Custom, Excise & Service Tax Tribunal
Commissioner Of Customs-Mumbai(Air ... vs Reliance Jio Infocomm Ltd on 22 June, 2022
1 C/88479,88483,88485,88487,88492/2018
C/87032 to 87039/2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH : MUMBAI
REGIONAL BENCH - COURT NO. I
Customs Appeal No. 88479 of 2018
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1014-1015-17-18 dated
08.02.2018 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
WITH
Customs Appeal No. 88483 of 2018
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1018-17-18 dated
08.02.2018 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 88485 of 2018
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1008-17-18 dated
08.02.2018 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 88487 of 2018
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1001-17-18 dated
08.02.2018 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
2 C/88479,88483,88485,88487,88492/2018
C/87032 to 87039/2019
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 88492 of 2018
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1001-1007-17-18 dated
08.02.2018 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87032 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1320-1328-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87033 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-308-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87034 of 2019
3 C/88479,88483,88485,88487,88492/2018
C/87032 to 87039/2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1312-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(ACC)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87035 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1311-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(ACC)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87036 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1313-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(ACC)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87037 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1310-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
4 C/88479,88483,88485,88487,88492/2018
C/87032 to 87039/2019
AND
Customs Appeal No. 87038 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1309-18-19 dated
29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(ACC)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
AND
Customs Appeal No. 87039 of 2019
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1314 & 1315-18-19
dated 29.03.2019 passed by the Commissioner of Customs (Appeals), Mumbai-III)
Commissioner of Customs-Mumbai ...Appellant
(Air Cargo Import)
Gr. VA, Air Cargo Complex, Sahar, Mumabi-400099.
Versus
Reliance Jio Infocomm Ltd. ....Respondent
Building no. 5-C, 1st Floor, Reliance Cooperate Park,
Ghansoli, Navi Mumbai-400 071.
Appearance:
Shri Ramesh Kumar, Authorized Representative for the Appellants
Shri J. C. Patel, Vipin Jain and Shilpa Balani, Advocates for the Respondents
CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER NO. A/85571-85583/2022
Date of Hearing: 14.03.2022
Date of Decision: 22.06.2022
Per: P. Anjani Kumar
These set of appeals are filed by the Revenue against the orders
passed by Commissioner of Customs (Appeals).
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2. Brief facts of the case are that M/s Reliance Jio Infocom Ltd., the
respondent herein has imported "Cards" (Populated Printed Circuit Boards)
OSLM-5-100G-WL3N for DWDM Equipment-Photonic Service Switch (PSS)
1830 imported by them and have classified the same under Customs Tariff
Sub-heading 8517 7010. The Department accessed the bills of entry
changing the classification to CTH 8517 62 90; the appellants preferred an
appeal before the Commissioner (Appeals); Commissioner (Appeals) vide
impugned orders has upheld the contention of the appellants and allowed
their appeals. Learned Commissioner (Appeals) has held as follows:-
(a) Information available from the product catalogue published by the
manufacturer supplier suggests that the impugned goods are parts
of Ciena's 5430 Packet Optical Switch (Platform) and therefore
shall be classifiable as parts under CTH 85177010 being PCB.
(b) In terms of Notification 57/2017 all goods falling under CTH 8517
are exempt from BCD unconditionally.
Revenue preferred these appeals against the impugned orders.
3. Shri Ramesh Kumar, Authorized Representative appearing for
Revenue reiterates the grounds of appeals and submits that the impugned
goods are various telecommunication devices used in optical communication
by transmitting digital signal/ messages in one or both directions over a
single transmission path on optical fibers; firstly, wavelengths of various
signals are changed and various such signals having different wavelengths
are mixed and loaded on a single optical fiber and transmitted for optimum
used of fiber i.e. single fiber used for transmitting various signals together;
at the receiving points, the signals are separated and wavelength are again
changed to the original and used in the recipient devices; in this whole
process, various devices such as "Transponder", "Muxponder", "Wavelength
Tracker" and "Amplifier" etc. and all these devices are placed on a switch
called Photonic Service Switch (PSS), which gives a platform to these
devices to perform the independent function assigned to these various
devices.
4. Learned Authorized Representative further submits that the
technology related to simultaneous transmission of two or more messages
in one or both directions over a single path, with separated signals is called
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Dense Wavelength Division Multiplexing (DWDM); he submits that some of
the imported items are as follows:-
(i) Optical Transponder or Card Transponder is a device which
convert the wavelength as needed so that it can be loaded on a
optical fiber without getting mixed with other signals on same
optical fiber. Also mentioned as TXP.
(ii) Optical Amplifier or Card Amplifier is a device which increase
the strength of the optical signal. A typical fiber cable has loss of
about 0.2dB per Km for 1.5 micro-meter light signal. Hence, the
signal occurs loss of about 20db, if it travels a distance of 100 km.
Therefore, the signal needs to be amplified in order to compensate
for the losses at the regular intervals by way of 'Optical Amplifier'.
(iii) In optical fiber communications, a Muxponder (MXP) is the
element that sends and receives the optical signal on a fiber in much
the same way as a transponder except that the Muxponder has the
additional functionality of multiplexing multiple sub-rate client
interfaces onto the line interface.
(iv) Other device are 'Optical Add-Drop Multiplexers' [ROADM-
Reconfigurable Optical Add-Drop Multiplexers]- The function of
dropping channels (i.e., rerouting channels from the main stream)
and adding channels (in the main stream) is a well-established
function in communication s systems and networks. In DWDM
systems, the main function of an optical adddrop multiplexer
(OADM) is to selectively remove a wave length from the fiber ( the
data content of which is rerouted to another fiber- the drop side),
pass the remaining wavelengths through the DWDM, and add the
same wavelength but with different data content (from the add fiber)
in the same direction.
5. Explaining on the basis of explanatory notes for HSN and relevant tariff
headings, learned Authorized Representative submits that part "E" of the
HSN heading 8517 explains that many automatic switch boards and
exchanges incorporate analogue to digital convertors, digital to analogue
convertors, data compression/ de-compression devices (CODECS), modems,
multiplexors, automatic data processing machines and other devices that
permit the simultaneous transmission of both analogue and digital signals
over the network, which enables the integrated transmission of speech,
other sounds, characters, graphics, images or other data; as per the above
modems, multiplexors being parts of switch boards are having a specific
function to perform in such switch boards (which is basically a platform)
even though they are categorically classified under sub-heading 8517 62 30
and 8517 62 70; he submits that the imported apparatus being parts of
Photonic Service Switch are to be classified under CTH 8517 62 90. Relying
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on path (G) of the HSN, he submits that all apparatus which allow the
connection to the communication network are the transmission or reception
within such network are to be classified under the sub-heading 8517 62 90;
all these apparatus are parts of a Public Switched Telephone Network or LAN
or MAN or WAN. He also submits that Network Interface Cards are covered
under the sub-heading 8517 62 90 and not under CTH 8517 70 10 which is
meant for parts-in specific-populated, loaded or stuffed printed circuit
boards; the sub-heading 8517 62 90 includes machines for, reception,
conversion, transmission, regeneration, switching apparatus, routing
apparatus.
6. Learned Authorized Representative further submits that Commissioner
(Appeals) erred in classifying the parts under CTH 8517 70 10 for the reason
that these Cards have part numbers mentioned on them and therefore they
cannot be called apparatus; even a small devices like keyboard, a mouse,
printer, monitor etc, have part numbers and further reason they cannot be
classified under Parts; as an example hard disk though functions along with
CPU, when imported its classified under 8523 and not under 8473 which is
meant for parts of data processing machine. He submits that appellants'
contention that they have imported PCBs is wrong; none of the documents
describe in imported good as populated, loaded or stuffed printed circuit
boards; the words "Cards" for Transponder/Muxponder were added in
brackets only to mislead the authorities.
7. Shri J. C. Patel, Shri Vipin Jain and Ms. Shilpa Balani appeared on
behalf of the appellants. Shri J. C. Patel learned Advocate submits that
Photonic Service Switch "1830" is Dense Wave Division Multiplexor (DWDM)
which combines optical signals of different wave lengths (colour)/ frequency
for being carried simultaneously over a single optical fiber; the switches are
used by the respondents in traffic originating locations for multiplexing the
signals; various parts i.e. transponder, muxponder, amplifier, route
channels, add-drop and wavelength tracker optical channel monitoring card
are "Populated Printed Circuit Boards" and are parts of DWDM equipment.
He submits that DWDM is covered by sub-headings 8517 62 70 which is
specifically mention "Multiplexors, Statistical multiplexor, Chargeable to nil
rate of duty; on the other hand populated, loaded printed circuit boards are
specifically covered as "Parts" under sub-heading 8517 70 10 of Customs
Tariff Act and are exempted under serial no. 13S of the notification no.
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24/2005-Cus dated 1.3.2005; Customs Tariff as well as the notification
issued clearly recognize "Populated, Loaded Printed Circuit Boards" as
"Parts" under sub-heading 8517 70 10; the respondent have been claiming
the same classification which was upheld by Commissioner (Appeals); the
order was accepted by the Revenue; however, since September-October
2018, Revenue has been again challenging the classification contending that
the said cards are " Machines for the reception, conversion and transmission
or regeneration of voice, images or other data, including switching and
routing apparatus" under Sub-heading 8517 62 90--- "others".
8. Learned Advocate for the respondents submits that the Department
did not dispute that the cards are "Populated Printed Circuit Boards" and the
fact that Photonic Service Switch is DWDM equipment and the Cards
imported are further equipment; the Department has not disputed the fact
that the catalogue of Photonic Service Switch (PSS) 1830 assigns specific
Parts Numbers to the Cards under "Parts List". He submits that populated
printed circuit boards are not by themselves complete "Machines" for
reception conversion and transmission are regeneration of voice, images are
other data, including switching and routing operators; the contention of
Department is incorrect as the goods falling under 8517 62 90 must be
Machines themselves; "Populated Printed Circuit Boards" imported with the
appellants are not complete Machine or apparatus in themselves but only
"Parts". He submits that it is pertinent to note that "populated, loaded or
stuffed" printed circuit board are covered under the single "-" entry 8517 70
for "Parts" which means that the statute recognizes the impugned goods are
part only and not complete machine of apparatus; other entries such as sub-
headings 8473 3030 9027 90 20 specifically referred to mounted printed
circuit boards and printed circuit assembly as part and not as machine or
apparatus; similarly the very fact that while Notification No.57/2017-Cus
dated 30.06.2017 mentions "Optical Transport Equipments" and "Optical
Transport Network (OTN) Products" under Sr. No.20, but separately
mentions "Printed Circuit Assembly (PCBA)" of Optical Transport Equipment"
and Optical Transport Network (OTN) Products," under Sr. No.22 as falling
under CTH 8517 7010, is again a statutory recognition of the fact that
"Printed Circuit Assembly (PCBA)" are not themselves complete Machine or
Equipment, but are only parts of machine or equipment.
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9. Learned Advocate further submits that impugned cards do not have
any independent function to receive, convert and transmit or regenerate
voice, images or other data; such functions are carried out by the machine
i.e. DWDM equipment; it has been held in appellants own case reported at
2019 (369) ELT 1713, that in the absence of any evidence produced by the
Department to establish that the goods in question are designed to function
independently as a machine, the same cannot on standalone basis be
considered as machine and have to be regarded as part only. He further
submits that as per HSN Explanatory notes under 84.79, if a device cannot
perform any function unless mounted on or incorporated in another
machine/ appliances/ entity and where such function is not distinct from the
function performed by such other machine/appliances/entity and is an
integral and inseparable part in the operation of such machine/
appliances/entity, then such device cannot be classified as a machine or
mechanical appliance but has to be classified as part of the said other
machine/appliances/entity; in the instant case, the Cards in question cannot
perform any function unless incorporated in the DWDM equipment viz.
Photonic Service Switch and their function is not independent or distinct
from that of the said DWDM equipment but is integral and inseparable part
of the said DWDM equipment. The Cards in question, therefore, cannot be
classified as a Machine or apparatus and have to be classified as Parts of the
said DWDM equipment. He submits that the issue is decided in the favour of
the respondents by the following judgments:-
(i) CC v Modicom Network P. Ltd.-2005 (185) ELT 333 upheld by the
Supreme Court in CC v Modicom Network P. Ltd.-2015 (320) ELT 21;
(ii) CC v N. I. System (India) P. Ltd.-2010 (256) ELT 173 (SC);
(iii) US Customs Ruling No. NY N027030 dated 29th May 2008 and No.
NY N027023 dated 28th May 2008;
(iv) Order-in-Appeal No. MUM-CUSTM-AMP-APP/003/17-18 dated
31.01.2018
10. Learned Advocate further submits that Department relies on HSN
notes under (G) other communication operator is misplaced; the other
communication operators referred in the notes are operators; the Other
Communication Apparatus referred to in the said HSN notes are apparatus
which allows for connection to a wired or wireless communication network or
the transmission or reception of speech or other sounds, images or other
data within such network. The apparatus referred to in these Notes are the
complete apparatus and not Populated Printed Circuit Boards of such
apparatus. The Cards imported in the present case are not comparable to
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Network Interface Cards referred to in the said HSN Notes, Network
Interface Cards are not PCBs of any Transmission or Reception apparatus of
Heading 851.17 and they are not parts of any Transmission and Reception
Apparatus of Heading 85.17 and instead are installed on a Computer of
Heading 84.71. Network Interface Cards cannot therefore be classified as
Parts under Heading 8517 70. Further, Network Interface Cards enable and
allow a Computer to connect to a Network and are therefore in themselves
Apparatus for transmission and reception of data between a Computer and a
Network. Such is not the case with the Cards in the present case, which are
incorporated in and are part of DWDM equipment. Therefore, the Cards of
DWDM equipment cannot be classified as Apparatus for transmission and
reception of data but are parts of DWDM equipment.
11. Learned Advocate further submits that the impugned goods are clearly
eligible for exemption under serial no. 13S of notification no.24/2005-Cus
dated 01.03.2005; the entry exempted all goods of heading 8517 70 10
except Printed Circuit Board Assembly (PCBA) of cellular mobile phones;
understandably, the impugned goods are not PCBA of cellular mobile phones
but are of DWDM equipment; the reference to notification no.11/2014-Cus
dated 11.07.2014 by the Department has no relevance. He submits that
India, as a signatory to the Information Technology Agreement dated
13.12.1996, entered into members states of WTO, is committed to exempt
printed circuit assembly of service from custom duty; he relies on Apex
Courts judgment in the case of G. M. Exports 2015 (324) ELT 209 (SC) held
that an interpretation of the statute, which is in conformity with
Government's commitment to international agreements; even if the
Department classification under CTH 8517 62 70, which is specific for
multiplexors, is accepted that tariff rate itself is nil; however, parts cannot
be classified under a specific sub-heading for multiplexors.
12. Heard both sides and perused the records of the case. Brief issue for
consideration before us is as to whether the goods imported by the
appellants merit classification under CTH 8517 62 70 as contended by the
Department or under CTH 8517 70 10 as claimed by the importer
respondent. Learned Counsel for the respondent submits that they have
been classifying the impugned goods under CTH 8517 70 10 and Learned
Commissioner (Appeal) vide order dated 31.01.2018 has accepted their
classification and the said order has been accepted by the Department.
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Though there is no res-judicator in matters of taxation, the assessment of
the impugned goods over the years would certainly have a reckoning. The
respondent claims that the impugned goods are parts of 1830 Photonic
Service Switch (PSS), the Department contends that the same are having
independent function and hence need to be classified along with the main
machine under CTH 8517 62 70. For a proper appreciation it will be useful to
have a look at the relevant headings of the Customs Tariff. Relevant
headings are as follows:-
After 1-1-2007 :
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
local or wide area network), other than
transmission or reception apparatus of
heading 8443, 8525, 8527 or 8528
- Telephone sets, including telephones
for cellular networks or for other
wireless networks:
- Other apparatus for transmission or u Free
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 -- Base stations u Free -
00
8517 62 -- Machines for the reception, conversion u Free
and transmission or regeneration of
voice, images or other data, including
switching and routing apparatus :
8517 62 --- PLCC equipment u Free -
10
8517 62 --- Voice frequency telegraphy u Free -
20
8517 62 --- Modems (modulators-demodulators) u Free -
30
8517 62 --- High bit rate digital subscriber line u Free -
40 system (HDSL)
8517 62 --- Digital loop carrier system (DLC) u Free -
50
8517 62 --- Synchronous digital hierarchy system u Free -
60 (SDH)
8517 62 --- Multiplexers, statistical multiplexers u Free -
70
8517 70 - Parts : u Free -
8517 70 -- Populated, loaded or stuffed printed Kg Free -
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10 circuit boards
8517 70 -- Other kg Free -
90
13. From the above, it is clear that the instruments/telephone sets for
cellular networks/wireless networks, apparatus both for transmission and
reception of voice, images or other data in a wired or wireless network, and
"Parts" classified under the said heading broadly placed under three
categories of single dash (-). First single (-), for telephone sets, including
telephones for cellular network or for other wireless network; second single
dash (-), for other apparatus for transmission or reception of voice, images,
or other data including apparatus for communication in wired or wireless
network (such as local or wide area network); and the third single dash (-)
for "Parts". We find that in respect of appeal number C/85235/2021, learned
Commissioner (Appeals) finds that now coming to the item imported by the
appellant i.e. OSLM-5-100G-WL3N: CARD, I find that the technical
information provided in the leaflet of the supplier M/s Ciena
Communications, USA, suggest that it is a part of Ciena's 5430 Packet-
Optical Platform and is a five port Wavelogic-3 nano OTN services line
module. It provides a physical platform and electrical interconnection for five
line side. Accordingly, the impugned goods will be classified as parts of
Packet Optical Switch under heading 85177010 being PCB. The function of a
module has been considered by the Tribunal in the case of Modicom Network
Pvt. Ltd. 2005 (185) ELT 333 (Tri-Bang) and held that
Para 6.......... We find that the Main Switching Center consists of various
modules in the form of PCBs. Each module will have its own function. The
modules are all of standard format. There is a face plate on the front of
each module with display elements, with controls and access to front
connectors. The PCBs of the modules are of multi layer design and the
components with which they are equipped are mainly surface mounted
devices. The Main Switching Center is a machine with the provision for
expansion. The modules are inserted as essential parts to attain a
particular capacity. The modules on their own do not have any
independent function and they cannot be dis-assembled further. Even
though the numbers of modules are variable depending on capacity, each
module remains as a part of the main machine, i.e. Main Switching Center.
In view of the above, the Original Authority's finding that the modules
cannot be considered as apparatus is correct. Hence there is no infirmity
in the Order-in-Appeal confirming the Original order..............
14. Respondents in the case herein have imported various "CARDS"
(Populated Printed Circuit Boards) for DWDM equipment- Photonic Service
Switch (PSS) 1830. Respondent submits technical literature pertaining to
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PSS 1830. Product information and planning guide for 1830 photonic service
switch (PSS) relies 9.1 for 8DG-63269-JBAA-TQZZA issue 1 dated 17
February 2017 published by Nokia lists the Muxponder/Transponder as
parts as below:-
15. We also find that the respondents have produced a photocopy of
picture of 1830 PSS 32 shelf as follows and explained that the different
populated circuit boards or parts of the PSS are inserted in the slots
designated for the same. Picture of the PSS is as follows:-
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16. Going by the above product literature terms of the headings of the
Customs Tariff, description of the product given in the respective bills of
entry and the ratio of the judgment in the case of Modicom (supra), we find
that the impugned goods cannot be held to have independent function
themselves. We have seen the product demonstrated to us by the
respondent during the course of hearing and find them to be Populated
Circuit Boards. Learned Authorized Representative for the Department
submits that the respondents have mentioned in the bills of entry that the
impugned goods are PCBs; however, the same was mentioned after the part
numbers within brackets to mislead the assessing officer. We do not find
there is any merit in the submissions. When the importers have been
importing for quite considerable period, it was free to Department to get the
samples tested by specialized agencies or institutions. This having not been
done, Department cannot simply rely on arguments advanced. Technical
literature made available and description of the impugned goods in various
imports documents and the findings of the impugned orders cannot be
brushed aside. We find that the Department has not put forth any evidence
to substantiate their contention. Therefore, in our considered opinion the
impugned goods cannot function as independent machine/equipment.
Therefore, we have no hesitation whatsoever holding the same to be the
parts of Photonic Service Switch (PSS) 1830.
17. We also find that Revenue submits that on the basis of Explanatory
notes to the HSN the items are complete machines or equipments
classifiable under CTH 85176270. The Department submits alluding to the
HSN that as per explanation (G) the equipment referred to therein allowed
for connection to a wired or wireless communication network or the
transmission or reception of speech or other sound, images or other data
within such networks. A look at this explanatory notes shows us the
following.
"85.17- 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, including telephones for cellular networks or for other
wireless networks:
8517.11 - - Line telephone sets with cordless handsets
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8517.12 - - Telephones for cellular networks or for other wireless networks
8517.18
--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 - - Base stations
8517.62 - - Machines for the reception, conversion and transmission or
regeneration of voice, images or other data, including
switching and routing apparatus
8517.69 - - Other
8517.70 - Parts
This heading covers apparatus for the transmission or reception of speech or
other sounds, images or
other data between two points by variation of an electric current or optical
wave flowing in a wired
network or by electro-magnetic waves in a wireless network. The signal may
be analogue or digital. The networks, which may be interconnected, include
telephony, telegraphy, radio-telephony, radiotelegraphy, local and wide area
networks.
.....
(E) Telephonic or Telegraphic Switching Apparatus.
(1) Automatic switchboards and exchanges.
These are of many types. The key feature of a switching system is the ability to provide, in response to coded signals, an automatic connection between users. Automatic switchboards and exchanges may operate by means of circuit switching, message switching or packet switching which utilize microprocessors to connect users by electronic means. Many automatic switchboards and exchanges incorporate analogue to digital converters, digital to analogue converters, data compression/decompression devices (codecs), modems, multiplexors, automatic data processing machines and other devices that permit the simultaneous transmission of both analogue and digital signals over the network, which enables the integrated transmission of speech, other sounds, characters, graphics, images or other data.
.....
(F) Transmitting and receiving apparatus for radio-telephony and radio- telegraphy.
This group includes:
(1) Fixed apparatus for radio-telephony and radio-telegraphy (transmitters, receivers and transmitter-receivers). Certain types, used mainly in large installations, include special devices such as secrecy devices (e.g., spectrum inverters), multiplex devices (used for sending more than two messages simultaneously) and certain receivers, termed "diversity receivers", using multiple receiver technique to overcome Fading. (2) Radio transmitters and radio receivers for simultaneous interpretation at multilingual Conferences.
(3) Automatic transmitters and special receivers for distress signals from ships, aircraft, etc. (4) Transmitters, receivers or transmitter/receivers of telemetric signals. (5) Radio-telephony apparatus, including radio-telephony receivers, for motor vehicles, ships^ aircraft, trains, etc. (6) Portable receivers, usually battery operated, for example, portable receivers for calling, alerting or paging.
(G) Other communication apparatus.
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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) 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.
PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Noteto Section XVI), parts of the apparatus, of this heading are also classified here."
12. Corresponding Customs Tariff entries for 8517 are read as under
" - 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 andtransmission
or regeneration of voice,images or other data, including switchingand routing apparatus:
8517 62 10 --- PLCC equipment 8517 62 20 --- Voice frequency telegraphy 8517 62 30 --- Modems (modulators-demodulators) 8517 62 40 --- High bit rate digital subscriber line system (HDSL) 8517 62 50 --- Digital loop carrier system(DLC) 8517 62 60 --- Synchronous digital hierarchy system(SDH) 8517 62 70 --- Multiplexers, statistical multiplexers 8517 62 90 --- Other ....
...."
18. On going through the relevant HSN notes, we find that the apparatus or equipments referred in the notes are complete apparatus and not Populated Printed Circuit Boards of such apparatus. As submitted by the respondent the Network Interface Cards referred to in the notes are not PCB of any transmission or reception apparatus of heading 8517. Network Interface Cards connect the computers to the internet and therefore can be considered to have independent function. Going by the product literature 17 C/88479,88483,88485,88487,88492/2018 C/87032 to 87039/2019 and our discussions as above, we find that the impugned cards are incorporated in and or parts of DWDM equipments.
19. We find that this Bench has gone into the issue of classification of parts or equipment while dealing with the classification of antennas imported by the very same respondent case. This Bench observed that Now, a simple analysis of Heading 8517 effective from 1-1-2007, it is clear that the instruments/telephone sets for cellular networks/wireless net works, apparatus both for transmission and reception of voice, images or other data in a wired or wireless network, and "parts" classified under the said heading broadly placed under three categories of single dash (-). First single dash (-) for telephone sets, including telephones for cellular network or for other wireless network; second single dash (-) for 'other apparatus for transmission or reception of voice, images, or other data including apparatus for communication in wired or wireless network (such as local or wide area network); and the third single dash (-), for "parts". The 'base station' is classified under the second category under CSH 8517 61 00, to which neither side disputes.
42. Revenue, referring to the definition of 'machine' prescribed under Note 5 of Section XVI classified the 'antenna' for base station under second category, as 'machines' for reception, conversion and transmission or regeneration of voice, images or other data including switching and routing apparatus. The Revenue's argument is based on the clarification issued by the Board on 1-1-2018 that antenna is an essential device of a wireless communication system; the information can travel only in the electromagnetic wave form. The antenna radiates the information in the form of electromagnetic wave in an efficient and desired manner to the base station, where the information is picked up by the receiving antenna and passed on to the receiver via transmission line. The signal is demodulated and the original message is then recovered at the receiver. Thus, the wireless communication gets established. It is the contention of the department that since the antenna can generate electromagnetic wave from current and voltages and which can convert electromagnetic wave to current and voltages with these waves impinge on it, therefore, it can be considered as a machine, which independently receives and transmits electromagnetic waves.
43. The respondent's contention, on the other hand, is that the antenna is a passive element. It cannot function on its own unless connected to the base station, Therefore, the same does not fall within the scope and meaning of 'machine' prescribed at Note 5 under Section XVI.
44. In support of their contention that the antenna imported for base station is a passive element, the respondent placed on record the opinion of Vinod Gandhi & Associates, Government registered Chartered Engineer. Also, they have placed a letter dated 12-11-2018 issued by the manufacturer of antenna i.e. M/s Ace Technology, Korea i.e. antenna supplied by them are passive part of base station i.e. e Node B (Sic). It is clarified that the antenna on its own is not capable of performing any function and when connected, it only transmits and receives only the signals. It is further stated that the antenna is not performing in any other functions like conversion or regeneration of voice, images or other data signals or switching and/or routing of signals. No technical literature has been placed by the Revenue in support of their contention that the imported antenna for base stations are designed to function independently as a machine, contrary to the claim of the Respondent that these are passive elements and can function only 18 C/88479,88483,88485,88487,88492/2018 C/87032 to 87039/2019 when attached to the base station for receiving and sending signals. The Revenue has placed the general information available on net about the multi fold use of e node antenna in 4G & 5G network in the developed wireless cellular technology. Comparing the data placed on the imported goods, we find merit in the contention of the Learned Advocate for the appellant that to be antenna as machine, it needs to be something more than a passive element of receiving and sending electromagnetic waves when attached to a base station. The meaning of 'machine' provided under Note 5 to Section XVI reads as :
"5. For the purposes of these Notes, the expression "machine" means any machine, machinery, plant, equipment, apparatus or appliance in the headings of Chapter 84 or 85."
The meaning of 'machine' has to be understood in the context of Heading 8517. This is clear when we read the scope of Heading 8517 as explained under HSN which reads as follows :-
"This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks."
45. In the present case, the manufacturer of antenna as well as the chartered engineer's certificate, in clear terms clarified that the antenna in question transmits and receives only signals and not performing any other function like conversion or regeneration of voice, images or other data signals and switching/routing of signals. Therefore, the antenna stand alone cannot be considered as a 'machine', attracting classification under Heading 8517.62. Consequently, the observation of the department in the circular dated 15-1-2018 that the Antenna itself is a complete device and has capability of functioning on its own of conversion of electrical signals into electromagnetic waves and vice versa in a wireless communication system cannot be applied to the present goods as it would be complete only when connected to a base station. In the event if the antenna so designed, instead of working as a passive element, besides the above function, it also performs some more functions as in the case of other entries under the same category, its classification under sub-heading 8517 62 may be attracted considering the same as an independent of 'machine'.
46. The Revenue's contention to classify the 'antenna' for base station under sub-heading 8517 62 rests on the ground that as per Note 2(a) of Section XVI, parts which in themselves constitute an article covered by a heading of this section, in all cases are to be classified in their own appropriate heading even if specially designed to work as part of a specific machine. Further it is contended that Antenna is a part of a machine classifiable under Heading 8517, only in the situation when it is not covered by any other headings of the section. As per department, since it is classifiable under 8517 62, hence, not to be considered under sub-heading8517 70 as 'parts'. The said Chapter note reads as follows :
"2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules :
(a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538, and 8548) are in all cases to be classified in their respective headings;
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(b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;
(c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548."
47. A simple analysis of Clause (a) of the above Note reveals that parts which are 'goods' required to be classified in the respective headings; in the present case, 'Antenna' being a part of the BTS, hence applying the said Rule, classifiable under Chapter Heading 8517. Revenue's interpretation of the said clause (a) in the present case is that in the event if the goods are not falling under any of the sub-heading of Heading 8517, then only it will be classifiable as 'parts', is incorrect. Clause (b) of the said Note 2 indicates that "other parts", by implication which are not goods, if suitable for use solely or principally with a particular kind of machine of the same heading are to be classified with the machines of that kind or the headings mentioned under the said clause (b) as appropriate. Further, it is mentioned that parts which are equally suitable for use principally with the goods of Heading 85.17 and Headings of 8517 and 8525 to 8528 are to be classified as Headings of 8517. Therefore, antenna since parts of BTS, as held by Hon'ble Supreme Court in Hutchison Essar South Ltd.'s case (supra), therefore, be classified as "parts" under Tariff Item 8517.7090.
20. We also find that Hon'ble Apex Courts has dealt the issue of classification of parts in the case of N.I. Systems India P. Ltd. - 2010 (256) ELT 173 (SC) and held as under:-
"28. For the reason given hereinafter, we hold on the basis of technical material (including the importer's own catalogue and webcast) that Controllers (including embedded controllers) are not merely PCs/ADPMs, but have a specialized structure and specific functions to perform and are therefore classifiable under Chapter 90.
29. Similarly, I.O. Modules and Chassis, which are the subject matter of import in this civil appeal are meant to operate as parts of industrial Process Control equipments like sensors. These I.O. Modules come with software tailored to their specific pre-defined functions. Therefore, one has to see the package in the holistic manner. The package as a whole- both hardware and software- constitutes one single functional unit. Accordingly, we hold that I.O. Modules and Chassis are classified as parts and accessories of Automatic Regulating or Controlling Instrument/Apparatus under CTH 9032.90.00."
20. In view of the above, we find that the Department could not support their contention. No technical literature was submitted; in spite of the fact that the imports have been taking place over a period of time. Learned Commissioner (Appeals) has been upholding the contention of the 20 C/88479,88483,88485,88487,88492/2018 C/87032 to 87039/2019 appellants. In one instance Revenue has accepted the order of Commissioner (Appeals). We find that the Department has not drawn any samples and did not obtain technical opinion to support their claim that the impugned goods are complete machines or equipment capable of independent function themselves so as to merit classification under CTH 85176270. On the contrary, the respondents could demonstrate by technical literature; samples and the ratio of judgments cited above that the goods imported by them are Populated Circuit Boards (PCBs) used in PSS 1830 and therefore, the impugned goods are parts of PSS and as such merit classification CTH 85177010. We also find that the appellants have submitted US Customs Rulings on the classification of the impugned goods, though they are not binding on us, they would certainly have a persuasive effect more so in the absence of any evidence to the contrary. In view of the discussion as above, and considering the fact that Commissioner (Appeals) has been consistent in rejecting the department's claim, we are of the considered opinion that there is no merit in the appeals filed by the Department.
21. In the result, we uphold the impugned orders and reject the appeals filed by the Department.
(Pronounced in open court on 22.06.2022) (S.K. Mohanty) Member (Judicial) (P. Anjani Kumar) Member (Technical) Sinha/ys