News Flash
  • Presidential Award of Appreciation Certificates and Medals announced on the occasion of Republic Day, 2023 Click here
  • Revised Annual Calendar of Departmental Examinations for The Year 2022-23 Click here
  • Departmental Examination: Confirmation for Inspectors of Central Tax scheduled in February,2023 now postponed. The examination re-scheduled from 21.03.2023 to 24.03.2023.
  • WCO Certificates of Merit - International Customs Day 2023. Click here
  • SECURITY ADVISORY -reg. Click here
  • Inviting Nominations for the post of Inspector and Sub-Inspector in National Investigation Agency on deputation basis -reg. Click here| Forwarding Letter
  • Cyber Security Guidelines - reg. Click here
  • Draft Seniority list of Joint Commissioner of Customs & Indirect Taxes appointed/promoted against the vacancy year 2015-16. Click here
  • Press Release regarding declaration of date of online written examination of Customs Brokers Licensing Examination, 2023 under CBLR, 2018. Click here
  • Extension of Closing date of Notice Inviting applications for the post of Additional Assistant Director in various Directorates under CBIC on a deputation basis- Reg. Click here
  • Filling up of posts of Staff Car Driver in Enforcement Directorate on deputation basis-Reg. Click here| Enclosure
  • Recruitment against Sports Quota in the Central Tax & Customs Department Pune-2022-Corrigendum-reg. Click here
  • Customs (Assistance in Value Declaration of Identified Imported Goods) Rules, 2023 Rules | Circular
  • Publication of All Non-Tariff Measures (NTMs) along with Centralized Control Numbers (CCNs) in compliance with the 6th NCTF meetingClick Here
  • Notification issued to assign powers of Superintendent of Central tax to Additional Assistant Directors in DGGI, DGGST and DG Audit. Click here
  • Notification for Departmental Examination for promotion of Tax Assistants to the Grade of Executive Assistants of Central Taxes & Customs to be held in the month of March, 2023 Click here
  • Annual General Transfer 2023. Click here
  • General Election to the Legislative Assemblies of Gujarat and Himachal Pradesh, 2022- Last visit of EOs for preparation of Scrutiny Reports etc.-Reg. Click here
  • CBIC has notified Rules of Origin of India-Australia Economic Cooperation and Trade Agreement Click here for rules
  • Request for Expression of Interest (EOIs) for Empanelment of CAs/ICWAs for conducting Special Audit under Section 66 of the CGST Act, 2017 at CGST Audit-1 Commissionerate, Delhi Click here
  • Filling up of the post of Administrative Officer in the Customs & Central Excise Settlement Commission, Additional Bench, Mumbai - Regarding Click here
  • Press Release on decisions of 48th GST Council. Click here
  • International Customs Day Celebration 2023: Seeking nominations for the award of WCO Certificates of Merit Click here | Proforma
  • Marks of Deptt. Exam. for Inspectors of Central Tax held in 02.08.2022 to 05.08.2022 declared. Nodal Officers (Exam) may download marks-sheet along with forwarding letter from their e-Mail ID. Click here
  • Notification issued to extend the due date for furnishing FORM GSTR-1 for November 2022 for registered persons whose principal place of business is in certain districts of Tamil Nadu. Click here
  • Notification for Departmental Examination for promotion of Ministerial Officers to the Grade of Inspectors of Central Taxes, Inspectors of Customs (Preventive Officers) & Inspectors of Customs (Examiners) to be held in the month of February 2023. It also contains the Schedule, Syllabus, and Instructions for Examination along with the format (in Annexure II) for requesting Question Papers. The Notification can be viewed through this link - Click here
  • CBIC has issued Postal Export (Electronic Declaration and Processing) Regulations, 2022 in furtherance of ease of doing business Notification No. 103/2022-Customs (NT)|Notification No. 104/2022-Customs (NT)|Circular No. 25/2022
  • Recruitment against Sports Quota in the Central Tax & Customs Department Pune Click here
  • CGL Examination 2020- Final Zone Allocation of Inspector (CGST).   |   Annexure-I   |  
  • Master’s Degree Programme in Public Finance at the National Graduate Institute of Policy Studies (GRIPS) in Tokyo, Japan (2023-24).   |   Nomination Form   |   Proforma   |   Annexure-I   |   OM   |  
  • Circular on Deputation-Willingness for the post of Inspector at NACIN, Faridabad Click here
  • DGTS is organizing an open house meeting with interested communication agencies for” Selection of Communication Agency for CBIC's Taxpayer outreach programs on 01st December, 2022 Click here
  • CGL Examination 2020- Final Zone Allocation of Inspector (PO & Examiner) and TA.   |   Annexure-I   |   Annexure-II   |   Annexure-III   |  
  • Manner of processing and sanction of IGST refunds, withheld in terms of clause (c) of sub-rule (4) of rule 96, transmitted to the jurisdictional GST authorities under sub-rule (5A) of rule 96 of the CGST Rules, 2017 Click here
  • Departmental Examination for promotion to the grade of Tax Assistant in Directorate Cadre (CCA DGPM) of CBIC for the year 2022-23 Click here
  • Stenographer Examination 2020- Final Zone AllocationClick here | Annexture I | Annexture II
  • CBIC issued notifications to empower the Competition Commission of India to handle anti-profiteering cases under CGST Act, 2017 with effect from 01.12.2022 Click here
  • Filling up of posts in the Competition Commission of India and in CBN on deputation basis-Reg. Click here
View All

 

AUTHORITY FOR ADVANCE RULINGS

(CENTRAL EXCISE, CUSTOMS & SERVICE TAX)

NEW DELHI

 

PRESENT

Hon'ble Mr.Justice Syed Shah Mohammad Quadri (Chairman)

Mr.Somnath Pal (Member)

Dr.B.A.Agrawal (Member)

 

Ruling Nos. AAR/05&06(Cus)/2006

In

 Application No.AAR/44/39(Cus)/2005

Application No.AAR/44/38(Cus)/2005

 

Applicant M/s Alcatel India Ltd.  Plot No. 25, Sector 18 Gurgaon-122015 Haryana, India
Commissioner designated Commissioner of Customs, Air Cargo Complex New Custom House New Delhi-110037
Present :  for the applicant Mr. Charles A. Barber Director (Customs & Supply Chain) Alcatel, London, UK   Mr. Steve Gaikwad Client Partner, Vantis Custom House  London, UK
For the Commissioner designated Mr. A.K. Roy, Joint CDR  CESTAT, New Delhi

 

 

R U L I N G

( By Mr. Somnath Pal, Member )

 

            In the first application - AAR/44(Cus)/39/2005 - the following question has been posed by the applicant for an advance ruling :-

 

             "Whether 1696 Optinex Metro Span Telecommunications Equipment proposed to be imported into India, is classifiable under Heading No. 8517 50 99 of the First Schedule of the Customs Tariff Act, 1975" .

 

2.         In Annexure-II to the application read with the Customs Technical Document furnished by the applicant and in the verbal submissions of their Ld. Representatives during the hearing before us, it has been stated that this product is  a hybrid of optical, electronic and mechanical systems  that forms part of a telecommunication system for use in transmission of aggregate data.  It functions utilizing specifically the Optical (Transmission) Amplifier cards by optimizing the amplification performance of aggregate data transmission.  It is a metro  DWDM (Dense Wavelength Division Multiplexing) telecommunication platform (up to 32 telecommunication channels) supporting a broad range of aggregate data rates for application in (i) Non-Amplified Telecommunication Systems (ii) Intra-City Telecommunication Networks (iii) Amplified Telecommunication Systems for large Metropolitan Networks.  This equipment supports variable rate transmission (optical) interfaces, capable of accepting a broad range of data rates, from 100 Mb/s up to 10 Gb/s.  The system transports a wide variety of SDH (Synchronous Digital Hierarchy) and data signals, such as STM-1, STM-4, ATM, FDDI, Fibre Channel, digital video etc.  It has been further submitted by the applicant that the Optical (Transmission) Amplifier cards function within the Alcatel 1696 Metro Span Telecommunication Unit.  This Unit provides both wavelength add/drop and optical ring restoration.  This enables the Alcatel 1696 Metro Span to extend the type of protection and flexibility that today is available through SDH and other protocols, without the added expense of these systems.  Any transmission signal from 100 Mb/s to 10 Gb/s will be able to traverse a 1696 Metro Span ring with terminal equipment only at the add-and-drop sites.  An internal wavelength switching matrix, makes the equipment able to provide the network topology and protection scheme best suited to match the system requirement.  This telecommunication equipment, it is submitted, functions as a dedicated unit for the transmission of aggregate data.    

 

3.         In the second application - AAR/44(Cus)/38/2005 - ruling is sought by the applicant on a related question as to whether Alcatel 1696 Optical Amplifier Card which functions within the Alcatel 1696 Metro Span Telecommunication Unit would be classifiable under Heading No. 8517 50 99 of the First Schedule to Customs Tariff Act, 1975.  It has been submitted that typically the Optical Amplifier Card provides up to + 17 dBm output power for 32 wavelengths in the C-band.  Output at + 20dBm can be achieved by adding a further pump.  This Card contains two independent stages : a booster and a pre-amplifier or two boosters or two amplifiers.  To allow for gain flatness, an optical attenuator is present.  In operation the Optical Amplifier Card extends the transmission capacity of the telecommunication system.  In the Customs Technical Document attached to the application the block diagram of the Optical Amplifier Card has been given which depicts various elements of this Card like monitor, SPV filter, optical receiver, pump and alarm & control unit.  It has been further mentioned therein that the Alcatel Optical (Transmission) Amplifier Card functions as a dedicated unit for the transmission of aggregate data.

 

            Referring to the Rule 1 of the General Rules for Interpretation of the First Schedule of the Customs Tariff Act, 1975 it has been contended by the applicant that the goods involved in both the questions are clearly telecommunication apparatus and being part of the transmission chain in the telecommunication system, would accordingly fall under the tariff heading 8517 and more precisely under the tariff item 8517 50 99 under the sub-heading 8517 50 which covers "other apparatus, for carrier-current line systems or for digital line systems".  For the Optical Amplifier Card, the applicant has also referred to the Information Technology Agreement (ITA) Schedule from India to WTO as per which amplifiers used in telecommunications are classified under heading 8517.

 

4.         In his initial comments as well as during the hearing before us the stand taken by the Commissioner  in regard to the Alcatel 1696 Metro Span Telecommunication Unit is also the same as that of the applicant, namely, that the equipment in question will be  appropriately  classifiable under tariff item 8517 50 99.  As regards the Optical Amplifier Card, though in his initial comments the Commissioner took the stand that the product in question, being an amplifier part would more specifically be covered under tariff item 8543 90 00 which is sought to be supported by application of Rule 3(c), the Ld. Joint CDR appearing for the Commissioner during the hearing before us, however, submitted that having regard to the technical details furnished by the applicant and further explained by them during the hearing as well as the rulings of the Authority in the applicant's case on the question of classification of 'Equalizers' and 'Repeaters', the goods in question would be more appropriately classifiable under tariff item 8517 50 99.

 

5.         In so far as the Alcatel 1696 Metro Span Telecommunication Unit is concerned, based on the description and design details, as well as the functional characteristics of the equipment in question as seen from the technical write up furnished by the applicant and as further explained before us during the hearing, we have no doubt in our mind that it would merit classification under tariff item 8517 50 99.  The Commissioner has also accepted the classification proposed by the applicant.

 

6.            Turning now to the other item namely, the Alcatel 1696 Optical Amplifier Card,  from the information furnished by the applicant in the application and from their submissions during the hearing before us on the exact role and function of the goods in question, we notice that it functions within the Alcatel 1696 Metro Span Telecommunication Unit by optimizing the amplification performance of aggregate data transmission.  This it does irrespective of the number of communication channels being operated or the variation in signal integrity which are normally experienced over the communication link.  Through this mechanism, constant amplification performance is achieved based upon the configuration of the telecommunication system.  In this way it extends the transmission capacity of the system.  From the block diagram of this item given in the Customs Technical Document supplied by the applicant alongwith the application it appears that the Optical Amplifier Card has various elements like monitor, SPV filter, optical receiver, pump and alarm & control unit.  It is noticed that to allow for gain flatness, a variable optical attenuator (VOA) is also present.  VOA is a device which can be adjusted to block different fractions of light passing through it.  What needs to be noted is that the Card in question is not performing a pure and simple amplification function but its role is to 'optimize' the amplification performance of aggregate data transmission.  As per Concise Oxford Dictionary, 'Optimize' means "make the best or most effective use of".  In the context before us, it would imply that this Card ensures "constant amplification performance" at the best or most effective level.  On the basis of the technical details made available to us we are therefore satisfied that the goods under consideration are not a type of apparatus that can fall within the ambit of tariff heading 8543 whose scope we have already examined in detail in our earlier Ruling No. AAR/14(Cus)/2005 dated 24.11.2005.  At the same time it is also apparent that they are designed to function as a part of the 1696 Metro Span Telecommunication Unit.  That it is a part in the transmission chain of a telecommunication system does not override or alter its basic identity and character of a 'part' of a telecommunication apparatus.  The Optical Amplifier Cards being admittedly and evidently 'part' of an apparatus falling under tariff heading 8517, the moot point for consideration is - what would be the classification of such a 'part' under the First Schedule to the Customs Tariff Act, 1975?  To answer this question, we need to refer to section Note 2(a) & 2(b) of section XVI of the First Schedule of the Customs Tariff Act, 1975 read with the guidelines given in the HSN Explanatory Notes to section XVI on classification of 'parts'.    The section Note 2 of section XVI reads as under :-

 

"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, 8485, 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 8485 or 8548."

 

For the sake of clarity, section note 5 states that for the purposes of these Notes, the expression "machine" means any machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85.

 

A conjoint reading of these provisions in our limited context would show that

 

(a)               in general, parts which are suitable for use solely or principally with particular machines of Chapter 85 are classified in the same heading as those machines, subject of course to the exclusions mentioned in Note 1 to section XVI and in Note 1 to Chapter 85;

(b)               the above rule does not apply to parts which in themselves constitute an article covered by a heading of section XVI [other than headings specified in Note 2(a)]; these are in all cases to be classified in their respective headings even if specially designed to work as part of a specific machine;

(c)               examples of what is meant by "parts which in themselves constitute an article covered by a heading of section XVI", have been given in HSN Explanatory Note to section XVI to make the position clear.  Limiting to chapter 85, a few examples can be cited as (i) electric motors of heading 85.01; (ii) electric heating resistors of heading 85.16; (iii) electrical apparatus for switching, protecting etc. of heading 85.35 and (iv) insulators of any material (heading 85.46).  Reference to these headings would at once clarify that the coverage has to be specific by name.  

 

            Applying the above propositions, we find that the Optical Amplifier Cards are undoubtedly suitable for use solely with 1696 Metro Span Telecommunication Unit; that they are not covered specifically by any other heading of section XVI; that they are also not covered by the exclusions mentioned in Note 1 to section XVI and in Note 1 to Chapter 85.  Therefore, they are to be appropriately classified in the same heading as that of the apparatus of which it is a part, namely, heading 8517.  Under this heading, there is a specific sub-heading 8517 90 for 'parts' of goods falling under the heading 8517 which would thus be the proper sub-heading for our purpose.   As the tariff item      8517 90 10 under this sub-heading is not applicable to the goods in question, the proper classification would therefore be under the residuary tariff item 8517 90 90 of the sub-heading 'parts'. 

 

7.         In view of the foregoing, our rulings on the two aforementioned questions  are as follows :-

 

(a)             Application No. AAR/44(Cus)/39/2005 -  The item 1696 Optinex Metro Span Telecommunications Equipment is classifiable under tariff item 8517 50 99 of the First Schedule of the Customs Tariff Act, 1975.

 

(b)            Application No. AAR/44(Cus)/38/2005 - The item Alcatel 1696 Optical Amplifier Card is classifiable under tariff item 8517 90 90 of the First Schedule of the Customs Tariff Act, 1975.

 

Pronounced in the open Court of the Authority on this 5th day of January, 2006.

 

 

            Sd/-                                         Sd/-                                                     Sd/-

      (B.A.Agrawal)                    (Justice S.S.M.Quadri)                            (Somnath Pal)    

           Member                                    Chairman                                       Member