible for duty exempti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r Pluggable (SFP) Transceiver combines the functions of a transmitter and a receiver, handling the reception, conversion, and transmission of signals. Their primary function depends upon its type. The primary function of optical Transceivers is to convert optical signals from the network to electrical signals and vice versa. Similarly, the primary function of electrical transceivers is to convert electrical type signals. They are pluggable modules that can be inserted into various networking devices such as Ethernet switches, IP routers, modems, network interface card, etc. i.e., it allows connection to a wired network. Transceivers can operate in various types of networks, including LANS, WANs, and data center networks, where they interconnect servers, storage devices, and other network equipment. 6.5 I observe that Transceivers are devices that transmit and receive signals, commonly used in communication systems. The Transceivers can undertake the functions relating to reception, conversion, and transmission of electrical or optical signals on stand-alone basis. They come in two main types: optical transceivers and electrical transceivers. Optical transceivers use light signal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l wave flowing in a wired network or by electro-magnetic waves in a wireless network. The heading 8517 as per the First Schedule to the Customs Tariff Act, 1975, has three single dash (-) entries. Thus, the goods covered under CTH 85.17 (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) have been divided into the following three categories: I. Telephone sets, including telephones for cellular networks or for other wireless networks: II. 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); III. Parts 6.9.2 As per HSN, the aforesaid category II has further been divided into the following groups: (A) Base station; (B) Entry-phone systems; (C) Videophones; (D) Apparatus for te....
X X X X Extracts X X X X
X X X X Extracts X X X X
....items covered under this single dash entry. If the item were to be treated as parts, the item would have covered under the third single dash (-) entry, which covered the parts. Therefore, the product cannot be classified as parts and would not be covered under CTI 85177990 which cover parts. 6.9.5 In such a scenario, the subject goods should be classified under the sub-headings/tariff items available under the second single dash (-) level under CTH 8517. Under the second single dash, there are three double dash (--) entries available as follows. Subheading/Tariff Item with Double Dash (..) Description 8517 6100 Base stations 8517 62 Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus 851769 Others The entry at the tariff item 8517 6100 is Base station, which is a central communication hub that manages signal communication between mobile devices and the network. A base station is much larger and serves as a communication hub that manages many transceivers and devices within its coverage area. Hence....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Packet Optical Transport Product or Switch (POTP or POTS) d) Optical Transport Network products e) Internet Protocol (IP) Radios f) Soft switches and Voice over Internet Protocol (VoIP) equipment, namely, VoIP phones. Media gateways. Gateway controllers and Session border controllers g) Carrier Ethernet Switches. Packet Transport Node (PTN) products, Multiprotocol Label Switching Transport products Profile (MPLS-TP) h) Multiple Input/Multiple Output (MIMO) and Long-Term Evolution (LTE) products i) Long Term Evolution (LTE) products 10% - 6.10.2 As discussed in the paras supra, Transceivers come in two main types: optical transceivers and electrical transceivers. Optical SFP Transceiver used in optical communication systems to receive and transmit data over fiber optic cables. An Optical Transceiver has electronic components to encodes/decode data into light pulses and then send them to the other end as electrical signals. They typically have an electrical interface on the side that connects to the inside of the system and an optical interface on the side that connects to the outside world through a fiber opti....