TaxTMI 
TaxTMI 
2026 (2) TMI 137
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....n the exclusion clause of Notification No. 02/2019-Customs dated 29th January 2019? B. Whether in the facts and circumstances of case and in law, the CESTAT erred in holding that the imported "Catalyst 3850 series Ethernet Switches" are "Enterprise Switches" and not "Carrier Ethernet Switches", despite the product specifications indicating capabilities similar to carrier-grade networking equipment and in disregarding the expert classification by the Telecom Engineering Centre (TEC)? C. Whether in the facts and circumstances of the case and in law, the CESTAT overlooked the binding nature of CBIC Circular No. 08/2023-Customs, which clarified that networking products, including those with MPLS, MPLS-TP, and SDN-based functionalities, are ineligible for concessional duty? D. Whether in the facts and circumstances of case and in law, the CESTAT was correct in holding that the Department's failure to conduct a physical inspection of the goods invalidated the denial of concessional duty, despite sufficient documentary evidence supporting the Department's case? 2. The short issue in the present Appeal is whether the Assessee/Respondent's imports of various mo....
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....urchase order is from a TSP/ISP and the TSP/ISP intend to use the switch in the network for the purposes of Transport/Carriage, then the switch may be treated as a Carrier Ethernet Switch. This OM is set out in paragraph 9.2 of the CESTAT order. 4. Based on these facts, initially, the CESTAT passed an interim order dated 18th September 2023 stating that they were of the view that technical specifications of the impugned Switches was required to be ascertained for ascertaining whether they would qualify for the concessional BCD. For this purpose, some officers from the Department having technical knowledge on the subject goods, or technical experts in the relevant field/subject duly recognized by the expert bodies, were directed to inspect the site where the same imported goods were installed for analysis and submit a report as to why, the product (s) in question should be considered differently than as claimed by the Assessee. This inspection was to be done in the presence of the Assessee's representative. The interim order has been set out in paragraph 12.1 of the CESTAT order. 5. The CESTAT found that the exercise as detailed in the above interim order had not been undertak....
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.... is an internal administrative instruction meant to guide officers and does not have any statutory force. It certainly cannot override a notification issued under the Customs Act. Consequently, it was submitted that even if the Office Memorandum suggests looking at end-use, such guidance cannot replace the legal requirement that eligibility be determined on the nature of the goods covered by the notification. To buttress the argument that the impugned Switches are in fact Carrier Ethernet Switches, the learned advocate appearing on behalf of the Revenue relied upon the observations made by the Commissioner (Appeals) in the order impugned before the CESTAT. He, therefore, submitted that substantial questions of law arise in the above Appeal, and hence the Appeal be admitted on the questions of law reproduced by us above. 9. Mr. D. B. Shroff, the learned Senior Advocate appearing for the Assessee, took us through the CESTAT order, and submitted that the CESTAT had passed a very detailed and reasonable order after hearing both sides. The CESTAT had in fact passed an interim order directing the parties to inspect the goods and see how these goods were used. This was done especially ....
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....fact the Switches imported by the Assessee were Carrier Ethernet Switches or Non-Carrier Ethernet Switches/Enterprise Ethernet Switches. The Department did nothing to have these Switches examined. All it did was produce a Report of the Telecom Engineering Centre (Western Region), Mumbai. As far as this Report was concerned, the same has been adequately dealt with by the CESTAT in the impugned order from paragraphs 12.3 onwards. Even on perusing the said Report, we find that the said Report categorically states as under:- a) as per the test report from M/s CN Lab Bengaluru, the said Switch product has been tested corresponding to the some of the test parameters (as mentioned in TEC ER No.TEC37942403), Mac Learning and Packet Forwarding, STP, MPLS TP Requirement, TDM PWE and Service Identification, Ethernet PWE and Service Identification etc. Based on the test results, lab has summarized their results as "... the device has been classified as a Layer-3 switch with limited capabilities. It does not support any feature to classify it as a carrier-grade MPLS-TP CEN Switch". 11. Despite this, the Report of the TEC goes on to hold that the impugned Switches may be considered a....
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.... by the CBIC, being Circular No.08/2023 dated 13th March 2023, the Tribunal has, in detail, referred to the aforesaid Circular at paragraph 9.4 of the impugned order. The Tribunal has in fact given a categorical finding that these instructions apply to imports made with effect from 1st April 2023, whereas the imports in the present case relate to the period November 2020 to February 2022. This apart, the Tribunal noted that even if the said Circular were to apply, the Switches in the present case do not fall within the exclusion as set out in the said Circular. For the sake of convenience the relevant portion of paragraph 9.4 of the impugned order is reproduced hereunder:- "9.4 .... First, we find that these instructions apply to imports made w.e.f. 01.04.2023, whereas the imports in the present case are relating to November, 2020 to February, 2022, and thus these instructions do not have any application on the present case. Even if we take into consideration the three specific products/equipment which are covered under the exclusion categories under CTI 85176290 described in the aforesaid circular at Annexure-2 for 'carrier ethernet switches' and other items, these are In....