TaxTMI 
TaxTMI 
2023 (8) TMI 1656
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....ich are contained in the affidavit filed by them during the course of hearing of the appeal. The appellants had filed the Bills of Entry (B/Es), by classifying the product in dispute under tariff item 8517 18 10, which provides 'NIL' rate of Basic Customs Duty (BCD). Contrary to the classification claimed by the appellants, the department had classified the said product under tariff item 8517 62 90, attracting BCD @20%. The speaking orders passed in this regard by the proper officer of Customs were appealed against by the appellants before the learned Commissioner of Customs (Appeals), which were disposed off vide different impugned orders passed by him in upholding the orders passed by the original authority. Feeling aggrieved with the impugned orders, the appellants have preferred these appeals before the Tribunal. 1.2 Learned Commissioner (Appeals) had rejected the appeals filed by the appellants holding that the product in question should appropriately be classified under tariff item 8517 62 90. Further, he has also held that since VolP Phone and Video Conferencing System are one and the same as both functions on IP using Session Initiation Protocol (SIP) or other proprietar....
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....atives for the Revenue, and the arguments advanced during the hearings of this case. Issue to be decided: 5. Brief issue for consideration before us is the classification of imported goods by the appellants as to whether, the same merits classification under Customs Tariff Item 8517 1810 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 various Bills of Entries filed during the disputed period. Legal provisions for classification of goods: 6. In order to address the above issue of classification of imported goods, we would like to refer the 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 la....
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....rima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and 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 accordan....
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....in any column of this Schedule in relation to the rate of duty indicates that duty on the goods to which the entry relates shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable. ADDITIONAL NOTES In this Schedule,- (1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all sub-headings of tariff items the first 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-Chapte....
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....e determined according to the terms of the headings and any relative Section or Chapter Notes; (GIR 1) (ii) reference to an article, shall also include such article in the incomplete or unfinished state, subject to the condition that article, as presented, has the essential character of the complete or finished article. Further, reference in a heading to a material or substance shall be taken to include mixtures or combinations of that material or substance with other materials or substances, and to goods consisting wholly or partly of such material or substance; (GIR 2) (iii)if the goods are found to be classifiable under two or more headings, then the classification 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 subheadings shall be determined according to the terms of those subheadings and any related sub-heading Notes (GIR 6) (vi) When the description of th....
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..... . . . . . . . . . . . . . . . . u Free - 8517 12 -- Telephones for cellular networks or for other wireless networks : 8517 12 10 --- Push button type . . . . . . . . . . . . . . . . . . . . . . u 20% - 8517 12 90 --- Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 20% - 8517 18 -Other : - 8517 18 10 --- Push button type . . . . . . . . . . . . . . . . . . . . . . u Free - 8517 18 90 --- Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . u 20% - - 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 20% - 8517 62 10 --- PLCC equipment . . . . . . . . . . . . . . . . . ....
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....r than transmission or reception apparatus of heading 8443, 8525,8527 or 8528. 11. Hence, in simple words, it can be put that the distinction between these two categories of goods is that the first one is 'telephone sets' and second one is 'other apparatus'. In the present case, the appellants had filed the Bills of Entries (B/Es) in dispute, by describing the imported goods as 'CISCO IP Phones' of various models such as CP-8861, CP- 8832, CP-8851, CP-8811, CP-3905, CP-6901, CP-7861, CP-8841, CP- 8800,CP-7841, CP-7832, CP-7821, CP-7811 etc. The representative sample of the CISCO IP Phone model CP-8861 was also produced by the learned Advocate for the appellants for claiming the classification as made by them in the B/Es. 12. For ease of reference, the sample pieces of the product demonstrated by the appellants are picturized below: From the above pictures, it could be seen the product essentially contain the telephone handset, push button keys, 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. The key specifications of the above CISCO IP Ph....
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....contention is that the imported goods are rightly classifiable under tariff item 8517 62 90, under the second category of 'other apparatus' on the basis of its functionality and the learned Commissioner (Appeals) had come to the conclusion that IP phone is an equipment using Voice over Internet Protocol (VoIP) technology as detailed in paragraphs 12 to 14 of the impugned orders. 15. Therefore, in order to decide further within the Chapter Heading 8517, whether the imported goods fall under the first category as 'telephone sets' or under the second category 'other apparatus', one needs to look further into relative Section or Chapter notes. In this regard, we find that Section Note 1 to Section XVI covering Chapters 84 and 85, provide for the list of goods that do not get covered under the said Chapters. Besides, Section Note 2 providing for classification of 'parts' of machines or articles are not relevant here. Thus, we find that Section Notes 3 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; S....
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....ta-sheet as above, the IP phones consist of transmission and reception hardware such as telephone handset, speaker, dialing push buttons, transmission and reception of audio signals either by converting it as data packets or otherwise, power module etc. From the above discussion, we are of the prima facie view that the IP phones is classifiable under 8517 18 10, as the principal function of these equipment remain as 'telephony'. 17. In order to further examine the classification in terms of HS explanatory notes of the WCO, which describe in detail the scope and coverage of the goods under the Customs classification, the extract of HS classification in respect of heading 8517 is given below: "Harmonized Commodity Description and Coding System Explanatory Notes "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 84.43, 85.25, 85.27 or 85.28(+). - Telephone sets....
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....er and microphone to enable communication without using the hand-set; devices for automatically answering calls, transmitting a recorded message, recording incoming messages and playing back the recorded message on command; devices for holding a connection on line while communicating with a person on another telephone. Telephone sets incorporating these devices may also have keys or push-buttons which enable their operation, including a switching key which enables the telephone to be operated without removing the hand-set from the cradle. Many of these devices utilize a microprocessor or digital integrated circuits for operation. The heading covers all kinds of telephone sets including: (i) Cordless telephone sets. ............ (ii) Telephones sets. ............ (B) Telephones for cellular networks or for other wireless networks. This group covers telephones for use on any wireless network. Such telephones receive and emit radio waves which are received and retransmitted, e.g., by base stations or satellites. These include, inter alia: (1) Cellular phones or mobile phones. (2) Satellite phones. The Explanato....
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....s 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." The third single dash entry at 8517 70 covers only 'parts'. 18. We have examined each of the 'single dash' entry and the goods covered thereunder as shown above. The scope of coverage of goods under the three different single dash entries of Chapter Heading 8517 is as follows: First one at 8517 10 is 'Telephone sets, including telephones for cellular networks or for other wireless....
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....eadings, classification shall be preferred under the heading which provides the most specific description to the heading rather than the one providing a more general description. Inasmuch as the tariff item 8517 18 10 covering "telephone sets of push button type" (other than line telephone and cellular networks or other wireless networks) is more specific than the contending tariff item 8517 62 90 covering "other" of machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus, the classification under tariff item 8517 1810 is appropriate as per GIR 3. Hence, in our considered view, the appropriate classification of the imported goods would be under Customs Tariff Item 8517 18 10. We also find that our such 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 ....
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....ference to any heading should be placed in that category alone. The specific heading of classification has to be preferred over general heading. The clause contemplates goods which may be satisfying more than one description. Or it may be satisfying specific and general description. In either situation the classification which is the most specific has to be preferred over the one which is not specific or is general in nature. In other words, between the two competing entries the one most nearer to the description should be preferred. Where the class of goods manufactured by an assessee falls say in more than one heading one of which may be specific, other more specific, third most specific and fourth general. The rule requires the authorities to classify the goods in the heading which satisfies 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 electric....