Custom, Excise & Service Tax Tribunal
Cisco Commerce India P Ltd vs Mumbai-Air Cargo Import on 30 September, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
MUMBAI
REGIONAL BENCH - COURT NO. I
CUSTOMS APPEAL NO. 86054 TO 86067 OF 2021
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1739 to 1754/2020-21 dated
28.02.2021 passed by the Commissioner of Customs (Appeals) Mumbai Customs-Zone III)
Cisco Commerce India Pvt. Ltd. .... Appellant
Prestige Solitaire Level-II No 6
Bruton Road, Bengaluru, Karnataka-560001.
Versus
Commissioner of Customs, Mumbai ... Respondent
(Air Cargo Import)
Commissioner of Customs, Air Cargo Complex,
Mumbai.
WITH
CUSTOMS APPEAL NO. 86021 & 86071 TO 86092 OF 2021
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1923 to 1952/2020-21 dated
24.03.2021 passed by the Commissioner of Customs (Appeals) Mumbai Customs-Zone III)
Cisco Commerce India Pvt. Ltd. .... Appellant
Prestige Solitaire Level-II No 6
Bruton Road, Bengaluru, Karnataka-560001.
Versus
Commissioner of Customs, Mumbai ... Respondent
(Air Cargo Import)
Commissioner of Customs, Air Cargo Complex,
Mumbai.
AND
CUSTOMS APPEAL NO. 85135 to 85160 & 85162 OF 2022
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-876 to 902/2020-21 dated
29.10.2021 passed by the Commissioner of Customs (Appeals) Mumbai Customs-Zone III)
Cisco Commerce India Pvt. Ltd. .... Appellant
Prestige Solitaire Level-II No 6
Bruton Road, Bengaluru, Karnataka-560001.
Versus
Commissioner of Customs, Mumbai ... Respondent
(Air Cargo Import)
Commissioner of Customs, Air Cargo Complex,
Mumbai.
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AND
CUSTOMS APPEAL NO. 85366 & 85465 to 85467 OF 2023
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1990/2022-23 dated
13.12.2022 passed by the Commissioner of Customs (Appeals) Mumbai Customs-Zone III)
Cisco Commerce India Pvt. Ltd. .... Appellant
Prestige Solitaire Level-II No 6
Bruton Road, Bengaluru, Karnataka-560001.
Versus
Commissioner of Customs, Mumbai ... Respondent
(Air Cargo Import)
Commissioner of Customs, Air Cargo Complex,
Mumbai.
AND
CUSTOMS APPEAL NO. 85942 to 85944 OF 2023
(Arising out of Order-in-Appeal No. MUM-CUSTM-AMP-APP-2723 to 2725/2022-23 dated
23.03.2023 passed by the Commissioner of Customs (Appeals) Mumbai Customs-Zone III)
Cisco Commerce India Pvt. Ltd. .... Appellant
Prestige Solitaire Level-II No 6
Bruton Road, Bengaluru, Karnataka-560001.
Versus
Commissioner of Customs, Mumbai ... Respondent
(Air Cargo Import)
Commissioner of Customs, Air Cargo Complex,
Mumbai.
APPEARANCE:
Shri T. Vishwanathan a/w Shri Akhilesh Kangsia & Ms. Payal Nahar, Advocates for
the Appellants
Shri D.S. Mann, Authorized Representative for the Respondents
CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)
FINAL ORDER NO. A/86011-86081/2024
Date of Hearing: 22.04.2024
Date of Decision: 30.09.2024
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PER: M.M. PARTHIBAN
These appeals have been filed by M/s Cisco Commerce (India) Private
Limited, Prestige Solitaire, Level-II, No.6 Brunton Road, Bengaluru (herein
after, referred to as 'the appellants', for short), assailing five Order-in-
Appeal Nos. MUM-CUSTM-AMP-APP-1739 to 1754/2020-21 dated
28.02.2021; MUM-CUSTM-AMP-APP-1923 to 1952/2020-21 dated
24.03.2021; MUM-CUSTM-AMP-APP-876 to 902/2021-22 dated
29.10.2021; MUM-CUSTM-AMP-APP-1990/2022-23 dated 13.12.2022 and
MUM-CUSTM-AMP-APP-2723 to 2725/2022-23 dated 23.03.2023 (herein
after, referred together as 'the impugned orders') passed by Commissioner
of Customs (Appeals), Mumbai-III, Mumbai.
2. The common issue involved in these group of appeals relates to
dispute in classification of various models of CISCO "Catalyst 3850 series
Ethernet Switches" imported by the appellants through Customs
Commissionerate of Air Cargo Complex, Sahar, Andheri (East), Mumbai.
The appellants have classified the imported Ethernet switches under
Customs Tariff Item (CTI) 8517 6290 and claimed the concessional Basic
Customs Duty (BCD) @10% ad valorem in terms of S. No. 20 of
Notification No.57/2017-Customs dated 30.06.2017, as amended, treating
the same as 'Non-carrier Ethernet Switch'. There is no dispute in the
classification of the imported goods adopted by the appellants. However,
the Department had re-assessed the aforesaid imported goods under
various Bills of Entry (B/Es) and denied the benefit of concessional BCD
calimed under the said Notification No. 57/2017-Customs, thereby re-
assessing the imported goods with BCD payable as 20% ad valorem. It has
been stated by the appellants that despite the explanations and
clarifications provided in support of their classification, claim for
concessional BCD and several requests made for issuance of Speaking
Order in terms of Section 17(5) of the Customs Act, 1962, no such
speaking orders were issued by the department. Feeling aggrieved with the
above re-assessment in denial of concessional BCD, the appellants had
filed appeals challenging the assessments made in the said B/Es before the
Commissioner of Customs (Appeals). In the first appellate proceedings of
the case, the learned Commissioner of Customs (Appeals) had confirmed
the decision taken at the original stage, on the main issue of eligibility to
exemption, in re-assessment of the imported goods at 20% BCD without
extending the benefit of concessional BCD under Notification No.57/2017-
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Customs dated 30.06.2017. Besides this, in few appeals he gave a finding
that those are time barred, and mandatory speaking orders have not been
passed under Section 17(5) ibid. Feeling aggrieved with the above
impugned orders of the learned Commissioner of Customs (Appeals), the
appellants have filed these bunch of 71 appeals before the Tribunal.
3.1 Learned Advocate appearing for the appellants, stated the imported
'Catalyst 3850 Ethernet Switches' are a non-carrier Switch and thus are
leviable to 10% BCD in terms of S.No.20 of Notification No.57/2017-
Customs, as amended; further, he stated despite the appellants request for
issue of speaking order for re-assessment, the proper officer of Customs in
re-assessment of the impugned goods have not issued any Speaking Order
which is mandatory under Section 17(5) ibid. Thus, he claimed that the re-
assessment orders are not sustainable in law.
3.2 Learned Advocate stated that the dispute in all 71 cases relate to the
imports made during the period from November, 2020 to February, 2022.
He stated that the imported switches are "enterprise switch" and hence the
same are eligible for concessional BCD in terms of S.No.20 of Notification
No.57/2017-Customs, as amended and are not covered by the exclusion
category of goods, mentioned in such notification. The Department had
incorrectly interpreted and denied the exemption by treating the imported
goods as 'Carrier ethernet switch' which are excluded from the exemption
benefit of the said notification. He further stated that for denying the
exemption benefit, the departmental authorities have compared the
imported goods viz., "Catalyst 3850 series Ethernet Switches" with
"Catalyst ME 3800X series Carrier Ethernet Switches". In this regard, he
stated that both the aforesaid products are entirely different inasmuch as
the imported goods are enterprise switch which are not having capabilities/
specifications of the carrier ethernet switch. The catalogues of the aforesaid
products submitted as part of the appeal papers make a distinction
between these two different type of switches as follows:
Essential future Carrier Ethernet Switches - CISCO ME Catalyst Ethernet
3800X series Switches - CISCO
3850 series
MPLS - TP (Traffic Supported Not Supported
Profile) facility
MEF Certification:
(a) MEF 9 & 14 Certified Not Certified
(b) MEF CE 2.0
Multi Gig Interface Not Supported Supported
PoE/PoE+ & UPoE Not Supported Supported
Stack Power Not Supported Supported
Multitenant Services Supported Not Supported
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Essential future Carrier Ethernet Switches - CISCO ME Catalyst Ethernet
3800X series Switches - CISCO
3850 series
Standard Services MEF 6.2/ MEF 51/ MEF 33 None
Synchronous Ethernet Supported Not Supported
(SynchE) & Pseudo
wire Redundancy
Placement/ Pre-aggregation for mobile Data Centre,
Deployment applications, mobile backhaul, Metro Branch and
aggregation, Service provider Campus
Examples of various ME 3750 Metro series switch Catalyst 3850
models produced by ME 1200 series switches Catalyst 2960
CISCO ME 3800X series switches Catalyst 3650
Catalyst 9200
Catalyst 9K series
By relying on the above specific features of the both the products, he
stated that the imported goods viz., "Catalyst 3850 series Ethernet
Switches" are of an enterprise switch which have application in campus and
data centre, whereas "Catalyst ME 3800X series Carrier Ethernet Switches"
have application in mobile backhaul and supports interfacing with long-
distance transmission protocol like MPLS-TP, SDH/SONET etc., which is
absent in the imported goods. In support of the above, the appellants had
submitted the clarification given by the manufacturer abroad i.e., CISCO
Systems International B.V., Netherlands vide their letter dated 04.09.2015,
stating that the imported goods do not have the features whereby "Carrier
Ethernet Switches" are used by service providers to deliver data in
standard protocol for long-distance transmission.
3.3 He further submitted that Telecommunication Engineering Centre
(TEC) is the technical body functioning under the Department of
Telecommunication, Government of India providing for specification of
common standards with regard to Telecom network equipment, services
and interoperability. They had published specifications of three types
namely Generic Requirements (GRs), Interface Requirements (IRs) and
Service Requirements (SR) for network elements in field of
telecommunication. In respect of Local Area Network (LAN) switches they
have published the GR vide No. TEC/GR/IT/LSW-01/05/MAR2014 and ER
vide No. TEC 37942207. As per these requirements, there are four
categories of LAN switches as given below:
S. GR description to LAN Switch categories Application as mentioned in GR
No.
1 High Functionality & High redundancy Suitable for aggregation network
2 High Functionality & Low redundancy Suitable for Metro Ethernet Edge
Node (Metro Ethernet Switches)
3 Low Functionality & High redundancy Suitable for Data Centre application
4 Low Functionality & Low redundancy Suitable for Intranet etc.
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In comparison with the above GRs and the product catalogue of imported
goods viz., "Catalyst 3850 series Ethernet Switches", he stated that it can
be correlated that the imported goods can be used only for data centre and
campus deployment, and therefore they are covered under S. No.3 above.
Whereas, carrier grade ethernet searches having application in Metro
Ethernet (ME) edge, falls under the S. No.2 above. Therefore, learned
Advocate submitted that going by application deployment, the imported
Catalyst 3850 series switches are of 'enterprise switch' and are not a
'carrier grade switch', as it does not meet the requirements of the same in
terms of the requirements laid down by the government authorities.
Further as per the ER requirements for Carrier ethernet switch, particularly
in respect of the following features such as MPLS TP requirement, TDM PWE
and service identification, Ethernet PWE and service identification,
manageability SNMP Qx Management protocol, Interface 11:Mbps-E2;
Interface 13: STM-1 Optical; Interface 14: STM-16 Optical; Interface 15:
STM-4 Optical, the imported goods do not support or has such essential
requirements. Thus, they submitted that from the above specified
essential features of the Carrier ethernet switch, which the imported goods
do not support of or have such facility, it is clearly demonstrated that these
are not carrier ethernet switches used in telecommunication sector. In
addition to the above, from the various representative invoices raised by
the appellants, they claimed that the imported goods are used not by
telecom service provider, but by various industries themselves who are not
the telecom service providers. Even in the case of telecom service
providers, wherever they require the switches for data centre for the
purpose of LAN, they use the imported goods for management of data
centre equipment. However, if the telecom service provider requires
switches which is for deployment for Wide area network, they use Carrier
ethernet switches of Metro Ethernet category, for transportation of data for
long distance.
3.4 Learned Advocate also submitted that "switches" are covered under
the category of network equipment in Appendix-B of the Information
Technology Agreement (ITA) of the WTO to which India is a signatory, and
therefore the duty exemption benefits extended under the international
agreements cannot be denied, particularly when such exemptions have
been specifically brought out to implement the obligations arising from
such ITA agreements, by issue of customs duty concessions. In this regard,
they placed reliance on the WTO ITA agreement, letter addressed to CBIC
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dated 18.09.2020 for addressing the concerns of the industry, technical
expert opinion about coverage of networking equipment under duty
concession submitted by them as a part of appeal papers.
3.5 Learned Advocate further stated that in terms of the commitments
made under the ITA, all goods covered under chapter heading 8517 were
provided with full basic customs duty exemption vide Notification
No.24/2015-Customs dated 01.03.2005; subsequently during budget
changes in the year 2014, the rates of import duty on certain specified
electronic goods for telecommunication was enhanced, to promote
domestic production. Such changes were introduced vide Notification
No.11/2014-Customs dated 11.07.2014, where 'Carrier ethernet switch'
falling under chapter heading 8517 was also mentioned as one of the items
on which BCD of 10% was imposed by excluding the same from the scope
of exemption under Serial No.13 of the aforesaid notification. However, the
exemption provided from the whole of BCD for all goods of chapter heading
8517, other than those goods for which 10% BCD was imposed, continued
to be extended under the Notification No.24/2015-Customs, as amended.
Therefore, learned Advocate stated that the imported goods which are
basically 'enterprise switch' are eligible for concessional BCD, and they
cannot be equated with 'Carrier ethernet switches' for which such
concessional duty is not applicable.
3.6 Learned Advocate also pointed out that in compliance with the
interim order No.33-103/2023 dated 18.09.2023 passed by the Tribunal,
the appellants had written to the jurisdictional customs authorities vide
their letter dated 02.11.2023, providing the details of the premises in
Mumbai where the imported "Catalyst 3850 series Ethernet Switches" were
available for enabling inspection of the subject goods by the technical
experts, in order to provide the factual report for enabling proper
classification of the imported goods for the purpose of determining the
appropriate rate of customs duty payable on such imported goods.
However, the jurisdictional customs authorities have not preferred to
conduct such inspection, and on the other hand have submitted the
specification of the product to the Telecommunication Engineering Centre-
TEC (West), who on such basis have provided their opinion in the form of
letter dated 24.04.2024 reiterating their earlier opinion of 18.01.2024,
stating that the subject imported goods maybe considered as Carrier
ethernet switch, since they have certain features and capabilities as are
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available in carrier ethernet switches. In this regard, learned Advocate
pleaded that since the matter was heard at length and the order in the
case was reserved on 22.04.2024, such additional submission made by
Revenue vide TEC's letter dated 24.04.2024 without complying with the
directions in the Interim Order of the Tribunal, and without inspection of
the impugned goods should not be taken into account for deciding the case
by the Tribunal.
4.1 Learned Authroised Representative (AR) appearing for the Revenue
reiterated the findings recorded by the learned Commissioner (Appeals) in
the impugned orders and stated that there are 71 appeals covered by five
Orders-in-Appeal covering the common issue. The details of these were
provided by him as follows:
(i) In the Orders-in-Appeal No. MUM-CUSTM-AMP-APP-1739 to 1754/2020-
21 dated 28.02.2021, relating to total 15 B/Es, all dated 30.12.2020 and
No. MUM-CUSTM-AMP-APP-1923 to 1952/2020-21 dated 24.03.2021,
relating to total 30 B/Es, 27 B/Es dated 28.01.2021 and 3 B/Es dated
23.02.2021, the issues have been disposed on merits, even though the
requirement of passing of speaking order by the proper officer of customs
have not been undertaken;
(ii) in respect of Orders-in-Appeal Nos. MUM-CUSTM-AMP-APP-876 to
902/2020-21 dated 29.10.2021 covering total 27 B/Es - 2 B/Es dated
24.03.2021, 23 B/Es dated 02.07.2021, 2 B/Es dated 24.08.2021, covering
27 appeals, in 21 cases the issues have been disposed on merits, even
though original authority did not pass speaking order under Section 17(5)
ibid; in 4 appeals the B/Es have been provisionally and hence learned
Commissioner (Appeals) disposed of the case as pre mature; and in rest of
2 appeals were held as time-barred;
(iii) in Order-in-Appeal No., MUM-CUSTM-AMP-APP-1990/2022-23 dated
13.12.2022 covering total 5 B/Es, all dated 04.10.2021, by considering it
as not proper on account of mandatory re-assessment order having not
passed by proper officer remanded the matter to original authority, without
deciding the merits of the issue; and
(iv) in Order-in-Appeal Nos. MUM-CUSTM-AMP-APP-2723 to 2725/2020-21
dated 23.03.2023, covering total 3 B/Es - 1 each dated 20.12.2021,
17.01.2022 and 13.02.2022, the appeal was disposed by the learned
Commissioner (Appeals) on the basis of earlier original order passed on the
same issue, by holding that there is no need to pass any further order by
him.
4.2 Learned AR submitted that the B/Es covering the imported goods in
all 71 appeals relates to the period subsequent to the imports for which
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assessments have been ordered on merit rate of BCD at 20%, by denying
the exemption of customs duty under Serial No. 20 of Notification
No.57/2017-Customs, as amended. In view of such assessment of
imported goods, the subsequent imports covered in 71 appeals, no
speaking order under Section 17 (5) ibid have been issued. Further, in
terms of the product literature available in CISCO website titled as
'configuring Multiprotocol Label Switching (MPLS) Configuring Guide', the
imported goods shall be treated as switches for IP-MPLS equipment.
4.3 In explaining about the imported goods, Learned AR stated that
Carrier ethernet is an application of ethernet technology that allows
network providers to offer internet services to their customers and to use
ethernet technology. It enables internet access and communication among
local area networks (LAN) of business, academic, private and government
organizations. He further submitted that the attempt of the appellants to
distinguish between carrier and the non-carrier ethernet switches is futile,
as the technology is actually ethernet technology. The products such as
routers/switches can be configured for use as carrier level as well as
enterprise level and are capable of performing. As the appellants were not
submitted any evidence or certificate which can prove that the impugned
goods are not capable of operating as carrier ethernet switches, the
impugned order in denying the Customs duty exemption is proper in
sustainable. Further, CBIC circular No.08/2023-Customs dated 13.03.3023
had clarified that customs duty exemption under Notification No. 57/2017-
Customs dated 30.06.2017 are not eligible for the following products viz.,
(i) IP-MPLS based equipment (ii) MPLS-TP based equipment (iii) SDN based
MPLS equipment (iv) PTN products for Carrier ethernet network for access
and recreation network applications. Further, learned AR also pleaded that
the opinion given by the Regional Technical Engineering Centre (Western
Region), Mumbai dated 24.04.2024 stating that functionally there is no
difference between a carrier ethernet switch and enterprise ethernet
switch, and therefore he stated that the imported goods are not eligible for
customs duty exemption.
4.4 Learned AR also stated that concessional benefit of the notification
should be subjected to strict interpretation by relying on the judgement of
Hon'ble Supreme Court in the case of Commissioner of Customs (Import),
Mumbai Vs. Dilip Kumar & Company - 2018 (361) E.L.T. 577 (S.C.).
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5. Heard both sides and perused the records of the case. We have also
considered the additional written submissions given in the form of paper
book by learned Advocates for the appellants as well as Authorised
Representatives for the Revenue, and the arguments advanced during the
hearings of this case.
Issue to be decided:
6. Brief issue for consideration before us is as follows:
(i) whether the impugned goods viz., "Catalyst 3850 series
Ethernet Switches" imported by the appellants and classified under
Customs Tariff Item 8517 6290, are eligible to concessional Basic
Customs Duty (BCD) in terms of goods covered under Serial No. 20
of Notification No.57/2017-Customs, as amended through
subsequent notifications; or,
(ii) whether such goods are not eligible for concessional BCD, as
contended by the Department,
for deciding on the appropriate levy of customs duty, in respect of various
Bills of Entries filed during the disputed period starting from November,
2020 to February, 2022.
7. In order to address the above issue of eligibility to exemption under
the said Notification No.57/2017-Customs, as amended, we would like to
refer the relevant legal provisions contained in Sections 12, 25 of the
Customs Act, 1962; Section 2 of the Customs Tariff Act, 1975 and
notifications issued thereunder for consideration of proper duty applicable
on the subject goods under dispute.
"Section 12. Dutiable goods. -
(1) Except as otherwise provided in this Act, or any other law for the time
being in force, duties of customs shall be levied at such rates as may be
specified under the Customs Tariff Act, 1975 (51 of 1975), or any other
law for the time being in force, on goods imported into, or exported from,
India.
....
Power to grant exemption from duty.
25. (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon...."
11C/86021/2021 a/w other 70 connected appeals "Section 2. Duties specified in the Schedules to be levied. -
The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules.
xxx xxx xxx xxx
THE FIRST SCHEDULE - IMPORT TARIFF
(Refer Section 2)
THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF Classification of goods in this Schedule shall be governed by the following principles:
1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:
xxx xxx xxx xxx THE GENERAL EXPLANATORY NOTES (GEN) TO IMPORT TARIFF
1. Where in column (2) of this Schedule, the description of an article or group of articles under a heading is preceded by "-", the said article or group of articles shall be taken to be a sub-classification of the article or group of articles covered by the said heading. Where, however, the description of an article or group of articles is preceded by "- -", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-". where the description of an article or group of articles is preceded by "---" or "----", the said article or group of articles shall be taken to be a sub-classification of the immediately preceding description of the article or group of articles which has "-" or "--". ..."
Tariff items and Notifications issued under Section 25 ibid in respect of imported goods, during the relevant time:
8.1 In order to address the issue of eligibility to exemption of imported goods, we would also like to refer to the relevant Customs Tariff heading, sub-headings, tariff items and the notifications issued over a period of time, in order to identify the scope of goods covered under such classification in chapter heading 8517, CTI 8517 6290 and the notification issued for providing exemption from Basic Customs Duty, which is the subject matter of dispute in the present appeals before us. The First Schedule of the Customs Tariff in respect of Chapter heading 8517 as it stood at the time of extending whole of customs duty exemption initially for the first time and the relevant Notification No. 24/2005-Customs dated 01.03.2005 is extracted and given as below:12
C/86021/2021 a/w other 70 connected appeals Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 8517 ELECTRICAL APPARATUS FOR LINE TELEPHONY OR LINE TELEGRAPHY, INCLUDING LINE TELEPHONE SETS WITH CORDLEWSS HANDSETS AND TELECOMUNICATION APPARATUS FOR CARRIER-CURRENT LINE SYSTEMS OR FOR DIGITAL LINE SYSTEMS; VIDEOPHONES
- Telephone sets; videophones:
8517 11 -- Line telephone sets with cordless handsets:
8517 11 10 --- Push button type u Free -
8517 11 90 --- Other u Free -
8517 19 -- Other:
--- Telephone sets:
8517 19 11 ---- Push button type u Free -
8517 19 12 ---- Rotary dial type u Free -
8517 19 19 ---- Other u Free -
8517 19 20 --- Videophones u Free -
Facsimile machines and teleprinters:
8517 21 00 -- Facsimile machines u Free -
8517 22 00 -- Teleprinters u Free -
8517 30 00 - Telephonic or telegraphic switching apparatus u Free -
8517 50 - Other apparatus, for carrier-current line systems or
for digital line systems :
8517 50 10 -- PLCC equipment u Free -
8517 50 20 -- Voice frequency telegraphy u Free -
8517 50 30 -- Modems (modulators-demodulators) u Free -
8517 50 40 -- High bit rate digital subscriber line system (HDSL) u Free -
8517 50 50 -- Digital loop carrier system (DLC) u Free -
8517 50 60 --Synchronous digital hierarchy system (SDH) u Free -
8517 50 70 --Multiplexers, statistical multiplexers u Free -
---Other :
8517 50 91 ----ISDN terminals u Free -
8517 50 92 ----ISDN terminal adaptor u Free -
8517 50 93 ----Routers u Free -
8517 50 94 ----X25 Pads u Free -
8517 50 99 - Other
8517 80 ---- Other apparatus:
8517 80 10 ---Attachments for telephones u Free -
8517 80 20 ---Subscriber end equipment u Free -
8517 80 30 ---Set top boxes for gaining access to internet u Free -
8517 80 90 ---Other
8517 90 -Parts :
8517 90 10 ---Populated, loaded or stuffed printed circuit boards Kg. Free -
8517 90 90 ---Other Kg. Free -
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8.2 The aforesaid notification extending full exemption was introduced as
a part of the budget proposals made in the Union Budget 2005. The relevant explanatory notes, issued in explaining the budget proposal vide letter in D.O.F.No.334/1/2005-TRU dated the 28.02.2005 stated as below:
"84.9 Customs duty is being exempted on the specified tariff lines covered under the Information Technology Agreement (ITA). With this reduction, customs duty will be exempt on all 217 tariff lines of ITA. All goods imported for the manufacture of ITA bound items, subject to end-use condition will also be exempt from customs duty (notification No. 25/98- Customs as amended by notification No. 18/2005-Customs, No. 24/2005- Customs and No. 25/2005-Customs refer)."
8.3 On plain reading of the tariff items covered under chapter heading 8517 and the exemption entry in serial No.3 of the said Notification No.24/2005-Customs dated 01.03.2005, it transpires that initially 'all goods covered under chapter heading 85.17' were wholly exempt from the basic customs duty leviable under the First Schedule to the Customs Tariff Act, 1975. Further, it also transpires that at the time of initial introduction of exemption to ITA bound items in the year 2005, vide notification No.24/2005-Customs dated 01.03.2005, there was no specific tariff entry for classification of goods covered under the description "machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus", and these were covered under the residual entry as 'others'. Further, as all goods covered under entire chapter heading 8517 was exempt, at that time, there was no basis for disputing eligibility of any goods under the aforesaid exemption.
8.4 From the documents placed on record, it is noted that the aforesaid notification No.24/2005-Customs was subsequently amended by issue of an amending notification No.11/2014-Customs dated 11.07.2014, so as to exclude certain specified tariff items, which was proposed to attract the tariff rate of basic customs duty of 10%. Such proposal of imposing 10% BCD was explained by the Union Finance Minister in the Union Budget, 2014 as follows:
"Budget 2014-2015 Speech of Arun Jaitley Minister of Finance July 10, 2014 xxx xxx xxx
215. The demand for electronics is growing very fast. To boost domestic production and reduce our dependence on imports, I intend to take the following steps:14
C/86021/2021 a/w other 70 connected appeals Impose basic customs duty at 10 percent on specified telecommunication products that are outside the purview of the Information Technology Agreement;
Exempt all inputs/components used in the manufacture of personal computers from 4 percent special additional duty (SAD);
Impose education cess on imported electronic products to provide parity between domestically produced goods and imported goods;
Exempt 4 percent SAD on PVC sheet and ribbon used for the manufacture of smart cards."
8.5 Further, the above budget proposal was also explained to the customs field formations by the Ministry of Finance, in its explanatory notes issued vide D.O.F.No.334/15/2014-TRU dated 10.07.2014, as follows:
"Basic Customs Duty on specified telecommunication products not covered under the ITA (Information Technology Agreement) is being increased from NIL to 10%. Clause 87 of the Finance (No.2) Bill, 2014 refers. Notification No.24/2005-Customs, dated 1st March, 2005 is being amended vide notification No.11/2014-Customs, dated 11th July, 2014 so as to exclude these specified tariff items, which will henceforth attract the tariff rate of basic customs duty of 10%. However, all goods required for the manufacture of the aforesaid telecommunication products would continue to enjoy the exemption from basic customs duty. Notification No.11/2014-Customs, dated 11th July, 2014 may be referred to for details."
In terms of the aforesaid budgetary changes, certain specified goods, which are not covered under the international obligation for extending tariff concession under the Information Technology Agreement (ITA), was enhanced with applicable basic customs duty without extending the duty concession under Notification No.24/2005-Customs, as amended, which was earlier available to all goods covered under chapter heading 8517 with effect from 11.07.2014. 'Carrier Ethernet Switch' which is under dispute in the present case, was one such item for which the duty concession was removed as above. The extract of the amending Notification No. 11/2014-Customs dated 11.07.2014, and the subsequent Notification No. 57/2017-Customs dated 30.06.2017, amended by Notification No. 75/2018-Customs dated 11.10.2018, No. 02/2019-Customs dated 29.01.2019 are extracted and given below:
15C/86021/2021 a/w other 70 connected appeals 16 C/86021/2021 a/w other 70 connected appeals 17 C/86021/2021 a/w other 70 connected appeals 18 C/86021/2021 a/w other 70 connected appeals 19 C/86021/2021 a/w other 70 connected appeals 8.6 From plain reading of the above notifications issued subsequent to 11.07.2014, it also transpires that the specified items which are outside the scope of ITA bound items, under the international obligations agreed to by India as a Member country or signatory to ITA agreement, were continue to attract the BCD of applicable rate as it existed during the relevant time.
Initially this was 10% tariff rate and when the tariff rate was enhanced to 20%, the effective rate of 10% was specified as applicable rate of BCD in the said notifications.
8.7 From the above analysis of the tariff schedule and exemption notifications, it has become clear that the scope of goods covered under the exemption Notification No.57/2017-Customs dated 30.06.2017 which was issued as successor to Notification No.24/2005-Customs, as amended, inter alia, include 'Carrier Ethernet Switch' which are not covered by the ITA agreement.
8.8 In terms of the HS Commodity Description and Coding System WCO, which describe in detail the scope and coverage of the goods under the Customs classification, the goods covered under chapter heading 851762 are stated as follows. Further, amongst such goods, the scope of coverage of communication networks, where ethernet switches are used are explained as given below:
"8517.62 -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus"
(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. (6) Pulse to tone converters which convert pulse dialed signals to tone signals."20
C/86021/2021 a/w other 70 connected appeals 8.9 It is further noticed that in the year 2022, in order to align the customs tariff along with the changes introduced in terms of HS Commodity Description and Coding System WCO, inter alia, the goods covered under chapter heading 8517 was amended with effect from 01.02.2022 as follows: (changes indicated in red-coloured letters/figures) 21 C/86021/2021 a/w other 70 connected appeals Thus, on perusal of the above details, we find that right through the disputed period of November, 2020 to February, 2022 covering the imports over the said period, the scope and coverage of the goods under chapter sub-heading 8517.62 remained the same and there was no change even after the HS changes for technological changes of goods such as 'smart phones' that were introduced in the year 2022, and made effective from 01.02.2022.
9.1 In the above back ground, we had examined the scope of coverage of the goods under Information Technology Agreement (ITA) which is also known as ITA-1 as provided under the government website of the Ministry of Commerce. It is stated therein that India is a signatory to ITA, which is a plurilateral agreement of WTO. India joined the ITA on 25th March 1997. As on date, there are altogether 75 member signatories, including 27 EU member countries, accounting for about 97 percent of the world trade in Information Technology (IT) products, which adhere to ITA for the purpose of international trade, which include the purpose classification and levy of duty under respective Customs statute. Though, the proponents of ITA expansion have prepared a consolidated list containing IT products (combining products of interest of all proponents of ITA 2), on which tariff reductions are being sought has been prepared and circulated amongst WTO members, which is also under active discussions in the WTO, with India's adverse experience with respect to local IT industry, no further expansion of the list of the items under ITA has been considered. In respect of the products covered under ITA, there are two attachments to the Annex of the ITA, called Attachment A list and Attachment B list. Attachment A lists the HS headings or parts thereof to be covered under ITA. Similarly, Attachment B lists specific products to be covered by an ITA wherever they are classified in the HS. The specific group of products covered in respect of chapter heading 8517.60 are as below:
"851762 -- (2007-) -- Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus"
On perusal of the above list of items under ITA, we find that there is no specific restriction in the scope of goods covered under the ITA inasmuch as the entire goods covered the sub-heading 8517.62 are included in the eligible list of goods to be considered under the exemption extended for goods covered under ITA agreement. Further, there has been no change in 22 C/86021/2021 a/w other 70 connected appeals the scope of coverage of items either under HS classification or under the First Schedule to the Customs Tariff Act, 1975.
9.2 We also find that the issue of eligibility to concessional BCD to Ethernet switches was initially referred by the Department of Revenue to the Department of Telecommunication, Ministry of Communication, who had clarified the issue in the O.M. dated 18.11.2016, as follows. The relevant extract of the said reference is given below:
"The undersigned is directed to refer to the Department of Revenue's OM INC 332/12/2016-TRU dated 29.07.2016 on the subject mentioned above and to furnish the comments of this department as under:
a. Layer 2 unmanaged Ethernet switches & half managed Ethernet switches are non-carrier Ethernet switches and appear to be not covered by the notification 11/2004-Custom dated 11.07.2014.
b. Managed Ethernet switches & web managed Ethernet switches can be carrier Ethernet switches or non- carrier Ethernet switches /Enterprise Ethernet switches.
C. There is no definite technical classification between Carrier Ethernet switches and Enterprise Ethernet switches/Non carrier Ethernet switch based on features/services supported. As carrier Ethernet switches and enterprise Ethernet switches may have overlapping features and may vary from OEM to OEM. Carrier Ethernet Switch and Enterprise Ethernet Switch can only be classified based on usage by TSP/ISP (Telecommunications Service Provider/ internet Service Provider) or customer location/offices/ Enterprises.
d. The Ethernet switches used by non TSP/ ISP's for aggregating the traffic in their local network can be treated as Enterprise Ethernet switch/Non-Carrier Ethernet switch whereas the Ethernet switches which are used by TSP/ISP's to transport/carriage of Ethernet /IP traffic can be treated as carrier Ethernet switches.
e. Based on the reasons cited above in our opinion the classification of the Ethernet switch in to carrier Ethernet switch and non-carrier Ethernet switch can only be ascertained based on the purchase order from the ultimate consignee.
i. In case the ultimate purchase order is from non TSP/ISP then such switch may be treated as Enterprise Ethernet Switch/Non- Carrier Ethernet switch.
ii. In case the purchase order is from TSP/ISP and the TSP/ISP intend to use the switch in their network for the purpose of Transport/Carriage then the switch may be treated as carrier Ethernet switch.
iii. In case the purchase order from TSP/ISP and the TSP/ISP intend to use the switch in their customer premises then the switch may be treated as Enterprise Ethernet Switch/Non-Carrier Ethernet Switch. For this a certificate may also be obtained from the TSP/ISP."23
C/86021/2021 a/w other 70 connected appeals 9.3 Further, on careful reading of the entries under Sl. No. 13 of the notification No. 11/2014-Customs dated 11.07.2014 and Sl. No. 20 Notification No.57/2017-Customs dated 30.06.2017, as amended, we find that 'Ethernet Switches' as a part of the network equipment to the extent that they are used either in Local Area Network (LAN) or Wide Area Network (WAN), including those products dedicated for use solely or principally to permit the interconnection of automatic data processing machines and units thereof for a network that is used primarily for the sharing of resources such as central processor units, data storage devices and input or output units for physical incorporation into automatic data processing machines and units thereof, alone are eligible for concessional BCD. If the 'Ethernet switches' are meant for or used for the purpose of telecommunication, along with various items listed therein under (i) to (iv) of the entry at Serial No.13, then such goods are not eligible for concessional BCD, as these have been excluded from the scope of such exemption in terms of specific description of goods. Thus, 'Carrier Ethernet Switch' used for telecommunication purpose is not eligible for the concession provided in such exemption entry of the aforesaid notifications.
9.4 We have also carefully perused the instructions issued by the Central Board of Indirect Taxes & Customs (CBIC) vide Circular No.08/2023 dated 13.03.2023. It is clearly stated therein that the CBIC, on being made aware of the various technology related descriptions used for products and equipment covered in the exclusion categories (b) to (h) of the exemption entry in Notification No.57/2017-Customs and No.02/2019-Customs in respect of tariff items under 8517 2690 and 8517 6990, have consulted with the Department of Telecommunication, and have identified the list of products/equipment covered under those exclusion categories. Accordingly, CBIC had decided that the specific product descriptions for which customs duty exemption are excluded will be captured in the bills of entry with effect from 01.04.2023 in terms of Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018. Therefore, CBIC had directed the field formations to make the stakeholders, including importers, to be made more aware of the matter, by requiring them to declare the specific alpha numeric code/ identifier code, relevant to the products/equipment covered under the exclusion categories. Firstly, we find that these instructions apply to imports made w.e.f. 01.04.2023, whereas the imports in the present case are relating to November, 2020 to 24 C/86021/2021 a/w other 70 connected appeals February, 2022, and thus these instructions do not have any application on the present case. Even if we take into consideration the three specific products/equipment which are covered under the exclusion categories under CTI 8517 6290 described in the aforesaid circular at Annexure-2 for 'Carrier ethernet switches' and other items, these are Internet Protocol Multi-Protocol Label Switching (IP-MPLS) based equipment (code TEG001); Packet Transport Network (PTN) based equipment (code TEG002); Multiprotocol Label Switching-Transport Profile (MPLS-TP) based equipment (code TEG003). The product literature and the specifications/features of 'Catalyst 3850 Enterprise Switch' placed on record, clearly indicate that they do not support MPLS-TP feature; IP-MPLS feature and are not used in the Packet Transport Network environment for transportation of data for mobile services. Therefore, we do not find that these specified products/ equipment are applicable for the impugned products covered in this case.
10. It is also seen that the learned Commissioner (Appeals) had decided on the issue of eligibility to BCD concession in respect of the imported goods as follows. The relevant paragraphs of impugned order are extracted and given below as follows:
"8. The main contention made by the appellant in the impugned case is that the imported Catalyst 3850 Ethernet Switch are a non-carrier Switch and thus are leviable to 10% Basic Customs duty in terms of S.No.20 of Notification No.57/2017-Cus, as amended and no Speaking Order was issued by the proper officer under Section 17(5) of the Customs Act, 1962.
xxx xxx xxx
10. It is known that data flows through network based on the standards set up by a globally recognised body i.e. Institution of Electrical and Electronics Engineers (IEEE), which are referred to by CISCO itself in its manuals found on its website (www.cisco.com) Ethernet has evolved from a LAN (Local Area Network) technology to a much more robust, carrier-grade transport technology for metropolitan service networks. Ethernet is the dominant LAN technology in most offices used to interconnect high-speed corporate networks. However, some of the attributes that make Ethernet simple and inexpensive for office LANs impede its use for carrier-grade data services over larger metropolitan networks. The amount of corporate, home, and internet data traffic has increased exponentially. Therefore, the capacity and configuration is highly relevant to determine the classification as Carrier Ethernet Switch. Basically, Carrier Ethernet is extension to Ethernet to enable users such as telecommunications network providers to provide Ethernet services to customers and to utilize Ethernet technology in their networks.
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12. IEEE 802.1Q Virtual LANs (Serial No. 15 above, of specification of Catalyst 3850): Virtual LANs, also known as 802.1Q, provides a method for assigning a "Virtual Identifier" or VID tag to each Ethernet frame. Within an office, VIDs allow different organizational groups to be connected together in virtual LANs, improving overall network efficiency and performance (i.e., engineering VID=100, marketing VID=200,sales VID=300). For a carrier the VID becomes a useful tag for identifying services from a specific customer.
13. It is further seen that the Operating System (CISCO IOS XE) of CISCO Catalyst 3850 meets the requirements of the carrier Ethernet equipment. This version of Operating System is clearly certified by the Metro Ethernet Forum in other devices. A list of all devices of CISCO certified by MEF is available on website of MEF (www.mef.net), which mentions the Word of operating system of CISCO IOS XE. The certification of operating system clearly indicates that software of the imported goods is certified by Metro Ethernet Forum (MEF) which is a non-profit international industry consortium, Dedicated to adoption of assured services across a global system of automated Networks. The forum makes recommendations to existing standard bodies.
14. The datasheet of a well established carrier ethernet switch of CISCO namely ME 3800X is obtained from website www.cisco.com which vide Table 9 specifies the networking standards. These standards were compared with That of CISCO CATALYST 3850 and it is seen that 10 standards of the carrier ethernet Switch are in common with IEEE standards of goods imported vide impugned Bs/E mentioned above. This commonality of specifications is strongly indicative of the Fact that the goods imported actually are carrier ethernet switches even if not Described so in Bs/E.
15. The technical specifications and software of imported goods is supported by configuration guide of catalyst 3850 which specifically provides the functionality of configuration of catalyst 3850 as carrier ethernet Switch as per its title which clearly reads as "CARRIER ETHERNET CONFIGURATION GUIDE, CISCO IOS XE RELEASE 3SE (CATALYST 3850 SWITCHES).
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17. Thus in view of all the above, it is clearly inferable that Catalyst 3850 switch is carrier Ethernet switch despite its non-statement as such by the Metro Ethernet Forum.
18. The appellants have highlighted the differences between carrier and non-carrier switches available on their website, which was published only on 31.07.2019. However, I find that the appellants have ignored the information which were available earlier for the same goods in their won website showing it as "carrier Ethernet switch". Hence I do not accept the contention of the appellant that impugned (CATALYST 3850 SWITCHES) items are "non carrier grade" one. As such, the duty as per exclusion clause (g) of Notfn. 02/2019-Cus, Sr 20 will be applicable and the goods shall be liable for BCD-@20%."26
C/86021/2021 a/w other 70 connected appeals 11.1 We find from the above, that the authorities below including the learned Commissioner (Appeals) have not examined the issue of eligibility to exemption of impugned goods in detail and on the basis of factual data about the imported goods in question. In respect of Orders-in-Appeal No. MUM-CUSTM-AMP-APP-1923 to 1952/2020-21 dated 24.03.2021 and No.MUM-CUSTM-AMP-APP-2723 to 2725/2020-21 dated 23.03.2023, learned Commissioner (Appeals) besides the above findings having been reiterated therein, he had inter alia found that the imported goods also supports high capacity of 10 GBPS with mac addresses running into huge number, being indicative of that catalyst 3850 switch is capable of creating wide area network running into kilometers. Further, by relying on certain product literature of CISCO in the earlier period, prior to 31.07.2019, he had stated that enterprise switches also meets the requirements of carrier ethernet; configuration guide specifically provide enhancing the functionality of carrier ethernet, and thus he did not accept the contentions of the appellants that the imported goods are non-carrier grade switches and denied concessional BCD for the imports under various B/Es.
11.2 In respect of Order-in-Appeal No. MUM-CUSTM-AMP-APP-1990/2022- 23 dated 13.12.2022, learned Commissioner (Appeals) besides the above common findings on merits of the case, he had inter alia found that in respect of the B/Es where re-assessment ordered by the department is contrary to the self-assessment made by the appellants claiming concessional BCD, no speaking orders have been passed as required under Section 17(5) ibid. Against such re-assessment done by the department for payment of higher BCD, the appellants had paid such duty under protest. Further, even though these appeals had been filed beyond the stipulated time for filing the appeal before learned Commissioner (Appeals) under Section 128 ibid, he had taken up these for consideration on the ground that Hon'ble Supreme Court had clarified that on account of the impact of the surge of the virus on public health and adversities faced by the litigants in the prevailing conditions, the period from 15.03.2020 till 28.02.2022 shall stand excluded in computing the period of limitation, in Misc. application No. 665 of 2021 in SMW(C) No. 3 of 2020. However, in respect of Order-in-Appeal No. MUM-CUSTM-AMP-APP-876 to 902/2020-21 dated 29.10.2021, while dealing with the merits of the case on the basis of above findings, learned Commissioner (Appeals) had also held in 6 B/Es the filing of appeal is time barred and in 4 B/Es the assessments are provisional. In this regard, we are unable to appreciate such decision of learned 27 C/86021/2021 a/w other 70 connected appeals Commissioner (Appeals), when he had accepted a part of the appeals filed beyond the prescribed period for filing the appeals before him on the basis of the Hon'ble Supreme Court's order, for the same period i.e., 2021, how such contradictory stand could be taken in the self-same appellants assessee's case for certain other part of the imports. Hence, such contrary stand taken by the learned Commissioner (Appeals) is not legally sustainable. Further, when re-assessment for payment of higher BCD on the imported goods have been ordered by the departmental authorities contrary to the self-assessment, we are also unable to appreciate how such assessments were considered as provisional and for what reasons it was done so, as these have not been explained or discussed for taking a proper view in the matter. Hence, we find that the same is also not legally sustainable.
11.3 We also find that it is clearly on record that the main contention in all these appeals remains the same i.e., eligibility to concessional BCD under Sl. No. 20 of Notification No.57/2017-Customs dated 30.06.2017, as amended, and therefore such common issue for all these appeals needs to be addressed by the Tribunal in the present case before us.
12.1 By taking into account the above discussed various factors into consideration including the contrary claims made by the appellants and the findings in the impugned orders, and in order to provide an evidential basis for deciding the above common issue of eligibility of imported 'Catalyst 3850 Ethernet Switches' to concessional BCD, during the course of hearing these appeals, this Tribunal had passed an Interim Order No.33-103/2023 dated 18.09.2023, and had ordered for conducting technical inspection of the imported goods in the presence of officers having expertise/technical knowledge of the subject goods or by technical experts in the presence of representative of the appellants. The extract of the said order is as follows:
"The issue involved in this batch of appeals relates to eligibility of concessional rate of Basic Customs Duty (BCD) in terms of Sr No. 20 in the Notification No. 57/2017-Cus dated 30.06.2017. The Department has denied the duty exemption in the said notification, holding that the goods in question should be classified as "Carrier Ethernet Switch", instead of the classification claimed by the appellant as "Enterprise Switch". On perusal of impugned order passed by the learned Commissioner of Customs (Appeals), we find that vide paragraph 14 in the said order, he has held that 10 standards of the Carrier Ethernet Switch are in common with IEEE standards of goods imported by the appellant and accordingly, the said goods should appropriately be classified as Carrier Ethernet Switch.28
C/86021/2021 a/w other 70 connected appeals
2. On perusal of the case records and considering the submissions made by both sides, we are of the view that technical specification of the product is required to be ascertained for proper classification of the goods and for that purpose, we are of the view that some officers from the Department having technical knowledge on the subject goods or technical experts in the relevant field/subject, duly recognized by Expert bodies should inspect the site, where the same imported goods have been installed for analysis and submission of the report as to why, the product(s) in question should be considered differently, than as claimed by the appellant in the Bills of Entry filed by them. If on examination, it is observed that the classification of the product is different than the classification claimed by the appellant, the reason should be assigned by the testing agency/officers to such effect.
3. Therefore, the jurisdictional Commissioner of Customs is directed to depute the officer(s) having technical knowledge on the subject goods or the technical expert as explained above, to inspect the product and for submission of the report with regard to the actual classification of the goods for purpose of payment of the customs duty. Inspection should be done in presence of the appellant's representative. It is expected that the report should be submitted by the Department within a period of 30 days from the date of passing of the order. Accordingly, the matter is adjourned to 06.11.2023 for reporting compliance and for a decision on merits on the appeal filed by the appellant."
12.2 In pursuance of the above, the departmental authorities have belatedly submitted the report, which the appellants had objected to it. From the report submitted by the jurisdictional Customs authorities addressed to the learned AR, which have been submitted as a rejoinder to the Revenue's written submission on 03.05.2024, we find that firstly such an exercise as detailed in the above interim order has not been undertaken by the departmental authorities, despite cooperation from the appellants informing the premises where the imported goods are situated for conducting the technical examination/inspection. On the contrary, it is found that the technical opinion of the Telecom Engineering Centre (western region), Mumbai, on the basis of letter No. CUS/APR/IPR/3/2023 Gr.5A/ACC dated 04.04.2024 providing details of the product, had alone was obtained to state that the imported goods may be considered as 'Carrier Ethernet Switches'.
12.3 From the details placed on the public domain/website, it transpires that Telecommunication Engineering Centre (TEC), under Department of Telecommunications (DoT), is the authorised agency/Telegraph Authority for the purpose of Testing and Certification of telecommunication infrastructure. They have notified a Simplified Certification Scheme (SCS) 29 C/86021/2021 a/w other 70 connected appeals for Mandatory Testing and Certification of Telecommunication Equipment (MTCTE). Any telegraph equipment which is used or capable of being used with any telegraph authority established, maintained or worked under the license granted by the Central Government in accordance with the provisions of section 4 of the Indian Telegraph Act, 1885, shall have to undergo prior mandatory testing and certification in respect of parameters as determined by the telegraph authority from time to time. The testing and certification envisaged in amended MTCTE Procedure v3.0 (TEC 93009:2024) ensures that the equipment meets all TEC prescribed Essential Requirements. The quality and reliability of equipment is not part of this procedure, hence, the same is not guaranteed through this certification. OEMs / dealers themselves will be responsible for necessary quality and reliability criteria claimed by them. Any equipment to be used in the network of Licensed Telecom Service Providers/Internet Service Providers/Virtual Network Operators etc. may have to undergo additional tests as specified in License.
12.4 In the above context, we are of the considered view, that if testing of the imported goods would have been conducted as elaborated in the interim order dated 18.09.2023, either at the premises/place offered by the appellants or in any other premises/place, where the TEC or the customs authorities desired to conduct field inspection of the imported equipment, then it could have been conclusively proved that the imported 'Catalyst Ethernet Switch' is either 'carrier ethernet' type or not. Further, if such test could have been conducted in any premises of the telecommunication service provider, then it could have been easily identified by TEC as they are the authorised agency, that whether such imported 'Catalyst Ethernet Switch' formed a part of the electronic asset infrastructure to prove the Revenue's arguments that these are used for 'carrier ethernet' or telecommunication purpose. In the absence of any such efforts having been taken by the customs authorities, either by themselves through some officers from the Department having technical knowledge on the subject goods or through TEC, we are unable to accept the various arguments made by the learned AR and the findings arrived at by the learned Commissioner (Appeals) in the impugned order, on the basis of certain specifications or features of the imported goods. Therefore, we are of the considered view that such findings are not sufficient to give a different treatment to the imported goods for denying the concessional basic customs duty exemption available under the notifications No. 30 C/86021/2021 a/w other 70 connected appeals 11/2014-Customs dated 11.07.2014 and No.57/2017-Customs dated 30.06.2017, as amended.
13. On the basis of the above factual details of the imported goods, and inasmuch as the report dated 24.04.2024 and the earlier report dated 18.01.2024 provided by TEC does not fulfill the requirements of the directions given in the interim order dated 18.09.2023, we are not able to consider the same having any merits for treating it as an expert opinion based on the technical examination of the working or functioning of the imported product, which as discussed in the preceding paragraphs 8.1 to 9.2 are essential to decide the issue on hand.
14. On the other hand, the appellants have produced certification from their customers such as M/s Cyient DLM Private Limited, Mysore; M/s Vodafone Idea Ltd., etc., to demonstrate that the various models of Ethernet Switches supplied by the appellants were purchased and used for enterprise/on campus use, in the data centre of the company for management of data centre or in equipment located in internal data centre-LAN and not in the back bone network architecture. Further, no wide network (WAN) transport/carrier ethernet services were offered on these imported Ethernet switches that have been deployed in their premises.
15. We find that there are sufficient grounds provided by the appellants to demonstrate that the imported Catalyst 3850 series switches are of 'enterprise switch' and are not a 'carrier grade switch', as it does not meet the various criteria as provided under the "Essential requirements" as laid down by the government authorities like Technical Engineering Centre and as elaborated in the arguments made by the learned Advocates for the appellants which have been captured at paragraphs 3.1 and 3.2.
16. In view of the foregoing discussions and analysis, we conclude that the product under consideration i.e., various models of CISCO "Catalyst 3850 series Ethernet Switches" imported by the appellants classified under CTI 8517 6290 are eligible for concessional Basic Customs Duty (BCD) @10% in terms of Sl. No. 13 of the notification No. 11/2014-Customs dated 11.07.2014 and Sl. No. 20 Notification No.57/2017-Customs dated 30.06.2017, as amended.
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17. Therefore, we are of the considered view that the impugned orders passed by the learned Commissioner (Appeals) cannot be sustained on merits. Accordingly, the impugned orders are set aside and the appeals are allowed in favour of the appellants.
(Order pronounced in open court on 30.09.2024) (S.K. MOHANTY) MEMBER (JUDICIAL) (M.M. PARTHIBAN) MEMBER (TECHNICAL) Sinha