Hybrid/Pure Matrix Cards For PTN Equipment Classifiable Under CTI 8517 70 10: CESTAT Quashes Customs Duty Against Vodafone Idea
Mariya Paliwala
2 July 2024 10:41 AM IST
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Hybrid/Pure Matrix Cards for PTN Equipment would be classifiable under CTI 8517 70 10 as “parts of goods, and Small Form Factor Pluggable for Packet Transport Network (PTN) Equipment would be classifiable under CTI 8517 70 90.The bench of Justice Dilip Gupta (President) and P.V. Subba Rao...
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Hybrid/Pure Matrix Cards for PTN Equipment would be classifiable under CTI 8517 70 10 as “parts of goods, and Small Form Factor Pluggable for Packet Transport Network (PTN) Equipment would be classifiable under CTI 8517 70 90.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that NIC is effectively a translator, which allows a computer to communicate with a network by translating the output of the computer into a format understandable by the network and vice versa. If a computer is not to be connected to a network, there is no need for the NIC of the computer to function. A computer is complete in itself and does its job of data processing without any need for Network Interface Cards (NICs).
The appellant/assessee, Vodafone Idea Limited, has sought the quashing of the order dated June 29, 2020, passed by the Principal Commissioner of Customs ACC (Imports), by which hybrid/pure matrix cards and small form factor pluggable (SFP) transceivers imported by the appellant have been classified under Customs Tariff Item 8517 62 90 and not under CTI 8517 70 90, as claimed by the appellant. The demand for duty was confirmed with interest and penalties.
The appellant sought the classification of Hybrid/Pure Matrix Cards for PTN Equipment under CTI 8517 70 10 as parts of goods falling under Heading 8571 and Small Form Factor Pluggable for PTN Equipment under CTI 8517 70 90.
The Principal Commissioner classified the goods under CTI 8517 62 90 and confirmed the proposed duty demand with interest by order dated June 29, 2020. The Principal Commissioner found that, like NIC cards that connect computers over a network in telecommunications, these cards connect OTN equipment over an optical network. Thus, the subject goods are nothing but NIC cards.
The appellant contended that the subject goods that have been imported by the appellant are not machines in themselves but parts of the main equipment, and the subject goods are not NIC cards. The goods are an integral and inseparable part of the main equipment, which together form the complete main equipment. The goods cannot function on a standalone basis and function only when put in the slot of the main equipment chassis. It is, therefore, the submission that the goods are proprietary to the main equipment. The term “proprietary, as defined in Newton's Telecom Dictionary, means “something that will only work with one vendor's equipment.”.
The assessee contended that the main equipment, i.e., PTN, is a network technology used in telecommunications to transport packet-based traffic efficiently and reliably. PTN solutions are typically used in service provider networks to support a variety of services, including voice, data, and video. Within this technological arrangement, the chassis of the main equipment has dedicated slots marked for these goods. These goods become functional when plugged into these slots, from where they derive their power and intelligence.
The tribunal noted that the subject goods are in the nature of a populated PCB. Undisputedly, the main equipment is classifiable under CTI 8517 62 90. The subject goods are not specifically covered under any heading of Chapters 84 or 85. Thus, they do not merit classification as per Note 2(a). Sub-Heading 8517 70 specifically identifies and recognizes populated PCBs as “parts. The subject goods (Hybrid/Pure Matrix Cards) are populated PCB and thus merit classification under CTI 8517 70 10 as “parts” of goods falling under Heading 8517 by virtue of Section Note 2(b) of Section XVI.
The order dated June 29, 2020, passed by the Principal Commissioner, therefore, cannot be sustained and is set aside.
Counsel For Appellant: B.L. Narasimhan
Counsel For Respondent: Mihir Ranjan
Case Title: Vodafone Idea Limited Versus Principal Commissioner of Customs
Case No.: Customs Appeal No. 51167 Of 2020
