TaxTMI 
TaxTMI 
2024 (12) TMI 1670
X X X X Extracts X X X X
X X X X Extracts X X X X
....2024, (24) Customs Appeal No. 20439 of 2024, (25) Customs Appeal No. 20440 of 2024, (26) Customs Appeal No. 20441 of 2024, (27) Customs Appeal No. 20442 of 2024, (28) Customs Appeal No. 20443 of 2024, (29) Customs Appeal No. 20444 of 2024, (30) Customs Appeal No. 20445 of 2024, (31) Customs Appeal No. 20446 of 2024, (32) Customs Appeal No. 20447 of 2024, (33) Customs Appeal No. 20448 of 2024, (34) Customs Appeal No. 20449 of 2024, (35) Customs Appeal No. 20450 of 2024, (36) Customs Appeal No. 20451 of 2024, (37) Customs Appeal No. 20452 of 2024, (38) Customs Appeal No. 20453 of 2024, (39) Customs Appeal No. 20454 of 2024, (40) Customs Appeal No. 20455 of 2024, (41) Customs Appeal No. 20456 of 2024, (42) Customs Appeal No. 20457 of 2024, (43) Customs Appeal No. 20458 of 2024, (44) Customs Appeal No. 20459 of 2024, (45) Customs Appeal No. 20460 of 2024, (46) Customs Appeal No. 20461 of 2024, (47) Customs Appeal No. 20462 of 2024, (48) Customs Appeal No. 20463 of 2024, (49) Customs Appeal No. 20464 of 2024, (50) Customs Appeal No. 20465 of 2024, (51) Customs Appeal No. 20466 of 2024, (52) Customs Appeal No. 20467 of 2024, (53) Customs Appeal No. 20468 of 2024, (54) Customs Appeal No. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....116) Customs Appeal No.20531 of 2024, (117) Customs Appeal No.20532 of 2024, (118) Customs Appeal No.20533 of 2024, (119) Customs Appeal No.20534 of 2024, (120) Customs Appeal No.20535 of 2024, (121) Customs Appeal No.20536 of 2024, (122) Customs Appeal No.20537 of 2024, (123) Customs Appeal No.20538 of 2024, (124) Customs Appeal No.20539 of 2024, (125) Customs Appeal No.20540 of 2024, (126) Customs Appeal No.20541 of 2024, (127) Customs Appeal No.20542 of 2024, (128) Customs Appeal No.20543 of 2024, (129) Customs Appeal No.20544 of 2024, (130) Customs Appeal No.20545 of 2024, (131) Customs Appeal No.20546 of 2024, (132) Customs Appeal No.20547 of 2024, (133) Customs Appeal No.20548 of 2024, (134) Customs Appeal No.20549 of 2024, (135) Customs Appeal No.20550 of 2024, (136) Customs Appeal No.20551 of 2024, (137) Customs Appeal No.20552 of 2024, (138) Customs Appeal No.20553 of 2024, (139) Customs Appeal No.20554 of 2024, (140) Customs Appeal No.20555 of 2024, (141) Customs Appeal No.20556 of 2024, (142) Customs Appeal No.20557 of 2024, (143) Customs Appeal No.20558 of 2024, (144) Customs Appeal No.20559 of 2024, (145) Customs Appeal No.20560 of 2024, (146) Customs Appeal No.20561 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me, the Orders-in-Appeal Nos. 564 to 820/2021 dated 29.11.2021 allowing the appeals of the Appellant in accordance with the directions mentioned therein inter alia requiring reassessment of the 256 BOE in question after issuance of a speaking order. The proceedings culminated into issuance of the Order-in-Original No. 372/2022 ('OIO') where the original authority concurred with views of the Appellant on classification and rate of duty for some products and disagreed with views of the Appellant on classification and rate of duty for products in relation to specified part IDs of Transceivers, Secured Routers, Modular Interface Cards, Parts of Security and Rack Mounting Kit. Aggrieved, the Appellant filed an appeal before Commissioner of Customs (Appeals) and the Commissioner (Appeals) upheld the classification and rate of duty. Aggrieved by this order, appellant is in appeal before us. 3. The Learned Counsel submitted that the Appellant is engaged in the import and sale of networking equipments. The present appeals are against the classification and rate of duty against the following products. Against each of these products, the submissions by the learned Counsel are summarised be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....17 passed by Commissioner of Customs and Central Excise (Appeals), Hyderabad). In view of the aforesaid fact, the civil appeals are dismissed." Subsequent to this, in the matter of IBM India Private Limited vs. Commissioner of Customs (Import), Mumbai [2024 (4) TMI 972 - CESTAT Mumbai], the CESTAT, Mumbai had once again confirmed classification of SFP/SFP+/QSFP optical transceivers under the Tariff Item 8517 7090 as parts of telecom equipment. The transceivers covered in the appeals are nothing but SFP/SFP+/QSFP transceivers and squarely covered by the judicial precedents mentioned above. This is also substantiated by the screenshots of Juniper website and letter from subject expert Dr. Giuliano Coli (lead of Juniper Networks' Optics Global Community Team) submitted by the Appellant. Classification of transceivers as parts of networking equipment of 8517 7090 is also supported by letter dated 22.10.2019 issued by the Telecommunication Engineering Center (TEC), which is the Technical Wing of the Department of Telecommunications of Ministry of Communications and top-most expert body to opine on matters pertaining to telecommunication goods. 3.2 With regard to Modular I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cified Juniper Switch which can be used for mounting of such Switch safely so as to configure and hold them for access and efficient operation. It is clarified that such kits are separately designed for each/compatible product. Since appropriate mounting is important for efficient and safe functioning of the equipment, the Appellant submits that RMK merits classification under CTH 8517 7090, as opposed to classification under CTH 8302 4900 as held by the Commissioner in the impugned order. 3.5. It is further submitted that the "Full secured Routers" in question are essentially fixed form equipment that consolidate routing, switching, security and next generation firewall capabilities into single device. This enables the core function of data packet forwarding along with value added security and firewall services. However, routing continues to be the core function of such devices since the security and firewall function is an additional value-added service which is performed as an additional step after routing of data. The classification of such secured 'Routers' under the Tariff Item 8517 6290 is undisputed. The Appellant submits that the same are eligible for full exemption fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies products as Services Gateways which have features like next-generation firewalls, secure SDWAN, etc. SRX series products viz. SRX 300, 320, 340, 345, and 380 are next generation firewall. These are high performance, secure SD-WAN gateway with superior and reliable WAN connectivity. It integrates security routing, switching for distributed enterprise offices in a single device. Remaining SRX products mentioned above viz. SRX 1500, 4100, 4200, and 4600 are high performance firewalls. From the above, it is evident that they are not mere routers as claimed by the importer but an integrated Services Gateway System, encompassing the features of routing and switching. Therefore, the SRX series products are not eligible for Notification benefits under Sl. No. 13N of Notification No. 024/2005 dated 01.03.2005 which is only available for routers. 4.2. Optical transceivers are network equipments which converts electrical signals to light signals and vice versa. It can either be plugged into or embedded into a network device that is capable of sending or receiving signal. The goods are imported as independent products to be used along with supplier's other network devices and are not pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch or other sounds, images or other data within such a network, and thus are classifiable under 851762. As these Modular Interface Cards (MICs) are capable of providing physical connections to various network media types, subject goods are classifiable under 85176290. Since these interface cards are covered under other communication apparatus of subheading 8517.62, which provides for "Machines for the reception, conversion and transmission or regeneration of voice, images, or other data, including switching and routing apparatus", these cards may not be classified under "Parts" of Subheading 8517.70/8517.79. As these Modular Interface Cards (MICs) are capable of providing physical connections to various network media types, subject goods are classifiable under 85176290 and notification benefit under Sl. No. 20 of Notification No. 057/2017 dated 30.06.2017 is applicable. 4.4. A Mini-Physical Interface Module (Mini-PIM) is a network interface card (NIC) that is installed on the SRX Series Services Gateway to provide physical connections to a LAN or a WAN. The Mini-PM receives incoming packets from the network and transmits outgoing packets to the network. SRX-MP-LTE-AA, SRX-MP-LTE....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fication and the other is regarding the eligibility of the benefit of the exemption notification No.24/2005 dated 01.03.2005 as shown in the table below. Sl. No. Product category for which Appeal is being filed As upheld in the Impugned Order As claimed by the Appellant Amount of differential BCD+SWS (INR) Classification Effective rate of BCD Classification Effective rate of BCD 1 Transceiver 8517 6290 20% 8517 7090 Nil 2,00,92,869 2 Modular interface cards (MIC) 8517 6290 10% 8517 7090 Nil 6,43,692 3 Mini Physical Interface module (Parts of security) 8517 6290 20%/10 % merit rate 8517 7090 Nil 12,45,169 4 Full Secured Routers 8517 6290 10% 8517 6290 Nil 61,92,631* 5 Rack Mounting Kits for switch 8302 4900 Merit rate 8517 7090 Nil 61,021 *Sl.No.13N of notification No.24/2005 dated 01.03.2005. Let's examine each of these products: 5.1 Transceivers: The transceivers are optical transceivers which facilitate communication of networking equipment with other equipment in internal or external network through fiber optic cables ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fabric through the mid-plane) and the control plane for decision of switching/routing packets between ports (provided by the supervisor module). In view of the above technical details made available from the manufacturers of the impugned goods, it is evident that SFP is not equipment which on its own is capable of providing the essential function of transmission and reception of optical data. It is a part of 1/0 card module used as part of the ethernet switch providing Ethernet interfaces to inter-connect switches, servers and routers in a data center or campus net-work. The original authority has, however, concluded that as the SFP modules have Digital Optical Monitoring (DOM) capability to monitor realtime parameters of the module, such as optical output power, optical input power, temperature, laser bias current, transceiver supply voltage etc they are distinct equipment/machines having specific functions of transmission and reception of optical data. However, it has not been brought forth as to whether the SFP can independently handle the above functions without being attached to the Ethernet switch as explained by the appellant in the submissions in these proceedings. The manu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he manufacturer supplier clearly suggests that all four items are parts of Alcatel Lucent 1830 Photonic Service Switch-32 (PSS-32) and therefore shall be classifiable as parts under 85177090 and 85177010. I also find that for other parts and cards imported in the same consignment the Deputy Commissioner of Customs has assessed the goods under heading 85177090 and 85177010 respectively. The Deputy Commissioner of Customs ought to have extended the same treatment to the impugned goods. Even in the catalogue goods have been shown as parts/spares with exact part numbers of PSS-32 and the appellant in its submission has given details where on invoice/packing list the impugned goods have been mentioned as parts with specific part number. I also find that goods have been subjected to 100% examination and the examinations report confirms all goods to be as per import invoice. It also endorses "card for DWDM". Besides, presently in terms of Customs Notification 24/2005 dated 01 03 2005 Sr. No. 13S goods of heading 85177010 and in terms of Customs Notification 57/2017 Sr. No. 5, goods of heading 35177090 are exempted from BCD unconditionally. All these details are sufficient to assume the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Revenue. Notification-Customs Customs -Tariff Exemption to specified goods to Chapter 36, 84, 85 and 90 and all goods for the manufacture thereof- [Notification No. 24/05-Customs] Dated 1.3.2005 In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so lo do, hereby exempts the following goods of the description as specified in column (3) of the Table below and falling under the heading, sub-heading or tariff-item of the First Schedule to the Customs Tariff Act 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table, when imported into India, from the whole of the duty of customs leviable thereon under the said First Schedule, namely:- Table Sl. No. Heading, subheading or tariff item Description 1 2 3 1 3818 00 All goods ..... ...... ....... 10[2 8443 31 00 All goods 6[13N 8517 62 90 Routers] Notification-Customs - Customs -Tariff GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sport Profile (MPLS-TP) products; 10% -] 46[(h) Multiple Input/Multiple Output (MIMO) products; (i)Long Term Evolution (LTE) products] 6.1 Full secured routers as declared by the appellant are network services platform and as per the technical literature, these products integrate routing, switching and security functions on a single platform that optimizes the usage of system resources. The appellant admits the fact that the routing is clearly the essential function of the secured routers with additional features enhancing the quality and since, the essential function is routing and claims the benefit of the Notification meant for routers under Sl. No.13N of Notification No.24/2005 which is meant for routers. The Commissioner in the impugned order based on the technical writ-up filed by the appellant and based on the products described in their website observes that these routers are having multiple functionalities including routing and are used as network service platform as well as integrated services gateway system encompassing the features of routing and switching. Since these additional features are not being disputed by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....It is also observed that on the supplier's website, this product is mentioned "as Expansion Module supported on the NFX150-s1 & NFX150-s1E models. These are LTE modules with support features like automatic switch overs between service providers through dual SIMS, multiple service provider and access point name (APN) profiles, LTE carrier aggregation, SIM security functions such as SIM lock, unlock and PIN change, and can be configured in three modes." Thus, these features provide additional scope of benefits and is an expansion module which are independent of the NFX150 series of security products. It is also admitted that the security products otherwise are also functional on its own and these Mini PIM provide additional and enhanced security features. 8.2 It is to be examined as to how these products both Module Interface Cards (MIC) and Mini Physical Interface Module (Mini-PIM) stand classified in view of the technical literature as discussed above and taking into consideration the criteria for classification based on the Section Notes, Chapter Headings and the HSN Explanatory notes. The respective disputed chapter headings are reproduced below: Tariff Item Description ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Free - 8517 69 30 - Routers u Free - 8517 69 40 - X 25 Pads u Free - 8517 69 50 - Subscriber end equipment 8517 69 60 - Set top boxes for gaining access to internet u Free 8517 69 70 - Attachments for telephones 10% 8517 69 90 - Other 8517 70 - Parts: 8517 70 10 - Populated, loaded or stuffed printed circuit boards u Free 8517 70 90 - Other kg 10% 8.3 The HSN Explanatory notes under chapter heading 8517 under communication apparatus reads as follows: (G) Other communication apparatus. This group includes 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. Communication networks include, inter alia, carrier-current line systems, digital-line systems and combinations thereof. They may be configured, for example, as public switched telephone networks, Local Area Networks (LAN), Metropo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. 8.4 In view of the above, if the product is capable of contributing a clearly defined function even if it functions along with the individual components connected through electrical or other devices, it stands classified under appropriate heading depending upon its function. As seen from the Technical Literature, the products are Network Interface Cards. The Network Interface Card as per the various dictionary definitions as reproduced from the decision in the case of M/s. Vodafone Idea Limited vs. Principal Commissioner of Customs (Import) (supra) is defined as follows: "Network Interface Cards' as a printed circuit board comprising electronic circuitry for the purpose of connecting a workstation to LAN. NIC usually is in the form of a card that fits into one of the expa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Therefore, these cards can be classified under CTI 8517 70 10, which covers 'populated, loaded or stuffed printed circuit boards." 9. Rack Mounting Kit meant for secured router as explained in their technical literature are basically rack mounting kit for POE or non-POE SRX service gateways with or without power supply adapter tray. These are basic racks mounting kit is an accessory for installing SRX service gateways in a rack and hence, these items cannot be considered as part of a secured router as claimed by the importer. The Rack Mounting Kit is an accessory for Ethernet switch and are associated with functioning of switch and thus, not part of a switch and since, the racks are specifically covered under Chapter Heading 8302 4900, the same are rightly classified under this Heading by the authorities. Moreover, as per Section Note 1(k) of Section XVI, Articles of Chapter 82 or Chapter 83 are not covered under Section XVI (84,85) as reproduced 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 Note....