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

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 5^th 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 10^th day of January, 2006.

            Sd/-                                         Sd/-                                                     Sd/-

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

           Member                                    Chairman                                       Member