Custom, Excise & Service Tax Tribunal
Bharti Airtel Ltd vs Commissioner Of Customs-Nhava Sheve - ... on 12 October, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Customs Appeal No. 86747 of 2021
(Arising out of Order-in-Appeal No. 32(Arshiya FTWZ)/2021(JNCH)/Appeals
dated 22.06.2021 passed by the Commissioner of Customs (Appeals),
Mumbai-II, Nhava Sheva)
M/s. Bharti Airtel Ltd. Appellant
Airtel Center, Plot No.16,
Udyog Vihar, Phase-IV,
Gurugram-122 015.
Vs.
Commissioner of Customs, Nhava Sheva-II Respondent
JNPT, Custom House, Nhava Sheva,
Raigad, Maharashtra 400 707.
Appearance:
Shri J.C. Patel, Advocate, for the Appellant
Shri Sydney D'Silva, Additional Commissioner, Authorised
Representative for the Respondent
CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL)
Date of Hearing: 18.07.2022
Date of Decision: 12.10.2022
FINAL ORDER NO. A/85935/2022
PER: SANJIV SRIVASTAVA
This appeal filed by the appellant is directed against order
in appeal No. 32(Arshiya FTWZ)/2021(JNCH)/Appeals dated
22.06.2021 passed by the Commissioner of Customs (Appeals),
Mumbai-II, Nhava Sheva. By the impugned order, the
Commissioner (Appeals) held as follows:
"12. In view of above, I find that assessments of imported
Antenna (Parts of telecommunication equipments) made by the
OA by revising the claimed classification from CTH 8570 7090 to
85176290 in 51 Bills of Entry (mentioned in table above) are
sustainable. Accordingly, I upheld the Speaking Order - Order-
in-Original No. 65/2020-21/AC/NS-GEN/CAC/JNCH dated
12.05.2020 in respect of said 51 Bills of Entry.
13. The Appeal filed by M/s. Bharti Airtel rejected accordingly."
2 C/86747/2021
2.1 M/s Bharti Airtel Ltd (Appellant) filed 51 Bills of Entry as
detailed in table 1 below, for the clearance of the antenna for
base station claiming classification under CTH 85177090. These
Bills of Entry were reassessed without any speaking order as per
Section 17(5) of the Custom Act, 1962 and the classification as
claimed by the respondents was modified to 85176290.
Table 1: Details of Bills of Entry filed
Description of Goods Antenna for Base Station
S Bill of entry No and date Classification of Goods
No Claimed Determined
1 2002411/04.02.2020 85177090 85176290
2 2002413/04.02.2020 85177090 85176290
3 2002414/04.02.2020 85177090 85176290
4 2002427/04.02.2020 85177090 85176290
5 2002412/04.02.2020 85177090 85176290
6 2002415/04.02.2020 85177090 85176290
7 2002311/04.02.2020 85177090 85176290
8 2002136/05.02.2020 85177090 85176290
9 2002436/05.02.2020 85177090 85176290
10 2002434/05.02.2020 85177090 85176290
11 2002437/05.02.2020 85177090 85176290
12 2002435/05.02.2020 85177090 85176290
13 2002488/05.02.2020 85177090 85176290
14 2002714/07.02.2020 85177090 85176290
15 2002694/07.02.2020 85177090 85176290
16 2002696/07.02.2020 85177090 85176290
17 2002695/07.02.2020 85177090 85176290
18 2002697/07.02.2020 85177090 85176290
19 2002853/10.02.2020 85177090 85176290
20 2002846/10.02.2020 85177090 85176290
21 2003305/14.02.2020 85177090 85176290
22 2003304/14.02.2020 85177090 85176290
23 2003331/15.02.2020 85177090 85176290
24 2003329/15.02.2020 85177090 85176290
25 2003328/15.02.2020 85177090 85176290
26 2003327/15.02.2020 85177090 85176290
27 2003352/15.02.2020 85177090 85176290
3 C/86747/2021
28 2003330/15.02.2020 85177090 85176290
29 2003388/17.02.2020 85177090 85176290
30 2003389/17.02.2020 85177090 85176290
31 2003654/19.02.2020 85177090 85176290
32 2003689/20.02.2020 85177090 85176290
33 2003664/20.02.2020 85177090 85176290
34 2003807/21.02.2020 85177090 85176290
35 2004019/25.02.2020 85177090 85176290
36 2004518/03.03.2020 85177090 85176290
37 2004537/03.03.2020 85177090 85176290
38 2004538/03.03.2020 85177090 85176290
39 2004686/03.03.2020 85177090 85176290
40 2004891/06.03.2020 85177090 85176290
41 2004965/09.03.2020 85177090 85176290
42 2005182/12.03.2020 85177090 85176290
43 20058102/12.03.2020 85177090 85176290
44 2005176/12.03.2020 85177090 85176290
45 2005506/17.03.2020 85177090 85176290
46 2005501/17.03.2020 85177090 85176290
47 2005870/26.03.2020 85177090 85176290
48 2005875/26.03.2020 85177090 85176290
49 2006185/15.04.2020 85177090 85176290
50 2006217/15.04.2020 85177090 85176290
51 2006536/25.04.2020 85177090 85176290
2.2 Appellants got the goods cleared by paying the duty as
assessed under protest and requested the assessing officer to
issue Speaking Order as per Section 17(5). Speaking orders
were issued under Section 17(5) of the Custom Act, 1962 vide
Speaking Order- Order in Original No 65/2020-2021/ AC/NS-
Gen/CAC/JNCH dated 12.05.2020, reassessing the imported
goods as stated above the assessment made on the Bills of
Entry by the proper officer were challenged by the appellant
before the Commissioner (Appeals) who by the impugned order,
referred in para 1 above, rejected the appeal and denied the
classification as claimed by the importers while filing the Bill of
Entries.
2.3 Aggrieved appellant has filed this appeal.
4 C/86747/2021
3.1 We have heard Shri J C Patel, Advocate for the appellant
and Shri Ramesh Kumar, Assistant Commissioner, Authorized
Representative for the Revenue.
3.2 Arguing for the appellant, learned counsel submitted that:
The Issue involved in this appeal is whether "Antenna" for
Base Station is classifiable as "Part" under CTSH 8517
7090 or as a "Machine for reception, conversion and
transmission or regeneration of voice, images or other
data" under CTSH 851762 90. The said issue stands
decided in the Respondent's favour by the following
decisions of this Hon'ble Tribunal in the Respondent's own
case, in which it is held that "Antenna" for Base Station are
classifiable as "Part" under CTSH 8517 7090 and not under
CTSH 8517 62 90: - CC v Reliance Jio Infocomm Ltd -
2019 (369) ELT 1713 - Reliance Jio Infocomm Ltd v CC -
2022 (2) TMI 967.
o Customs Tariff and Statutory Notifications of the
Government clearly recognize and consider Antenna
as "Parts":
Prior to 2007, Heading 85.17 covered only Apparatus for
Line Telephony and did not cover apparatus for Radio
Telephony. The transmission apparatus for radio telephony
was covered under Heading 85.25 and the reception
apparatus for radio telephony was covered under Heading
85.27. Antenna for the apparatus of headings 85.25 and
85.27 were specifically covered as Parts under Heading
8529.
It would therefore follow that the Tariff itself recognized
that Antenna are not in themselves complete apparatus
for transmission or reception of radio telephony but are
only parts of apparatus for transmission and reception of
radio telephony.
In the year 2007, the HSN was amended so as to shift
apparatus for transmission and reception of radio
telephony from Headings 8524 and 8527 to Heading 8517.
As a result, while prior to 2007, Heading 85.17 covered
5 C/86747/2021
only apparatus for Line telephony, with effect from 2007,
even radio telephony apparatus was brought under
Heading 85.17. As a consequence of such change, Parts of
apparatus for transmission and reception of radio
telephony which prior to 2007 were covered under Heading
8529, were from 2007 onwards covered under Heading
8517 which specifically covered "parts".
Consistent with the said changes in HSN, the Indian
Customs Tariff was also amended with effect from
01.01.2007 whereby transmission and reception apparatus
for radio telephony were removed from Headings 8524 and
8527 and brought under Heading 85.17. Resultantly, parts
of transmission and reception apparatus for radio
telephony, which prior to 2007 were covered under
Heading 85.29, stood shifted to Heading 8517.70 which
covers Parts.
The effect of the aforesaid changes was clearly that
"Antenna' for transmission and reception apparatus for
radio telephony, which prior to 2007 were covered as
"Parts" under Heading 85.29, stood shifted to Heading
8517,70 which covers Parts.
Accordingly, with effect from 01.01.2007, Base Stations
which are transmission and reception apparatus used in
radio telephony (Cellular network) stood covered under
Heading 8517 61 00 and Antenna for such Base Stations,
being parts stood covered under Heading 8517 70 which
specifically mentions "Parts". -
The following two Notifications of the Central Government
clearly recognize and consider Antenna as Parts
classifiable under CTH 8517 7090 and not as Machines or
Apparatus of CTH 8517 62 90:
o Sr. No.vi of Notification No.18/2007-Cus dated 22-2-
2007 read with Sr. No.30 of Notification
No.69/2004-Cus dated 9-7-2004, issued by the
Government of India, as per which " Aerials or
antennae of a kind used with apparatus for radio
6 C/86747/2021
telephony", fall under tariff item 8517 70 90 which
covers "Parts" and
o Sr. No.31 of Notification No. 11/2018 dated
02.02.2018, which covers, 'Aerials or antennae of a
kind used with apparatus for radiotelephony and
radiotelegraphy falling under Tariff item 8517 7090'.
Decision of the HS Committee (World Customs
Organization) 62nd session supports the
Respondent's case:
As per the decision of the HS Committee (World Customs
Organization) 62nd session, antenna for base station are
classifiable as parts under heading 8517.70 and not as a
complete machine or apparatus for reception conversion or
transmission or regeneration of voice images or other
data under 8517.62. The said decision clearly supports the
Respondent's case.
As laid down by the Hon'ble Delhi High Court in the case of
Manisha Pharma Plasto Pvt. Ltd. 1999(112) ELT 22, in
paragraph 18, that the opinion of the HS Committee has a
lot of weight and should ordinarily be taken as binding
since the very name of the committee suggests it is
meant to harmonize the conflicting interpretation of
products and formulae in the member countries in view of
international trade. The said decision has been followed by
the Tribunal in the case of CCE v. Telco Limited
2002(143)ELT 548 which has been upheld by the
Supreme Court as reported in 2003(152)ELT A259. The
said decision has also been followed by the Tribunal in the
aforesaid decision in CC v Reliance Jio Infocom Ltd - 2019
(369) ELT 1713.
After the said HS committee decision holding Antenna to
be "Parts", the HSN and the Indian Customs Tariff, have
with effect from 1-1-2022, specifically mention Antenna
under "Parts". The very fact that Antenna are now
specifically mentioned under "Parts" leaves no manner of
doubt that the same are Parts and not complete Machine
or apparatus. Reliance is placed on the following decisions
7 C/86747/2021
which hold that when the legislature carves out a specific
sub-heading for given product under a given heading
which remains unchanged, it is statutory recognition of
the fact that such product answered the description of
such heading even for earlier period:
Nestle India v CCE - 1999 SCC Online CEGAT 2011 = 2000 (124)
ELT 898, Upheld by Supreme Court in Commissioner v Nestle
India - 2005 (184) ELT A164SC.
3.3 Arguing for the Revenue, learned Authorized
Representative reiterated the findings recorded in the impugned
order and stated:
Admittedly classification of identical products has been
decided by the Hon'ble Tribunal in the case of
Commissioner of Customs (Import), Mumbai vs M/s.
Reliance Jio Infocomm Ltd in its Final Order No. A/87015-
87016/2019 dated 06.11.2019 [2019 (369) ELT 1713 (Tri-
Mum)]. Commissioner (Appeal) in his impugned Order in
Appeal No.920-922 dated 10.06.2019 has relied on the
aforesaid judgment of the Hon'ble Tribunal and has
ordered classification of telecommunication antennas
under CTH 85177090.
Admittedly, Revenue is bound by the CBIC instruction No.
01/2018 - Cus dated 15 Jan 2018 which clarifies that
telecommunication antenna being a complete device with a
specified function i.e. conversion of electrical signals into
electromagnetic waves and vice versa in a wireless
communication system, is appropriately covered by the
single dash heading "-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)" of heading
8517 as an "transmitting and receiving apparatus for
radio-telephony."
As per the said instruction the telecommunication
antennas, at double dash level, squarely covered by the
heading "851762- machines for reception, conversion and
8 C/86747/2021
transmission or regeneration of voice, image or other data,
including switching and routing apparatus."
Hon'ble Supreme Court in case of Collector of Central
Excise vs Dhiren Chemical Industries wherein it has been
held that;
"1. The issue involved in these appeals is covered by the
decision of a Constitution Bench in Collector of Central
Excise, Vadodara v. Dhiren Chemical Industries, also
reported in [2002 (139) E.L.T. 3(S.C.). The Constitution
Bench interpreted the phrase "on which the appropriate
amount of duty of excise has already been paid" in favour
of the Revenue. However, it held that, regardless of the
interpretation placed by it on that phrase, if there were
circulars which had been issued by the Central Board of
Excise and Customs which placed a different interpretation
upon that phrase, that interpretation would be binding on
the Revenue. It is not disputed that there are circulars
issued by the Central Board of Excise and Customs which
place a different interpretation upon that phrase and which
apply to the facts of these two appeals."
Revenue has filed an appeal before the Hon'ble Supreme
Court vide CIVIL APPEAL Diary No(s). 14979/2020 wherein
the Final Order No. A/87015-87016/2019 [2019 (369) ELT
1713 (Tri-Mum)] has been challenged. On 18.12.2020, the
case has been heard by the Hon'ble Supreme Court and
the notice
Hearing of the instant appeal may be deferred till decision
of the petition filed by Revenue, is decided by the Hon'ble
Supreme Court.
4.1 We have considered the impugned order along with the
submissions made in appeal and during the course of arguments
and in written submissions made by the both the sides.
4.2 Undisputedly both the sides agree that the same issue has
been considered by the coordinate bench of CESTAT, in case of
Reliance Jio Infocom [2019 (369) ELT 1713 (T-Mum)] and bench
have decided the issue in favour of appellant.
9 C/86747/2021
4.3 Commissioner (Appeals) has in the impugned order while
deciding the appeal observed as follows:
"8. Further, I observe that the basic issue to decide for the
classification of the Telecommunication Antenna is, whether it is
a part of the device/machine/apparatus of heading 8517 and
classifiable under CTH 8517 70 90 or it is a telecommunication
apparatus classable under any other heading of heading 8517. In
view of this, para (iii) & (iv) of the Board circular no. 01/2018-
customs dated 15.01.2018 are reproduced here as under:-
"iii) The classification of parts of the goods of Chapter 85 is
governed by rules enumerated in section Note 2 of section XVI
read with general Explanatory Notes to this Section Note
According to rule (e), parts which are goods included in any of
the headings of Chapter 84 or 85 are in all cases to be classified
in their respective headings. In other words, the 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. Therefore, the goods under consideration would fall
under CTH 8517 70 90 as a part of the machine/apparatus
classifiable under CTH 8517 only in the situation when it is not
covered by any other heading of the section.
iv) However, as discussed above, the telecommunication
antenna being a complete device with a specified function ie,
conversion of electrical signals into electromagnetic waves and
vice-versa in a wireless communication system, is appropriately
covered by heading "Other apparatus for transmission or
reception of voice, images on other data including apparatus for
communication in a wired or wireless network (such as a local or
wide area network):" of heading 8517 as an 'transmitting and
receiving apparatus for radio-telephony'. Further, at double
dash level, it is squarely covered by the heading "8517 62--
Machines for the reception, conversion and transmission or
regeneration of voice, images or other data, including switching
and routing apparatus."
10 C/86747/2021
From the above it is very clear that the impugned goods are
appropriately covered under CTH 85176290 as others @ 20%
BCD.
9. Further, the appellant has contended that the OA erred in
relying on the Board's circular 1/2018-cus dated 15.01.2018,
which has duly considered by the Tribunal in its decision in CC vs
Reliance Jio lnfocom Ltd.-2019(369)ELT 1713 and the aforesaid
Board's circular cannot prevail over the Tribunal's decision. In
view of this find that it is mandatory to follow instructions issued
by Board by all the officers appointed under Custom Act, 1962 as
per provisions under section 151A of the Customs Act, 1962,
which is as under:
151A. Instructions to officers of customs.- The Board may, if it
considers it necessary or expedient so to do for the purpose of
uniformity in the classification of goods or with respect to the
levy of duty thereon, issue such orders, instructions and
directions to officers of customs as it may deem fit and such
officers of customs and all the other persons employed in the
execution of this Act shall observe and follow such orders,
instructions and directions of the Board:"
10. I find that Board Circulars/instructions are binding on the
department. In view of this I rely on the Hon'ble Supreme
Court's decision in the case of Commissioner of Central Excise,
Jaipur-II vs. Super Synotex (India) Ltd., wherein vide para 24 it
is held that:
We may, at this stage, also clarify the position relating to
circulars. Binding nature of a circular was examined by the
Constitution Bench in CCE v. Dhiren Chemical Industries -
(2002) 2 SCC 127 = 2002 (139) E.L.T. 3 (S.C.), and it was held
that if there are circulars issued by C.B.E. & C. which placed
different interpretation upon a phrase in the statute, the
interpretation suggested in the circular would be binding on the
Revenue, regardless of the interpretation placed by this Court. In
CCE v. Ratan Melting & Wire Industries - (2008) 13 SCC 1 =
2008 (231) E.L.T. 22 (S.C.) = 2008 (12) S.T.R. 416 (S.C.), the
Constitution Bench clarifying paragraph 11 in Dhiren Chemical
Industries (supra) has stated thus :-
11 C/86747/2021
"7. Circulars and instructions issued by the Board are no doubt
binding in law on the authorities under the respective statutes,
but when the Supreme Court or the High Court declares the law
on the question arising for consideration, it would not be
appropriate for the court to direct that the circular should be
given effect to and not the view expressed in a decision of this
Court or the High Court. So far as the clarifications/circulars
issued by the Central Government and of the State Government
are concerned they represent merely their understanding of the
statutory provisions. They are not binding upon the court. It is
for the court to declare what the particular provision of statute
says and it is not for the executive. Looked at from another
angle, a circular which is contrary to the statutory provisions has
really no existence in law."
11. Further, the appellant relied upon the decision of the
Hon'ble CESTAT in the case of CC v Reliance Jioinfocom Ltd.-
2019(369)ELT 1713 vide Order A/87015-87016 of 2019 dated
06.11.2019 where Hon'ble CESTAT held that Antenna are not
Machines but only parts of Machines and therefore are
classifiable under Taiff Heading No 85177090, In this regard, I
find that the department has filed an appeal before Hon'ble
Supreme Court against this judgment of Hon'ble Tribunal. Also,
vide the para 13 of the impugned order the OA stated that CBEC
has decided not to withdraw the circular which classify Antenna
under sub heading 8517 62 90 even after H.S. Committee
decision"."
4.4 Distinguishing the decision of Tribunal in case of Reliance
Jio Infocomm as per para 11 of the impugned order,
Commissioner (Appeals) has decided the classification of
"Antenna for base station" under heading No 85177090.
However the distinction sought to be made is not based on any
sound logic except by referring to the Board Circular. The
approach of Commissioner (Appeal) is contrary to the decision of
Hon'ble Supreme Court in case of Ratan Melting and wire
Industries [2008 (231) ELT 22 (SC)] wherein five judges bench
of the Hon'ble Apex Court has observed as follows:
12 C/86747/2021
"6. Circulars and instructions issued by the Board are no doubt
binding in law on the authorities under the respective statutes,
but when the Supreme Court or the High Court declares the law
on the question arising for consideration, it would not be
appropriate for the Court to direct that the circular should be
given effect to and not the view expressed in a decision of this
Court or the High Court. So far as the clarifications/circulars
issued by the Central Government and of the State Government
are concerned they represent merely their understanding of the
statutory provisions. They are not binding upon the court. It is
for the Court to declare what the particular provision of statute
says and it is not for the Executive. Looked at from another
angle, a circular which is contrary to the statutory provisions has
really no existence in law.
7. As noted in the order of reference the correct position vis-a-
vis the observations in para 11 of Dhiren Chemical's case (supra)
has been stated in Kalyani's case (supra). If the submissions of
learned counsel for the assessee are accepted, it would mean
that there is no scope for filing an appeal. In that case, there is
no question of a decision of this Court on the point being
rendered. Obviously, the assessee will not file an appeal
questioning the view expressed vis-a-vis the circular. It has to
be the revenue authority who has to question that. To lay
content with the circular would mean that the valuable right of
challenge would be denied to him and there would be no scope
for adjudication by the High Court or the Supreme Court. That
would be against very concept of majesty of law declared by this
Court and the binding effect in terms of Article 141 of the
Constitution."
4.5 Learned Authorized representative submitted that revenue
has filed the Civil Appeal Diary No 14797/2020 against the order
of CESTAT before the Hon'ble Apex Court. The said Civil Appeal
has been listed before the Hon'ble Apex Court on 18.12.2020,
05.08.2021, 17.09.2021, 11.11.2021 and 28.03.2022. The order
passed by the bench on the last day is reproduced below:
"CIVIL APPEAL Diary No(s). 14979/2020
13 C/86747/2021
(Arising out of impugned final judgment and order dated 06-11-
2019 in CA No. 85882/2018 06-11-2019 in CA No. 85883/2018
passed by the Custom Excise Service Tax Appellate Tribunal,
West Zonal Bench At Mumbai)
COMMISSIONER OF CUSTOMS (IMPORT) Petitioner(s)
VERSUS
M/S RELIANCE JIO INFOCOM LTD. Respondent(s)
(IA No.82614/2020-EXEMPTION FROM FILING C/C OF THE
IMPUGNED JUDGMENT and IA No.82613/2020-STAY
APPLICATION and IA No.82612/2020-CONDONATION OF DELAY
IN FILING APPEAL )
Date : 28-03-2022 This petition was called on for hearing today.
CORAM : HON'BLE MR. JUSTICE A.M. KHANWILKAR HON'BLE
MR. JUSTICE ABHAY S. OKA
For Petitioner(s) Mr. Balbir Singh LD ASG Mr. Mukesh Kumar
Maroria, AOR Mr. Rupesh Kumar, Adv. Mr. Bhuvan Mishra, Adv.
Mr. Udai Khanna, Adv.
For Respondent(s) Mr. K. R. Sasiprabhu, AOR (NP) Mr. Vishnu
Sharma, Adv. Mr. Tushar Bhardwaj, Adv.
UPON hearing the counsel the Court made the following O R D E
R In view of the letter circulated by the learned counsel for the
respondent seeking adjournment on the ground of personal
difficulty, list the matter after two weeks. Rejoinder filed by the
petitioner is taken on record."
From the above it is observed that neither the appeal has been
admitted by the Hon'ble Apex Court nor any stay granted by the
court. In view of the above we are not inclined to agree with the
submissions made by the authorized representative to adjourn
the matter till the decision of Hon'ble Apex Court in the Civil
Appeal Diary No 14979/2020.
4.6 The issue was again considered by the Tribunal in case of
Reliance Jio Infocomm vide the order reported at [2022- TIOL-
604-CESTAT-Mum] and the bench dismissed the appeals filed by
revenue sating as follows:
14 C/86747/2021
"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
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
15 C/86747/2021
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 radiotelegraphy.
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 16 C/86747/2021 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.
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.
17 C/86747/2021 (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 Note to 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 and transmission or regeneration of voice, images or other data, including switching and 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 18 C/86747/2021 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 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 19 C/86747/2021 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 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 20 C/86747/2021 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'.
21 C/86747/2021
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;
(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 22 C/86747/2021 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) = 2010-TIOL-52-SC-CUS 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 23 C/86747/2021 a period of time. Learned Commissioner (Appeals) has been upholding the contention of the 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."
4.7 Since the same issue has been considered by the coordinate bench and the appeals filed by the revenue have been dismissed, in our view this appeal also needs to be allowed.
5.1 The appeal filed by the appellant is allowed.
(Order pronounced in the open court on 12.10.2022) (Sanjiv Srivastava) Member (Technical) (Ajay Sharma) Member (Judicial) tvu