AUTHORITY FOR ADVANCE RULINGS
(CENTRAL EXCISE, CUSTOMS &
SERVICE TAX)
NEW DELHI
PRESENT
Justice Syed Mohammed
Quadri
(Chairman) |
Mr. Somnath Pal
(Member) |
Dr. B.A.Agrawal
(Member |
Ruling Nos. AAR/15-17(Cus)/2005
In
Application No.AAR/44(Cus)/13/2005
Application No.AAR/44(Cus)/12/2005
Application No.AAR/44(Cus)/11/2005
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 |
None
|
for the
Commissioner
designated |
Shri A.K. Roy, Joint CDR
CESTAT, New Delhi
|
R U L I N G
( By Mr. Somnath Pal, Member )
The following three
applications have been filed by M/s Alcatel India Ltd., Plot No. 25, Sector-18,
Gurgaon, Haryana, India (hereinafter to be referred to as "the applicant") under
section 28H of the Customs Act, 1962 (for short "the Act") as a wholly owned
subsidiary Indian company of M/s Alcatel, France. The questions raised in these
three applications for advance ruling are also indicated below against the
corresponding application Nos :-
(a) Application No.
AAR-44(Cus)/13/2005 - "Whether Submerged passive tilt equalizer R4 proposed to
be imported into India is classifiable under Heading No. 8517 50 99 of the First
Schedule of the Customs Act, 1975" (apparently a printing error for Customs
Tariff Act, 1975).
(b) Application No.
AAR-44(Cus)/12/2005 - "Whether Submerged Adjustable slope equalizer Unit R3 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(Cus)/11/2005 - "Whether Submerged Passive Equalizer Unit R2 proposed to
be imported into India, is classifiable under Heading No. 8517 50 99 of the
First Schedule of the Customs Tariff Act, 1975".
We have clubbed these
three applications for advance ruling since they contain the common question of
classification of "Equalizer", though, in finer details, the three items under
consideration function as equalizer for equalization of three different
parameters, namely, "tilt", "slope" and "shape" of the gain/wavelength needed
to optimize the overall transmission through the submerged cable.
2. In respective
Annexure-II to the three applications, the applicant, after giving brief
description of the goods in question and referring to the General Interpretative
Rule 1 of the First Schedule to the Customs Tariff Act has stated that the
equalizers under consideration are clearly telecommunication apparatus. These,
according to the applicant, are classifiable under tariff heading 8517 50 99
which reads "other apparatus, for carrier-current line systems or for digital
line systems". The applicant has enclosed alongwith these applications copies
of the rulings given by the U.K./the U.S.A./Australian Customs all of whom have
classified these products under tariff sub-heading 8517 50.
3. The designated
Commissioner, namely, the Commissioner of Customs, Air Cargo Exports, New Custom
House, IGI Airport, New Delhi (hereinafter to be referred to as "the
Commissioner") in his comments has, however, contended that the classification
of the three equalizers under consideration would be under tariff heading item
8543 89 99. According to the Commissioner, the tariff heading 8543 appears more
appropriate because it covers all electrical appliances and apparatus, not
falling in any other heading of Chapter 85, nor covered more specifically by a
heading on any other Chapter of the Nomenclature, nor excluded by the operation
of a Legal Note to Section XVI or to the Chapter 85 from heading 8543. The
electrical appliances and apparatus of this heading must have individual
function. Tariff item 8543 89 81 covers graphic equalizers. The equalizers in
question are similar equipment and having an independent function and not
covered more specifically by a heading of any other Chapter of the Nomenclature,
nor excluded by the operation of a legal note to Section XVI or to Chapter 85.
They therefore merit classification under tariff item 8543 89 99.
4. Despite repeated
opportunities given to the applicant by postponing the hearing in the months of
August, September and October, 2005 as requested by them, nobody appeared before
the Authority on behalf of the applicant for the hearing on the rescheduled
dates. The Commissioner was however, represented by the Joint CDR who appeared
before us and reiterated the view expressed by the Commissioner.
5. In response to the
comments of the Commissioner suggesting classification of these Equalizers under
tariff item 8543 89 99, the applicant however reacted and sent their comments
drawing attention to the technical information already furnished by them in
respect of these three items and contending that these products are not
independent units but are specifically designed for use in the submerged
telecommunications systems. Referring to the rulings given by the UK, the USA
and Australian Customs and to the General Interpretative Rule 1, they reiterated
that the three "Equalizers" in question are appropriately classifiable under
tariff item 8517 50 99.
6. We have carefully
examined the matter in the light of the three questions posed before us. On the
technical front, as per the details furnished by the applicant in respective
Annexure-II to the three applications and the related Customs Technical
Document, the common features of the three Equalizers in question are :-
(i) They are
designed for telecommunications systems utilizing submerged equipment.
(ii) They form
part of a submarine telecommunication system for use in transmission of
aggregate data.
(iii) They are of
Alcatel generic design and include features that allow their configuration to
suit a given system.
(iv) They
function as dedicated units for the transmission of aggregate data.
(v) They are all
modular in construction.
On the other hand, as
we have already mentioned, the difference amongst the three Equalizers lies only
in the nature of the parameter which requires equalization to optimize the
overall transmission through the submerged cable. For proper appreciation of
this aspect, we find it useful to cull out the relevant technical details given
in the above documents which are as follows :-
Sl.No.
Application No. Goods and its
functional parameters
A. |
Application 13/2005 |
(a)
(b)
(c)
(d)
(e) |
The Submerged R4 Passive Tilt
Equalizer (PTEQ) is inserted in a submerged telecommunication system where
an equalization of the residual gain/wavelength aggregate data signal
must be provided through modification of the transmission tilt where
multi-channel telecommunication signals are involved.
It modifies the transmission
tilt for multi-channel optical transmission system.
The residual wavelength
signal tilt accumulates when the signal passes through a number of repeater
sections during the normal operational activity.
Dependant upon the system
configuration, a number of different positive or negative tilt filters or a
zero attenuator can be fitted to provide equalization and optimize the
signal/system performance.
It is a hybrid of optical and
mechanical systems. |
B. |
Application 12/2005 |
(a)
(b)
(c)
(d)
(e) |
The Submerged R3 Adjustable
Slope Equalizer Unit (ATEQ) is inserted in a submerged telecommunication
system to provide equalization of the gain/wavelength slope in order
to optimize the overall transmission through the submerged cable.
Each constituent wavelength
of the incoming telecommunication signal undergoes a polarization rotation,
applying an electrical current to the device controls the degree of
rotation. The polarization of each different signal wavelength will be
rotated by a different amount. The output section of the device acts as a
polarization analyzer and attenuates each signal wavelength depending on its
degree of rotation. Since the wavelengths at opposite ends of the spectrum
are rotated by different amounts, one end of the signal wavelength band will
be attenuated more than the other resulting in a sloped response and an
optimization of the signal over the cable length.
The gain/wavelength slope
develops after a number of system repairs and/or ageing of the system line.
The equalization shape that is required is decided upon by measurement of
the actual gain profile of the telecommunication system Alcatel repeaters
operating under normal seabed conditions.
Two optical assemblies are
constructed with their controlling electronic circuits on a common internal
assembly (boat), so that one boat provides the functionality required for
one fibre pair. Several boats can be incorporated in a single housing to
operate with up to eight fibre pairs.
It is a hybrid of optical,
electronic and mechanical systems. |
C. |
Application 11/2005 |
(a)
(b)
(c)
(d) |
The Submerged R2 Passive
Shape Equalizer Unit (SEQ) is inserted in a submerged telecommunication
system where an equalization of the residual gain/wavelength
non-linearity is required to optimize the overall system transmission.
The equalization shape that
is required is decided upon by measurement of the actual gain profile of the
telecommunication system Alcatel repeaters operating under normal seabed
conditions. The signal loss/wavelength characteristic required is then
"converted" into a multi element Bragg Grating optical fibre filter
assembly, consisting of up to five individual elements.
Modules are configured in
pairs on a common internal assembly (boat); several boats can be
incorporated to operate with up to eight fibre pairs. The SEQ passes power
feed current without any significant voltage drop.
It is a hybrid of optical and
mechanical systems. |
7. With a view to
examining the contention of the Commissioner on the classification of these
three types of equalizers, it is necessary to reproduce the relevant portion of
the tariff heading 8543. This heading reads as under :-
"Electrical machines and
apparatus having individual functions, not specified or included elsewhere in
this Chapter"
Under this heading
there is a specific category "Graphic equalizer and synthesised receivers".
Since the Commissioner has taken the tariff item 8543 89 99 as the appropriate
classification, the entire portion of the tariff starting with the category
"graphic equalizer and synthesised receivers" and ending with tariff item "8543
89 99 ---- other" is reproduced below for easy reference :-
Tariff Item |
|
Description of goods |
Unit Rate of duty
Standard Preferential
Areas |
(1) |
|
(2) |
(3) (4) (5) |
8543 89 81
8543 89 82
8543 89 91
8543 89 92
8543 89 93
8543 89 94
8543 89 95
8543 89 99 |
---
----
----
---
----
----
----
----
----
---- |
Graphic equalizer and synthesised receivers :
Graphic equalizers
Synthesised receivers
Other :
RF (radio frequency) power amplifiers and noise generators
for communication jamming equipment, static or mobile or manportable
Equipment or gadgets based on solar energy
Professional beauty care equipment
Audio video stereo encoders
Time code generator
Other |
u 15%
-
u 15% -
u 15% -
u 15% -
u 15% -
u 15% -
u 15% -
u 15% - |
From the above layout
of the Tariff, it is clear that as far as equalizers are concerned there is only
one type, namely, "graphic equalizer" which has been specified against tariff
item 8543 89 81. There is no specific item for other equalizers under tariff
heading 8543. It is not the case of the Commissioner that the equalizers under
consideration before us are covered by the specific item, namely, graphic
equalizers. In fact, he has indicated that these three equalizers are equipment
similar to graphic equalizers. The category "graphic equalizer and synthesised
receivers", we observe, specifically covers two items both of which have been
individually specified against tariff item 8543 89 81 and 8543 89 82. There is
therefore no scope whatsoever of having any third item under this category. The
next category is "Other" which is a residual entry for items not covered by any
other earlier tariff items up to 8543 89 82. Under this residual category, five
types of goods have however been specified and the final residual tariff item is
8543 89 99 which therefore covers any goods which are not covered by any of the
tariff items up to 8543 89 95 under the heading 8543. Thus it is apparent that
this residual tariff item mentioned by the Commissioner is not a specific item
for equalizers. It is a well settled law that before we take resort to a
residuary item we must cautiously exclude the possibility of coverage of the
goods by any other tariff heading/sub-heading/item. In the case before us, the
heading 8543 itself is in the nature of a residuary heading in so far as
electrical machines and apparatus having individual functions are concerned.
Such machines and apparatus can fall under the heading 8543 only if they are not
specified or included elsewhere in Chapter 85. The tariff item 8543 89 99 is
thus the residuary tariff item of a residuary tariff heading of Chapter 85 and
hence its coverage is very general and far removed from being specific.
8. From the technical
details and functional parameters as explained in the annexures to the
application it becomes clear that the three products in question are a
combination of either optical and mechanical elements or of optical,
electrical/electronic and mechanical elements and they play an integral and
inseparable part in the transmission of data as a telecommunication apparatus
for carrier current line systems or for digital line systems. The heading 8517
includes "telecommunication apparatus for carrier-current line systems or for
digital line systems". The coverage of the category "apparatus for
carrier-current line systems or for digital line systems" has been indicated in
the HSN Explanatory Note to heading 85.17 which reads as follows :-
"These systems are based on the
modulation of an electrical carrier-current or of a light beam by analogue or
digital signals. Use is made of the carrier-current modulation technique and
pulse code modulation (PCM) or some other digital system. These systems are
used for the transmission of all kinds of information (words, data, images,
etc.)
These systems include
all categories of multiplexers and related line equipment for metal or optical-fibre
cables. "Line equipment" includes transmitters and receivers or electro-optical
converters. Combined modulators-demodulators (modems) are also classified
here."
9. It is not the case of
the Commissioner that these "Equalizers" are not integral parts of submerged
telecommunication systems or they are not telecommunication apparatus. The only
contention is that despite being so, they are more specifically covered under
heading 8543. We have already examined the scope and coverage of this heading
in our another recent ruling in the applicant's case on the question of
classification of "Submerged Repeater Generic R4" (vide Ruling No.AAR/14(Cus)/2005,
dated 24-11-2005).
We are not therefore repeating it again here. Suffice it to say that the
Commissioner's contention that the Equalizers in question are more specifically
covered by heading 8543 than 8517 is not convincing enough to merit acceptance.
In our view they are appropriately classifiable under tariff heading 8517 rather
than the very wide and general residuary item 8543 89 99. Since the goods
under consideration are not covered by any of the sub-heading/tariff items from
8517 11 up to and including 8517 30 00, it will fall under sub-heading
8517 50 and more precisely under the tariff item 8517 50 99, after excluding
rest of the specified items 8517 50 10 to 8517 50 94.
10. For the reasons given
above, we rule on the questions raised in the three applications that the goods
namely (a) Submerged passive tilt equalizer R4, (b) Submerged Adjustable slope
equalizer Unit R3 and (c) Submerged Passive Equalizer Unit R2 are individually
classifiable under the tariff item 8517 50 99 of the First Schedule of the
Customs Tariff Act, 1975.
Pronounced in the open Court of the Authority on this 24th day of
November, 2005.
Sd/-
(B.A.Agrawal)
Member |
Sd/-
(Justice S.S.M.Quadri)
Chairman |
Sd/-
(Somnath Pal)
Member |
|