Custom, Excise & Service Tax Tribunal
Commissioner Of Customs (Import), Air ... vs M/S Indelox Services Pvt. Ltd on 9 August, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO. II
Appeal No. C/87650/13
C/CO/91152/14
(Arising out of Order-in-Appeal No. 149/Mumbai-III/2013 dated 26.3.2014 passed by the Commissioner of Customs (Appeals), Mumbai-III ).
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Commissioner of Customs (Import), Air Cargo Complex, Mumbai Appellant Vs. M/s Indelox Services Pvt. Ltd. Respondent Appearance: Shri S.J. Sahoo, AC (AR) for Appellant Shri Dinesh K Agarwal, C.A. for Respondent CORAM: SHRI RAMESH NAIR, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 09.08.2016 Date of Decision: 26.10.2016 ORDER NO. Per: Ramesh Nair
This is an appeal filed by the Revenue against the order of the Commissioner (Appeals) whereby the learned Commissioner (Appeals) held the imported goods namely, Network Security Device is classifiable under CTH 8517 as against the Departments claim under CTH 8543.
2. Shri S.J. Sahoo, learned AC (AR) appearing on behalf of the Revenue reiterates the grounds of appeal and submits that the imported goods of the respondent is a security device and it is not used for communication, therefore, it is correctly classifiable under CTH 8543 and not under CTH 8517.
3. Shri Dinesh Kumar Agarwal, learned C.A. appearing on behalf of the respondent submits that the product imported by them is named as McAfee Web Gateway WBG-5500 Appliance. This is used between the two servers for communication by NETWORK, which has additional feature of security. He submits that it is used as router for communication of the data, therefore, even though it has security feature, it is undoubtedly used as a communication device. Therefore, it is correctly classifiable under CTH 8517 and not under 8543. He referred to the HSN of Chapter 8517, wherein under clause (g) there is other communication apparatus which includes the impugned goods. He submits that the goods is a router which is specifically provided under clause (g) of Chapter 8517. He submits that in their own case the clearance of same goods have been allowed under CTH 8517. He enclosed certain sample Bills of Entries which show that goods have been allowed to be cleared under CTH 8517. He also referred to some ruling of the foreign countries where the identical goods have been classified under CTH 8517. He also referred to the details of European Commission on Taxation and Customs, wherein it was clarified that the identical product with enhanced security is under heading 8517. Alternatively, he submits that if at all the goods is not classifiable under CTH 8517, it can be classified under CTH 8471 as it has feature of data processing also, but in any case, it is not classifiable under CTH 8543 as the entry of 8543 is residuary entry.
4. We have carefully considered the submissions made by both sides. We find that the learned Commissioner (Appeals) has classified the impugned goods under CTH 8517 on the following findings: -
5. Considered the submissions. The appellant is aggrieved by the classification of the impugned goods under CTH 8543 instead of CTH 8517 as claimed by them. As per the installation manual (page 9) the goods "McAfee Web Gateway ensures comprehensive security for networks. It protects networks against threats arising from the webs, such as viruses and other malware, inappropriate content, data leaks, and related issues. This appliance is installed as a gateway that connects a network to the web. Following the web security rules, it filters the requests that users send to the web from within the network. Responses sent back from the web and embedded objects sent with requests or responses are also filtered. Malicious and inappropriate content is blocked, while useful content is allowed to pass through." Therefore impugned goods act as a security device in a network and it protects the network from external malicious threats. It is not the case of the department that the impugned goods can function on its own without being connected to any network. Therefore the impugned goods are specially designed with a special purpose for use in a network and it cannot be for general use. Further Rule 3 of the Classification rules states that the most specific description shall be preferred to headings providing a more general description. CTH 8517 covers goods such 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 84.43, 85.25, 85.27 or 85.28. Whereas the explanatory notes to the HSN 2012 of Chapter 8517 reads as "(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 con figured, 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:
( I ) 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."
Therefore when network interface is covered under the CTH 8517, the machine comprising of similar cards is also covered under CTH 8517. The impugned goods being an interface between the web and network is rightly classifiable under 8517. Also in the matter of Commissioner of Customs, Bangalore Vs. Cisco Systems (India) Pvt. Ltd. 2007 (210) ELT 674 (Tri-Bang), I find that the classification of the network security device stands decided by the Honble Tribunal under CTH 8517. In the impugned goods being of similar nature are classifiable under CTH 8517. As far as past clearance of similar goods is concerned no demand notice seems to have issued by the department, till date. From the above finding, it is observed that the learned Commissioner (Appeals) has contended that the product in question is covered under the Network Interface Card, therefore, it was classifiable under CTH 8517.
5. On the submissions of the learned Counsel, based on various authorities, we find that the product is a Gateway Security Device. It has the function of transmitting the data through Network from one server to other and it has function of security for the data transmitted. Since the product has feature of transmission of data, it merits classification under the communication apparatus i.e. under CTH 8517. Heading 8543 proposed by the Revenue is a residuary entry. Since as per the application and function of the product, it is used for communication and transmission of the data. It finds place under the specific entry i.e. under 8517. Therefore, it cannot be classified under residuary entry, which is meant for a product not elsewhere specified. As per the finding of the learned Commissioner (Appeals) and our above discussion, we are of the view that subject goods is correctly classifiable under CTH 8517 and not under CTH 8543. Therefore, the impugned order is upheld. The appeal is dismissed. The Cross-Objection filed by the respondent also stands disposed of.
(Pronounced in Court on 26.10.2016)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
Sinha
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Appeal No. C/87650/13