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/7-13(Cus)/2006
In
Application No.AAR/44/51(Cus)/2005
Application No.AAR/44/49(Cus)/2005
Application No.AAR/44/48(Cus)/2005
Application No.AAR/44/46(Cus)/2005
Application No.AAR/44/45(Cus)/2005
Application No.AAR/44/44(Cus)/2005
Application No.AAR/44/43(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 )
The
following seven applications filed by the applicant are being taken up together
for giving advance ruling since they involve a common issue :-
(a) Application
No. AAR/44/51(Cus)/2005 - "Whether Alcatel SPC Communications Unit
proposed to be imported into India, is classifiable under Heading No. 8517 50 99
of the First Schedule of the Customs Tariff Act, 1975".
(b) Application
No. AAR/44/49(Cus)/2005 -
"Whether Alcatel Electrical Interface unit proposed to be imported into India,
is classifiable under Heading No. 8517 50 99 of the First Schedule of the
Customs Tariff Act, 1975".
(c) Application
No. AAR/44/48(Cus)/2005 - "Whether Alcatel Alarm unit 1 proposed to be
imported into India, is classifiable under Heading No. 8517 50 99 of the First
Schedule of the Customs Tariff Act, 1975".
(d) Application
No. AAR/44/46(Cus)/2005 - "Whether Alcatel Alarm Concentrator unit
proposed to be imported into India, is classifiable under Heading No. 8517 50 99
of the First Schedule of the Customs Tariff Act, 1975".
(e) Application
No. AAR/44/45(Cus)/2005 - "Whether Alcatel Part Equipped Logic Shelf
proposed to be imported into India, is classifiable under Heading No. 8517 90 of
the First Schedule of the Customs Tariff Act, 1975".
(f) Application
No. AAR/44/44(Cus)/2005 - "Whether Alcatel Earth Protector
proposed to be imported into India, is classifiable under Heading
No. 8517 50 of the First Schedule of the Customs Tariff Act, 1975".
(g) Application
No. AAR/44/43(Cus)/2005 - "Whether Alcatel Alarm Unit no 2
proposed to be imported into India, is classifiable under Heading No.
8517 50 of the First Schedule of the Customs Tariff Act, 1975".
2.
Though in respect of the applications at Sl. Nos. (f) and (g) the
classification is indicated under tariff sub-heading 8517 50 in the respective
questions, the applicant however has specified in the corresponding Annexure-II
to these applications that the goods in question would be appropriately
classifiable under the tariff item 8517 50 99.
For the item covered by the application at (e) above, the applicant's
stand is that it would be classifiable under 8517 90 as 'part' of apparatus
falling under heading 8517. In
other words, with the sole exception of item at Sl. No. (e), for all the
remaining goods mentioned above, it is the submission of the applicant that they
are classifiable under the tariff item 8517 50 99 only.
3.
The common issue involved in these applications is the classification of the
items which are admittedly parts of Alcatel's Power Feed Equipment (PFE) as
has been disclosed by the applicant in the Annexure-II to the applications.
None of these applications however has the Customs Technical Document attached
to it and technical information is available briefly in the "description of
goods" given in Annexure-II only. In respect of the Application Nos. AAR/44/51(Cus)/2005
[Sl. No. (a)] and AAR/44/46(Cus)/2005 [Sl. No. (d)], the technical details
refer to the two items in question "as a communication interface between the
PFE and Alcatel's telecommunication systems Network Management System (NMS)".
During the hearing before us a clarification was sought from the Ld.
Representatives of the applicant as to whether such interfaces can be treated as
parts of PFE. It was explained by them that although these two products
are functioning as a communication interface between PFE and NMS, yet they are
very much part of the PFE. They are not only designed and supplied as
parts of Alcatel's PFE but are also having an important and special functional
relationship with the PFE.
4.
On the classification issue, the applicant submitted that though the products
are parts of PFE, they are essentially apparatus for carrier-current line
systems or for digital line systems. In accordance with Rule 1 of the
General Rules for Interpretation of First Schedule of the Customs Tariff Act,
1975 they are clearly classifiable under tariff item 8517 50 99. The
Commissioner in his initial comments, took the stand that the items covered by
application Nos. AAR/44/51(Cus)/2005 [Sl. No. (a)]; AAR/44/49(Cus)/2005 [Sl. No.
(b)] and AAR/44/45(Cus)/2005 [Sl. No. (e)], being parts of the power feed
system are classifiable under tariff heading 8504 90 90. For the items
covered by application Nos. AAR/44/48(Cus)/2005 [Sl. No. (c)], AAR/44/46(Cus)/2005
[Sl. No. (d)] and AAR/44/43(Cus)/2005 [Sl. No. (g)], the Commissioner
sought the classification of the products in question under tariff heading 8531
80 00 whereas for the goods in application No. AAR/44/44(Cus)/2005 [Sl.
No. (f)], he proposed classification under tariff heading 8535 40
20. This was contested by the applicant in their written response to the
Commissioner's comments.
5.
It was pointed out to the Ld. Representatives of the applicant during the
hearing that the applicant themselves had sought the classification of the PFE
in a separate application before this Authority under tariff item 8504 40 90 and
vide Ruling Nos. AAR/07-09(Cus)/2005 dated 30.08.2005, this Authority held that
PFE would be classifiable under 8504 40 90. The Commissioner had also
expressed his agreement in his comments with the above classification in that
case. That being so, the Ld. Representatives of the applicant were asked
as to whether they would like to make any submission on the possibility of these
items falling under tariff heading 8504 which has a separate sub-heading for
'parts' (8504 90). While conceding that consistency has to be
maintained in deciding the classification of the parts in question, it
was, nevertheless, submitted by the applicant that these parts would more
appropriately fall under tariff item 8517 50 99. Reliance was placed in
this context on section Note 2 of section XVI of the First Schedule of the
Customs Tariff Act, 1975 to support their contention.
The Ld. Joint CDR representing the Commissioner, however, submitted
before the Authority during the hearing that classification of all these items
is possible both under tariff heading 8504 and under 8517. When asked to
indicate a categorical stand, he submitted that tariff heading 8517 would be
more appropriate and conceded that classification under tariff items 8531 80 00
and under 8535 40 20 for the items mentioned above, as originally indicated in
the comments of the Commissioner can not be justified having regard to their
role and function as explained by the Ld. Representatives of the applicant
during the hearing.
6.
Having carefully examined the technical information furnished and the
submissions made before us by the applicant as well as by the Ld. Representative
of the Commissioner, we observe that all the seven items in question are
admittedly parts of the Alcatel Power Feed Equipment (PFE). We have already ruled that the Alcatel PFE would be
classifiable under tariff item No.
8504 40 90. This was in tune with
what the applicant themselves had indicated in their applications and also what
the Ld. Representative of the Commissioner had agreed to. The moot point for consideration in the present bunch of applications is
therefore - what would be the appropriate classification of a 'part' of an
apparatus which falls under tariff heading 8504? The applicant has relied upon section Note 2 of section XVI of the First
Schedule to Customs Tariff Act, 1975 to seek support for their contention that
the goods under consideration in these applications, though being 'parts' of
PFE, would still merit classification under tariff heading 8517 and more
precisely under tariff item
8517 50 99.
7.
We have already examined in detail the ambit of section Note 2 of section
XVI and its implications in another recent ruling of this Authority in the
applicant's case (vide Ruling Nos. AAR/05&06(Cus)/2006 dated 5th
January, 2006). Keeping in view the
propositions laid down there, we have now to examine the facts placed before us.
Evidently and admittedly the goods under consideration are parts which
are so designed as to be suitable for use solely with Alcatel PFE.
In a typical statement the applicant themselves have made it clear in the
'description of goods' that "these units are part of the Alcatel PFE and
cannot be used independently of it or in other equipment, although they can be
interchanged within the PFE cabinet as a spare or replacement for an existing
unit". There is also no
disagreement between the applicant and the Commissioner that none of these items
constitutes an article covered by a heading of section XVI having regard to
their nature, design and function. The
guidelines given in HSN Explanatory Note to section XVI as to what is meant by
"parts which in themselves constitute an article covered by a heading of
section XVI" also support this view. These
goods are also not covered by the exclusions mentioned in Note 1 to section XVI
and in Note 1 to Chapter 85. It
may not be out of place to mention that the Commissioner in his initial comments
in respect of the items at Sl. No. (a), (b) and (e) did indicate that these
parts of the power feed system are classifiable under tariff heading 8504 90 90.
8.
Having regard to the facts and the propositions referred to above, we are
satisfied that the goods in question in all these seven applications would be
appropriately classifiable as 'parts' of Alcatel PFE falling under tariff
heading 8504. From the tariff
layout of the heading 8504 which covers "electrical transformers, static
converters (for example, rectifiers) and inductors", we find that the entry
'parts' of machines falling under heading 8504 has a separate sub-heading
8504 90 which has got two tariff items under it.
The item "8504 90 10" which specifically covers parts "of
transformers" does not concern us in the present context.
Therefore, the goods under consideration would fall under the
residuary tariff item "8504 90 90 --- Other" under the sub-heading
'parts'.
9.
In view of the foregoing, we rule on the questions raised in the seven
applications detailed in para 1 above that the goods mentioned therein are
individually classifiable under tariff item 8504 90 90 of the First Schedule of the Customs Tariff Act, 1975.
Pronounced in the open Court of the Authority on this 10th day
of January, 2006.
Sd/-
Sd/-
Sd/-
(B.A.Agrawal) (Justice
S.S.M.Quadri)
(Somnath Pal)
Member Chairman
Member
|