TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 954
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.... of the First Schedule of the Customs Tariff Act, 1975 or otherwise. 2. The Applicant vide their application has submitted as follows: 2.1 The Applicant operates from both Special Economic Zone ("SEZ") as well as Domestic Tariff Area ("DTA") units. The Imported products i.e., MTL, Newport Prime Cover, ASY, Newport Prime, Chassis Base (Lower Metal), ASY, Yuba, Lodoga Prime, Chassis, Top Cover, ASY, Yuba, Lodoga Prime, Chassis, Base Sheet Metal, ASY, Yuba, Marysville, Prime, 2 piece, top cover, ASY, Yuba, Marysville, 2 piece chassis, Base sheet metal, ASY, Backing plate, Fortuna Heatsink with insulator, ASY, Backing plate, Woodpecker, Double, Heatsink with insulator, ASY, PT Reyes, QSFP, Light pipe Shroud are used in the manufacture of data center switches in DTA Unit. 2.2 For manufacture of data-center switches, the applicant imports the said products made up of pre-plated steel. The Imported products i.e., MTL, Newport Prime Cover, ASY, Newport Prime, Chassis Base (Lower Metal), ASY, Yuba, Lodoga Prime, Chassis, Top Cover, ASY, Yuba, Lodoga Prime, Chassis, Base Sheet Metal, ASY, Yuba, Marysville, Prime, 2 piece, top cover, ASY, Yuba, Marysville, 2 piece chassis, Base sheet....
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....nd other electronic components of the data center switches. The product is customized with pre-specified demarcated protrusions, compartments, circumscribed & delimited projections, boundaried protuberances, exclusive pre-measured chambers with identified partitions, designated provisions and areas as provided by the applicant for mounting, bolting and installation of PCBAs and other components. The product is manufactured by the supplier located outside India basis the designs and drawing provided by the applicant for specific use in manufacturing of the data center switches. The chassis contains mechanical provisions for airflow management, light pipe chambers for status indication and insulators for electrical protection. The items imported are used as such in India without any further processing or activity. ASY-07463- 01, LFIASTASY- 07463-01_A1 ASY, Yuba, Lodoga Prime, Chassis, Top Cover The ASY, Yuba, Lodoga Prime, Chassis, Top Cover is made of pre- plated steel. The steel covers provide robust physical protection for the sensitive electronic components housed within the switches. They shield the internal parts from physical damage due to accidental im....
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....LFIASTASY- 07585- 01_Ao ASY, Yuba, Marysville, Prime, 2 piece, top cover The ASY, Yuba, Marysville, Prime, 2 piece, top cover is made of pre- plated steel. The assembly offers structural integrity, ensuring that the data center switches are securely housed and supported. This stability is essential for maintaining the alignment and connectivity of internal components, which is critical for optimal performance. By providing a well-designed enclosure, the product aids in managing the thermal environment of the switches. Proper thermal management is vital to prevent overheating, which can lead to equipment failure or reduced performance. The top cover provides a protective barrier for the sensitive electronic components within the data center switches. This protection is crucial for preventing physical damage from external factors such as dust, debris, and accidental impacts. The use of steel components and precise assembly techniques help shield the sensitive electronic components from electromagnetic interference, which can disrupt the operation of data center switches. ASY-04307- 03, LFIASTASY- 04307- 03_Bo ASY, Yuba, Marysville, 2 piece chassis, Base sheet met....
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....ASY, Backing plate, Fortuna Heatsink with insulator are made of pre-plated steel and are integral components in the cooling solutions of electronic devices. The backing plates provide structural support by distributing the mechanical load exerted by the heatsink across a larger surface area. This helps prevent damage to the PCB (printed circuit board) or the CPU socket, which can occur if pressure is concentrated in a small area. The product ensures that it adds rigidity to the mounting system of the heatsink, ensuring that it remains firmly in place even under thermal expansion or mechanical vibrations. A backing plate ensures that the heatsink maintains consistent and even pressure on the surface of the PCBA. This is crucial for maximizing thermal conductivity between the PCBA and the heatsink. By spreading pressure evenly, backing plates help prevent warping of the PCB, which could otherwise lead to electrical issues or impaired thermal contact. The backing plates include an insulating layer to prevent electrical contact with the motherboard. This insulation is typically made from non-conductive materials. ASY-05369- 02, LFIASTASY- 05369- 02_A1 ASY, Backing pla....
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....nformation to technicians. 2.3 The Applicant being a contract manufacturer of telecommunication equipment, manufactures its final products based on the exclusive dimensions & technical specifications provided by its customers. To cater to the stipulations of the final product according to customers, the Applicant imports parts of the data center switches (i.e., as listed above, which are the subject matter of the advance ruling) from outside India. The Applicant instructs the foreign supplier to comply with specified dimension, measurements, scale and customization required for manufacturing the said parts of the data center switches. 2.4 The Applicant wishes to submit that the final products (i.e., data center switches) predominantly comprises of the following parts: Parts of the data center switch Brief functionality 1. Chassis/Enclosures (As detailed above) The physical chassis and casing that houses and protects all internal components along with the other functions of thermal management, EMI shielding etc. as detailed above 2. Ports Ethernet Ports: These are the primary interfaces for connecting network cables. Ports vary in speed (e.g., 1Gbps, 10Gbps, ....
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....stallation of Printed Circuit Board Assemblies (PCBAs). The internal structure of the chassis and covers is meticulously engineered to include specific protrusions and mounting pads. These are not arbitrary; they are strategically positioned to coincide with the mounting points on the PCBAs. 2.6 There is no market for the data center switches without the chassis, top covers and the entire enclosures. The data center switches as finished products are customarily sold as a complete functional package along with the chassis, covers and the enclosures. The data center switches cannot function in the intended manner in the absence of the enclosures. The same is further enumerated hereunder. FUNCTIONAL UTILITY OF CHASSIS, COVERS, BACKING PLATES AND LIGHT SHROUDS WHICH ARE SUBJECT MATTER OF ADVANCE RULING We have divided the functional utility of 9 parts into three categories as below Category 1 - ASY, Newport Prime, Chassis Base (Lower Metal), ASY, Yuba, Lodoga Prime, Chassis, Top Cover, ASY, Yuba, Lodoga Prime, Chassis, Base Sheet Metal, ASY, Yuba, Marysville, Prime, 2 piece, top cover, ASY, Yuba, Marysville, 2 piece chassis, base sheet metal 2.7 The above chassis p....
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....nts within the switch, reducing the risk of electromagnetic noise causing signal disruption. By minimizing crosstalk, the switch can maintain high signal integrity, ensuring that data is transmitted accurately and without error. Reduced crosstalk contributes to the overall stability and reliability of data center switches, which is essential for managing large volumes of data traffic in a high-performance computing environment. Cooling, Air Flow Management, Thermal Conductivity and Heat Dissipation 2.8 Efficient cooling and airflow management are crucial for ensuring the optimal performance and reliability of data center switches. These systems are designed to handle high-density computing tasks, which generate significant amounts of heat. To prevent overheating and maintain stable operations, cooling strategies must be meticulously planned and implemented. The vent layouts on the chassis and covers of the data center switches are engineered with strategically placed vents and airflow channels. These features facilitate the movement of cool air into the chassis while expelling hot air, creating a continuous flow that prevents heat buildup. Fans are positioned within the chass....
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....promise the performance and reliability of sensitive electronic components. The steel chassis acts as a protective shell, shielding the internal parts from physical damage due to accidental impacts or mechanical stresses. This protection is crucial in maintaining the operational reliability of switches in dynamic data center environments. The plating process adds a layer of sound insulation to the steel chassis, which helps reduce the acoustic footprint of the switch. This is particularly beneficial in data centers where maintaining a quieter environment is desired. The design of pre-plated steel chassis can incorporate additional sound-dampening features, leveraging the material's mass and rigidity to minimize noise from fans and other moving parts. Category 2 - ASY, Backing plate, Fortuna Heatsink with insulator, ASY, Backing plate, Woodpecker, Double, Heatsink with insulator Temperature Regulation, Heat Dissipation, Mechanical Support and Stability 2.10 In data center switches, the use of a heatsink backing plate with an insulator is an essential design strategy to enhance thermal management and ensure electrical safety. Backing plate serves as a support for the hea....
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....al parameters, contributing to their reliability and performance in demanding data center environments. The integration of these elements into switch design reflects a comprehensive approach to addressing the thermal and electrical challenges inherent in high-density computing equipment. Category 3 - ASY, PT Reyes, QSFP, Light pipe Shroud Light Guidance and improved readability 2.12 A light pipe shroud is an optical component used in data center switches to enhance the visibility and functionality of status indicators such as LEDs (Light Emitting Diodes). These indicators provide critical information about the operational status of the switch, including power, network connectivity, and performance alerts. The light pipe shroud is designed to capture and direct light from embedded LEDs on the switch's circuit board to the external surface of the device. By channeling light through an optically clear material, typically a clear plastic or acrylic, the shroud minimizes light dispersion and ensures uniform brightness across the indicator. This uniformity helps prevent misinterpretation of the indicator's status due to uneven or dim lighting. The design of the light pip....
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....retation of the First Schedule to the Customs Tariff Act, 1975. For legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. 3.2 Rule 1 of the General Rules for Interpretation provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to 6 provide the general guidelines for classification of goods under the appropriate sub-heading. In the event the goods cannot be classified solely on the basis of Rule 1, and if the headings and section or chapter notes do not otherwise require, the remaining Rules 2 to 6 may then be applied in sequential order. Application of Chapter 73 3.3 The Applicant has analyzed chapter 73 which provides for classification of "Articles of iron or steel". The Applicant has observed that there is no specific heading under chapter 73which covers the applicant's products (i.e., chassis, covers, backing plates and light shrouds) and therefore, the only recourse can be made to residual heading under 73269....
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.... 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) as indicated above). Having highlighted the same, it is worthwhile to analyze the third category (i.e., Parts) for the present items in this application. Whether present items imported can be termed as 'parts'? 3.5.1 Before directly going into the classification of present item under 'Parts', it is necessary to analyze whether the imported products would qualify as "parts".In the case of Electrosteel Castings v. CCE 1989 (43) ELT 305 (CEGAT), the Hon'ble Tribunal observed that "part" is a component whose absence will disable a machine or appliance. It must be regarded as an essential ingredient or part of that machine. In the case of CCE v. Insulation Electricals (2008) 224 ELT 512 (SC), the Hon'ble Supreme Court observed that, a part is an essential component of the whole without which whole cannot function. In the instant case, as enumerated above, the pre-plated steel chassis, covers, backing plates and other components in addition to housing the PCBAs and other electronic c....
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....are used solely or principally with that machine can only be classified as 'parts' of that machine. The Applicant would like to further submit that the imported products are specifically customized and designed parts that are key integral components in the manufacture of the data center switches classifiable under heading 8517. In the absence of the imported parts, the equipment cannot be manufactured and thus the imported components i.e., "MTL, Newport Prime Cover, ASY, Newport Prime, Chassis Base (Lower Metal), ASY, Yuba, Lodoga Prime, Chassis, Top Cover, ASY, Yuba, Lodoga Prime, Chassis, Base Sheet Metal, ASY, Yuba, Marysville, Prime, 2 piece, top cover, ASY, Yuba, Marysville, 2 piece chassis, Base sheet metal, ASY, Backing plate, Fortuna Heatsink with insulator, ASY, Backing plate, Woodpecker, Double, Heatsink with insulator, ASY, PT Reyes, QSFP, Light pipe Shroud" would constitute as 'parts' suitable for use solely or principally with telecommunication equipments (i.e., data center switches) in terms of note 2(b) to section XVI. Therefore, it warrants classification as 'parts' under heading 8517. More specifically, the imported product can be classif....
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....n their CAAR-1 indicated that they intend to import the subject goods i.e. Back Enclosure for C6 Version-1, Back Enclosure for C6 Version-2 and Front Enclosure for B6x of Wi-Fi receiver at the jurisdiction of Office of the Commissioner of Customs, Import Commissionerate, Chennai-I. The application was forwarded to the Office of the concerned Commissionerate for their comments on23.05.2025 & 16.06.2025. However, this office has not received any comments/response in this matter till now. Details of Hearing 5.1 A hearing was held on 09.07.2025 at 03.00 PM. Shri Debasis Nayak, Shri Aman Goyal and Shri Venkadathri Rajaraman, authorized representative on behalf of the applicant appeared for the hearing and reiterated the contention submitted with the application. They contended that the subject goods in the present case are parts of 'Data Center Switches' and merit classification under CTI 85177990 as parts of final finished goods under CTH 85176290. They relied upon GRI-1 read with section note 2(b) of section XVI of the Customs Tariff Act, Note 1 of section XV which excludes certain items of chapter 84 & 85; Rule 3 of GRI. They also relied upon Board Circulars- 121/32/....
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.... 94% efficient power supplies and optimized airflow for reliability and easy installation. They support a Unified Forwarding Table for flexible L2 and L3 forwarding and a shared packet buffer for superior burst absorption. 6.5 The data-center switches offer flexibility for scale-out network designs, supporting 128-way ECMP (Equal Cost Multi Path) and 64-way MLAG (Multi-chassis Link Aggregation). It provides custom hash algorithms for efficient traffic balancing and multi-speed interface flexibility. The switches support VXLAN routing, bridging, and gateway capabilities for next-gen data centers, with advanced monitoring features for network visibility. 6.6 The imported products are customized with pre-specified demarcated protrusions, compartments, circumscribed & delimited projections, boundaried protuberances, exclusive pre- measured chambers with identified partitions, designated provisions and areas as provided by the Applicant for mounting and installation of Printed Circuit Board Assemblies and other electrical components for data center switching function. The pre-customized tailor-made items imported for the manufacture of data center switches can be used only for the....
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....- Telephone sets, including smartphones and other telephones for cellular networks or for other wireless networks: 8517 11 -- Line telephone sets with cordless handsets: 8517 11 10 --- Push button type 8517 11 90 --- Other 8517 13 00 -- Smartphones 8517 14 00 -- Other telephones for cellular networks or for other wireless networks 8517 18 -- Other 8517 18 10 --- Push button type 8517 18 90 --- 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 00 -- Base stations 8517 62 -- Machines for the reception, conversion and transmission on regeneration of voice, images or other data, including switching and routing apparatus 8517 6210 --- PLCC equipment 8517 6220 --- Voice frequency telegraphy 8517 6230 -- Modems (modulators-demodulators) for xDSL based Wireline Telephony 8517 6250 --- Digital loop carrier system (DLC) 8517 6260 --- Synchronous digital hierarchy system (SDH) 8517 627....
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....tory Notes, the aforesaid Group G relates to "Other communication apparatus" and is reproduced below: "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), 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) Modem (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 pul....
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....ts on the PCBAs. The robust construction of the product offers Vibration Reduction, Electrical Insulation, Structural integrity and Physical protection, structural integrity, ensuring that the switches are securely housed. The design includes features that facilitate effective thermal management, such as Cooling, Air Flow Management, Thermal Conductivity, ventilation or heat dissipation mechanisms. The use of pre-plated steel and precise assembly techniques aid shield the electronic components from electromagnetic interference. The mounting pads are engineered with high precision to match the exact dimensions and structural needs of the PCBAs. This precision ensures that the PCBAs fit perfectly within the enclosures, minimizing any movement that could disrupt their operation. The design allows for a seamless interface between the electronic components and the enclosure, thereby supporting the mechanical integrity of the entire assembly. These pads serve as pivotal anchorage points, ensuring the PCBAs are held in a stable and secure position once installed. This stability is crucial for maintaining the alignment of conductive pathways and ensuring that electromagnetic coupling confi....
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....r of the device, allowing users to monitor status indicators without opening the enclosure. The light pipe shroud provides additional stability to the LEDs, reducing the risk of disconnection or damage. The shroud acts as a protective cover for the LEDs on the circuit board. It shields these components from dust, moisture, and physical damage that could impair their functionality or lead to premature failure. The integration of light pipes into the chassis involves aligning them accurately with the internal light sources. This alignment is crucial for maintaining the clarity and intensity of the transmitted light. The light pipes are housed within dedicated chambers or channels within the chassis to protect them from external interference and to prevent light leakage. This setup allows users to monitor system status, such as power on/off, network activity, or error states, without opening the enclosure. 6.13 The applicant submitted that the imported products have no individual utility of their own for any other purpose as they have been specifically customized and designed for use by the Applicant. The pre-plated and insulated steel components are not capable of any operation in....
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.... desires) cannot use the imported item for any other customer. Therefore, the imported product qualifies the test of sole and principal use. The Applicant further submitted that the imported products are specifically customized and designed parts that are key integral components in the manufacture of the data center switches classifiable under heading 8517. In the absence of the imported parts, the equipment cannot be manufactured. In view of the above definitions, technical specifications, and judicial guidance, it is concluded that the subject goods namely .,"MTL, Newport Prime Cover, ASY, Newport Prime, Chassis Base (Lower Metal), ASY, Yuba, Lodoga Prime, Chassis, Top Cover, ASY, Yuba, Lodoga Prime, Chassis, Base Sheet Metal, ASY, Yuba, Marysville, Prime, 2 piece, top cover, ASY, Yuba, Marysville, 2 piece chassis, Base sheet metal, ASY, Backing plate, Fortuna Heatsink with insulator, ASY, Backing plate, Woodpecker, Double, Heatsink with insulator, ASY, PT Reyes, QSFP, Light pipe Shroud", constitute components or parts of apparatus or devices (i.e., Data Center Switches) attracting classification under CTH 8517 of the First Schedule to the Customs Tariff Act, 1975. Accordingly....
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....2 to Section XVI is subject to Note 1 to the same Section. As per Note 1, the Section does not cover certain articles, including: "(g) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV), or similar goods of plastics (Chapter 39); " In the instant case, as enumerated above, the pre-plated steel chassis, covers, backing plates and other components in addition to housing the PCBAs and other electronic components provide electromagnetic/radio-frequency interference shielding capabilities to the PCBAs inside the data center switches, aid in cooling, air flow management, thermal conductivity and heat dissipation function for radiating the heat generated on the PCBAs and other electrical components inside the data center switches to the external environment, aid in vibration reduction, electrical insulation, maintaining structural integrity and physical protection, light guidance and improved readability, and energy efficiency. The imported products have no individual utility of their own for any other purpose as they have been specifically customized and designed for use by the Applicant. The pre-plated and insulated steel components are not ....
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....ered under any of the specific subheading at the eight-digit level under heading 8517. Consequently, they fall under the residuary entry 8517 79 90, which reads as "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- Parts-Other --- Other". Therefore, by virtue of GIR1, Note 2(b) to Section XVI, and Explanatory Notes to Heading 8517, the products in question are classifiable under CTI 85177990 (Other) of the First Schedule of the Customs Tariff Act, 1975. 6.18 In view of the above facts and circumstances of the case, I reach to conclusion that the products in question attracts merit classification under CTH 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 ....