Custom, Excise & Service Tax Tribunal
Reliance Jio Infocomm Limited vs Commissioner Of Customs-Cc Air Cargo Ch ... on 18 February, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH WEST ZONAL BENCH, CHENNAI
REGIONAL BENCH - COURT NO. 03
Customs Appeal No. 41734 of 2019
[Arising out of OIO No. 434/2019-AIR dated 31.07.2019 passed by Commissioner of
CUSTOMS-Chennai VII]
RELIANCE JIO INFOCOMM LTD. .....Appellant
Door No. 77, Poochi Athiputtu Village
Uthukotai Taluk, Tiruvallur District
Chennai - 620018
VERSUS
Commissioner of Customs (Air Cargo) .....Respondent
New Custom House,
GujarMeenambakkam
Chennai - 600027
APPEARANCE:
Shri Vipin Jain, Advocate for the Appellant
Shri. R. Rajaram, Assistant Commissioner (AR) for the Respondent
CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR
HON'BLE MEMBER (TECHNICAL), MR. P. ANJANI KUMAR
FINAL ORDER NO.40074 /2022
DATE OF HEARING: 22.10.2021
DATE OF DECISION: 18.02.2022
RAMESH NAIR
The issue involved the present case is that whether the Antenna for
base station imported by the appellant is classifiable as parts of base station
under CTH 85177090 as claimed by the appellant or as machine/equipment
for the reception, transmission and conversion of data under CTH 85176290
as claimed by the Revenue.
2. Shri Vipin Jain, learned Counsel appearing on behalf of the appellant
at the outset submits that this very issue in the appellant's own case has
been considered by this tribunal at Mumbai Bench reported at
COMMISSIONER OF CUSTOM (IMPORT), MUMBAI VS. RELIANCE JIO
INFOCOMM LTD - 2019(369) ELT 1713 (Tri.- Mumbai) wherein the
classification of antenna used for base transmission station for mobile
connection network has been held as parts for base station under custom
2|Page Customs Appeal No. 41734 of 2019
tariff item 85177090 of Custom Tariff Act 1975. Therefore, the issue is no
longer under dispute and decided in favour of the appellant.
3. Shri R. Rajaram, learned Assistant Commissioner (Authorized
Representative) appearing on behalf of the revenue reiterates finding in the
impugned order.
4. We have carefully considered the submission made by both the sides
and perused the records. We find that the limited issue to be considered by
us in this appeal is that whether the antenna imported by the appellant is a
parts of base station and classifiable under 85177090 or as a complete
machine for reception, transmission or conversion of data under
CTH85176290. We find that the very same issue in the appellant's own case
has been decided by this tribunal's Mumbai Bench as cited above wherein
the tribunal has passed the following order:
34. It is contended that Ld. Commissioner (Appeals) has failed to
observe the principles of natural justice, inasmuch of as, the
Department was not provided with adequate opportunities to present
their case. Countering the said plea, the respondent on the other hand
has submitted that a copy of the appeal has been endorsed to the
department by the Learned Commissioner (Appeals); no written
submission was filed by the department in response to the said appeal,
nor any request for a personal hearing or adjournment of the hearing
scheduled had been advanced. Besides, it is also argued that the
relevant provision under the Customs Act and the Rules made
thereunder mandates to extend personal hearing to the appellants and
not to the respondents, and the argument of at least three
adjournments of the personal hearing prescribed under the Act is only
the upper cap and depends on the circumstances of each case, and not
adjourning the matter invariably for three times in all cases will not
result into violation of the principles of natural justice.
35. We find merits in the contention of the Ld. Advocate for the
respondent. It is a normal practice before the Commissioner (Appeals)
that the personal hearing is extended to the appellant-assessee when
an appeal is filed by the assessee, the department is served with copy
of the Appeal to submit their reply to the appeal and in the event they
intend to be heard, such request is made accordingly in filing their
written submission to the appeal. Majority of cases where appeals are
3|Page Customs Appeal No. 41734 of 2019
filed by the assessee, the appeals are disposed of by the
Commissioner (Appeals) after hearing the assessee after due notice to
the department. In the present case, nothing has been brought on
record to show that the Commissioner (Appeals) has deviated from the
normal practice or rejected the request of adjournment of the
department and proceeded by disposing the appeal after hearing the
appellant in a biased manner without putting the department on notice
about filing of the appeal. Thus, in these circumstances, in our view,
there is no violation of principles of natural justice in disposing the
appeal by the Learned Commissioner (Appeals) by not adjourning the
hearing suo motu for three times without any request for adjournment
from the department in this regard.
36. The second preliminary objection raised by the Revenue is that
since the duty has been paid under protest, the assessment is not
final, therefore appeal against the assessment Order cannot lie before
the Commissioner (Appeals). We do not find merit in the said
contention of the Revenue inasmuch as that payment of the disputed
amount before or after assessment of the respective bill of entry either
under protest or otherwise will not make the assessment
provisional/incomplete and not an appealable Order. On the contrary,
in view of the principle of law laid down by the Hon'ble Bombay High
Court in Karan Associate's case (supra), an assessed Bill of Entry is an
appealable order.
37. Now, coming to the merits of the case, it is not in dispute that
the imported Antenna was meant to be used with the base station for
mobile telecommunication network. It is also not in dispute that the
antenna for base station, imported by the respondent earlier, that is
prior to May, 2017 had been subjected to classification as "parts"
under Heading 8517 70 90, and such assessment was never
challenged by the Revenue.
38. The dispute now centres around the issue, whether the antenna
for base station would be considered as a 'machine' and accordingly
classifiable under CSH 8517 62 90 as claimed by the Revenue or as
"parts" classifiable under CSH 8517 70 90, claimed by the respondent.
39. Therefore, to understand the scope of the competing entry 8517
62 90 & 8517 70 90 and its applicability to the imported goods in
question, it is necessary to have a glimpse on the development
(changes) brought into the said Tariff Heading 8517 and related tariff
entries 8525, 8527 & 8529 of CTA 1975.
Before 1-1-2007 :
8517 Electrical apparatus for line
telephony or line telegraphy,
including line telephone sets with
cordless handsets and
telecommunication apparatus for
carrier-current line systems or for
digital line systems; videophones
- Telephone sets; videophones:
851711 --
85171110 --- Push button type u Free -
85171190 --- Other u Free -
4|Page Customs Appeal No. 41734 of 2019
851719 -- Other u Free -
--- Telephone sets: u Free -
85171911 ---- Push button type u Free -
85171912 ---- Rotary dial type u Free -
85171919 ---- Other u Free -
85171920 --- Videophones u Free -
- Facsimile machines and teleprinters: u Free -
85172100 -- Facsimile machines u Free -
85172200 -- Teleprinters u Free -
85173000 - Telephonic or telegraphic switching u Free -
apparatus
851750 - Other apparatus, for carrier-current u Free -
line systems or for digital line
systems:
85175010 -- PLCC equipment u Free -
85175020 -- Voice frequency telegraphy u Free -
85175030 -- Modems (modulators-demodulators) u Free -
85175040 -- High bit rate digital subscriber line u Free -
system (HDSL)
85175050 -- Digital loop carrier system (DLC) u Free -
85175060 -- Synchronous digital hierarchy system u Free -
(SDH)
85175070 -- Multiplexer, statistical multiplexer u Free -
--- Other: u Free -
85175091 ---- ISDN terminals u Free -
85175092 ---- ISDN terminal adapters u Free -
85175093 ---- Routers u Free -
85175094 ---- X25 pads u Free -
85175099 ---- Other u Free -
8517 80 - Other apparatus: u Free -
85178010 --- Attachments for telephones. u Free -
85178020 --- Subscriber end equipment u Free -
85178030 --- Set top boxes for gaining access to u Free -
the Internet
85178090 --- Other u Free -
8517 90 - Parts: u Free -
85179010 --- Populated, loaded or stuffed printed kg Free -
circuit boards
85179090 --- Other kg Free -
8525 Transmission apparatus for radio-
telephony, radiotelegraphy, radio-
broadcasting or television, whether
or not incorporating reception
apparatus or sound recording or
reproducing apparatus; television
cameras; still image video cameras
and other video camera recorders;
digital cameras
852510 - Transmission apparatus: u 12.5% -
85251010 --- Radio broadcast transmitter u 12.5% -
85251020 --- TV broadcast transmitter u 12.5% -
85251030 --- Broadcast equipment sub-system u 12.5% -
85251040 --- Communication jamming equipment u 12.5% -
85251050 --- Wireless microphone u 12.5% -
85251090 --- Other u 12.5% -
852520 - Transmission apparatus u 12.5% -
5|Page Customs Appeal No. 41734 of 2019
incorporating reception apparatus:
--- Two way radio communication u Free -
equipment :
85252011 ---- Walkie Talkie set u Free -
85252012 ---- Cordless handset u Free -
85252013 ---- Car telephone u Free -
85252014 ---- Transportable telephone u Free -
85252015 ---- Marine radio communication u Free -
equipment
85252016 ---- Amateur radio equipment u Free -
85252017 ---- Cellular telephone u Free -
85252018 ---- Other u Free -
85252019 --- Other: u Free -
85252091 ---- VSAT terminals u Free -
85252092 ---- Other satellite communication u Free -
equipment
85252099 ---- Other u Free -
85253000 - Television cameras u 12.5% -
-
85254000 Still image video cameras and other u 12.5% video camera recorders; digital cameras 8527 Reception apparatus for radiotelephony, radio-telegraphy or radio-broadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock
- Radio-broadcast receivers capable of operating without an external source of power, including apparatus capable of receiving also radio-telephony or radio-telegraphy:
85271200 -- Pocket-size radio cassette-players u 12.5% - 85271300 -- Other apparatus combined with sound u 12.5% recording or reproducing apparatus 85271900 -- Other u 12.5% -
- Radio-broadcast receivers not capable u 12.5% -
of operating without an external source of power, of a kind used in motor vehicles, including apparatus capable of receiving also radio- telephony or radio-telegraphy:
85272100 -- Combined with sound recording or u 12.5% -
reproducing apparatus
85272900 -- Other u 12.5% -
- Other radio-broadcast receivers, u 12.5% -
including apparatus capable of
receiving also radio-telephony or
radio-telegraphy:
85273100 -- Combined with sound recording or u 12.5% -
reproducing apparatus
85273200 -- Not combined with sound recording or u 12.5%
reproducing apparatus but combined with a clock 85273900 -- Other u 12.5% -
852790 - Other apparatus: u 12.5% -
--- Radio communication receivers: u 12.5% -
6|Page Customs Appeal No. 41734 of 2019
85279011 ---- Radio pagers u 12.5% -
85279012 ---- Demodulators u 12.5% -
85279019 ---- Other u 12.5% -
85279090 --- Other u 12.5% -
8529 Parts suitable for use solely or
principally with the apparatus of
headings 8525 to 8528
8529 10 - Aerials and aerial reflectors of all Kg 12.5% -
kinds; parts suitable for use
therewith:
--- Dish antenna: Kg 12.5% -
85291011 ---- For communication jamming Kg 12.5% -
equipment
85291012 ---- For amateur radio communication Kg 12.5% -
equipment
85291019 ---- Other Kg 12.5% -
--- Other aerials or antenna: Kg 12.5% -
85291021 ---- For communication jamming Kg 12.5% -
equipment
85291022 ---- For amateur radio communication Kg 12.5% -
equipment
85291029 ---- Other Kg 12.5% -
--- Other: Kg 12.5% -
85291091 ---- For communication jamming Kg 12.5% -
equipment
85291092 ---- For amateur radio communication Kg 12.5% -
equipment
85291099 ---- Other Kg 12.5% -
8529 90 - Other: Kg 12.5% -
85299010 --- For communication jamming Kg 12.5% -
equipment
85299020 --- For amateur radio communication Kg 12.5% -
equipment
85299090 --- Other Kg 12.5% -
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:
8517 11 -- Line telephone sets with cordless u Free -
handsets:
85171110 --- Push button type u Free -
85171190 --- Other u Free -
8517 12 -- Telephones for cellular networks or u Free -
7|Page Customs Appeal No. 41734 of 2019
for other wireless networks:
85171210 --- Push button type u Free -
85171290 --- Other u Free -
8517 18 - Other: u Free -
85171810 --- Push button type u Free -
85171890 --- Other u Free -
- 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) :
85176100 -- Base stations u Free -
8517 62 -- Machines for the reception, u Free
conversion and transmission or
regeneration of voice, images or
other data, including switching and routing apparatus :
85176210 --- PLCC equipment u Free -
85176220 --- Voice frequency telegraphy u Free -
85176230 --- Modems (modulators-demodulators) u Free -
85176240 --- High bit rate digital subscriber line u Free -
system (HDSL)
85176250 --- Digital loop carrier system (DLC) u Free -
85176260 --- Synchronous digital hierarchy u Free -
system (SDH)
85176270 --- Multiplexers, statistical multiplexers u Free -
85176290 --- Other u Free -
8517 69 --- Other : u Free -
85176910 --- ISDN System u Free -
85176920 --- ISDN terminal adapter u Free -
85176930 --- Routers u Free -
85176940 --- X 25 Pads u Free -
85176950 --- Subscriber end equipment u Free -
85176960 --- Set top boxes for gaining access to u Free -
internet
85176970 --- Attachments for telephones u Free -
85176990 --- Other u Free -
851770 - Parts : u Free -
85177010 -- Populated, loaded or stuffed printed Kg Free -
circuit boards
85177090 -- Other kg Free -
40. From the above comparative study, it is clear that prior to 2007, the Heading 8517 was consisting of apparatus i.e. telephone instruments only for line telephony and not for radio telephony; the transmission apparatus for radio telephony was covered under Heading 8525 and reception apparatus for radio telephony was covered under Heading 85.27; the antenna for the apparatus for radio telephony under Headings 8525 and 8527 was specifically covered as "parts"
under 8527 of CTA, 1975. After 1-1-2007 the instruments for radio telephony/mobile network, apparatus for reception and transmission, and "parts" have been placed under one heading i.e. 8517 of CTA, 1975. Revenue continued classification of antenna for mobile network as "parts" accepting its classification under 8517 70 90 post 1-1-2007.
41. 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
8|Page Customs Appeal No. 41734 of 2019 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 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
9|Page Customs Appeal No. 41734 of 2019 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 :
10 | P a g e Customs Appeal No. 41734 of 2019 "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;
(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.
48. To resolve the issue about classification of antenna for base station between the competing entries of sub-headings 851762 and 851770 arose before the member countries, the HS Committee in 62nd session, after deliberation, recorded as follows :-
No. Product Classification HS codes Classification description considered rationale 22 Antenna for Base 8517.70 8517.62 GIRs 1 [Note Station and 2 (b) to 8517.70 Section XVI] and 6 It is a directional dual-polarized plate antenna with a width of 0.3 m 11 | P a g e Customs Appeal No. 41734 of 2019 and a length of 1.4 m.
The antenna works at 1.7-2.7 GHz frequency band and is part of a base station which plays a role as a core facility for mobile communication.
Used in a mobile communication system, the base station antenna receives and transmits electromagnetic waves in the base station system.
Its main features are as follows:-
Directivity:
horizontal beam width of 65 degrees for cellular sector networking;
High gain: 18dBi;
Vertical beam pointing adjustment function; and Unique 4.3-10 connector for communication.
49. The invoices and the specification of antenna imported submitted during the course of the proceeding confirms the specification mentioned as above
50. Revenue vehemently opposed to the said opinion of HS Committee stating that it is not binding on the department. We do not find merits in the argument of the Revenue in view of the principle of law laid down by the Hon'ble Delhi High Court in Manisha Pharma Plasto Pvt. Ltd.'s case (supra), whereunder it is held that the opinion of Harmonized Systems Committee has lot of weight and should ordinarily be taken as binding. Similar view has been expressed by the Tribunal in the case of CCE, Pune-I v. Telco Ltd. 2002 (143) E.L.T. 548 (Tri.-Mum.), later upheld by the Supreme Court reported at 2003 (152) E.L.T. A259. Also, the literature relating to the classification of the antenna of different countries placed by the respondent indicates 12 | P a g e Customs Appeal No. 41734 of 2019 that the antenna is classified as part of base station under sub-heading 8517 70.
51. In the result, the correct classification of the antenna for base station is under sub-heading 8517 70 90 as "parts". Since, the main issue of classification has been addressed, the other ancillary/alternative submission/issues on the eligibility of various exemption notifications issued in support of the classification of the said goods, becomes more academic, hence not analysed. Consequently, the Revenue's appeals are being devoid of merits accordingly rejected.
13 | P a g e Customs Appeal No. 41734 of 2019 14 | P a g e Customs Appeal No. 41734 of 2019 From above decision it can be seen that the identical issue in the appellant's own case has been decided by tribunal Mumbai Bench wherein it was held that the antenna imported by the appellant is correctly classifiable under customs 85177090 as parts. Following the above decision of this tribunal we are of the view that impugned order is not sustainable.
5. Accordingly, the impugned order is set aside appeal is allowed with consequential relief, if any, in accordance with law.
(Pronounced in the open Court 18.02.2022) RAMESH NAIR MEMBER (JUDICIAL) P. ANJANI KUMAR MEMBER (TECHNICAL) Palak