Commissioner of Customs, Bangalore Versus BPL Telecom Ltd.>2006(05)LCX0228

2006(05)LCX0228

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE

Dr. S.L. Peeran, Member (J) and Shri T.K. Jayaraman, Member (T)

Commissioner of Customs, Bangalore

Versus

BPL Telecom Ltd.

Final Order No. 928/2006, dated 18-5-2006 in Appeal No. C/102/2003

Advocated By -

Shri K.S. Reddy, JDR, for the Appellant.
Shri G. Shivadass, Advocate, for the Respondent.

[Order per : S.L. Peeran, Member (J)]. -

The Revenue is aggrieved with the Order-in-Appeal No. 83/2003-Cus dated 24-2-2003 by which he has accepted the plea for classification of various accessories and held them to be in the nature of sub assemblies/accessories for tele-communication to be classified under Chapter sub-heading 8525.10 of Customs Tariff as Transmission Apparatus as against the classification adopted by the Department under sub-heading 8543.89 as a residuary entry other. The Commissioner after due examination of the catalogue and the items have clearly concluded that the Section Note 3(c) of Part II of classification of parts under New Excise Tariff Act 1985 would apply and not Section Note 3(d) as held by the Original Authority. The finding recorded by the Commissioner in para 4 is reproduced herein below.
"4. I have carefully gone through the facts of the case and the written and oral submissions made by the party. It is not disputed by the Department that these imports have been made under specific contract for supply and installation of VSAT terminals for uplinking project executed for M/s. VSNL (A Government of India Enterprise). There is merit in the argument of the appellants that these cannot be treated as individual stand alone electrical equipment, as held by the Deputy Commissioner of Customs. These " are specifically imported in terms of specification and design for the uplinking project and therefore form part of the chain of equipment required for transmission and broadcasting of TV signals. These equipments from the write-up given, are in the nature of sub-assemblies/sub-components of transmission equipment, and would appear to fall more appropriately under Heading 8525. The Deputy Commissioner of Customs has also observed that all the equipments do not themselves have the capacity to transmit signals. This view is not correct. Transmission equipment consists of a chain of equipment each of which performs aiding functions for transmission. Therefore, some of these equipments while not directly having the capacity to transmit signals, forms part of an intermediate chain for transmission of signals. Further the electrical machines under Heading 8543 have different specification and deal with high current and voltage equipments. The impugned goods being in the nature of sub-components cannot be treated as parts. The Deputy Commissioner of Customs has also taken the analogy from the Central Excise Act by invoking para 3 (d) to state as far as principles of classification applicable to 'parts' are concerned, those that constitute an article by themselves should be classified under respective Headings. The Deputy Commissioner of Customs however has ignored the fact that para 3 (d) of Part II of Classification of parts under New Excise Tariff Act, should be read after exhausting the earlier paras. The appellants have correctly maintained that para 3 (c) specifically states that when parts are used principally or solely along with certain machines/apparatus, their classification would have to be made under the same Heading. I also find that between heading 8525 and 8529, the goods being in the nature of subsystems and subcomponents rather than parts, are more appropriately classifiable under sub-heading 85.25 itself. In view of the above, I therefore hold that the impugned goods are more appropriately classifiable under Heading 8525.10 as Transmission Apparatus and not under heading 8543.89.1 therefore uphold the appeal and set aside the order of the Deputy Commissioner of Customs."

2. The Revenue contended in this appeal that the end-use does not determine the classification and the goods have to be classified/assessed as presented. It is submitted that Section Note 2(a) of Section XVI clearly states that parts which are goods included in any of the heading chapter 84 or 85 are in all classes to be classified in their respective headings. Therefore, such goods have individual functions and are required to be classified in Residuary Heading "Other" under chapter heading 8543.89.

3. The learned JDR argued on this ground.

4. The Counsel took us through the HSN explanatory note No. 1487 and 1488 wherein it has been clearly held that under the group Transmission Apparatus for Radio-telephony or Radio-telegraphy, Radio-Broadcasting or Television, all items described therein are included which perform the functions of the items falling in that group. He pointed out from the paper book and the findings recorded by the Commissioner that these items do not have individual functions and their parts principally or solely have to be used along with certain machines/apparatus. Hence, the classification claimed by them is required to be classified under Heading 8525.10 as the goods are in the nature of sub-systems and sub-components rather than parts. He submits that para 3(c) of Part II of classification of "parts" under New Excise Tariff Act should be read and applied. If it does not fall within the term of para 3 (c) then para 3 (d) should be applied. The original authority has erred in proceedings to para 3 (d) of Part II of classification of parts under New Excise Tariff Act. Therefore, the Commissioner after due examination and examining the entire records has correctly classified the item under 8525.10.

5. On a careful consideration of the entire matter, we notice that in terms of Part II of Mew Excise Tariff Act which deals with classification of "parts" 3(c) reads as follows:
3(c) - Note 2 of this section deals with classification of parts of machinery. In general, parts, which are suitable for use solely or principally with particular machines or with the group of machines or apparatus falling under the same heading, are classified under the same heading as those machines or apparatus subject to exclusions mentioned earlier in Section Notes. In some cases separate headings are, however, provided for:
(A) Parts of the engines of heading 84.07 or 84.08 (heading 84.09).
(B) Parts of the machinery of headings 84.25 to 84.30 (Heading 84.31).
(C) Parts and accessories of the textile machines of headings 84.44 to 84.47 (heading 84.48).
(D) Parts and accessories of the machine-tools of headings 84.56 to 84.65 (heading 84.66).
(E) Parts and accessories of the office machines of headings 84.69 to 84.72 (heading 84.73).
(F) Parts of the machines of headings 85.01 or 85.02 (heading 85.03).
(G) Parts and accessories of apparatus of headings 85.19 to 85.21 (heading 85.22).
(H) Parts of apparatus of headings 85.25 to 85.28 (heading 85.29).
(I) Parts of apparatus of heading 85.35, 85.36 or 85.37 (heading 85.38).

In terms of this note, parts of apparatus which are suitable, for use solely or principally with particular machines with that group of machines or apparatus falling under the same heading are required to be classified under the same headings as those machines or apparatus subject to exclusions mentioned in Section notes. There is no inclusion to these items in the HSN explanatory notes at page 1487-88. It clearly indicates that these items are required to be classified along with the (a) Transmission Apparatus for Radio-telephony or Radio-telegraphy and (b) Transmission Apparatus for Radio-Broadcasting or Television. The Commissioner has examined the issue very clearly and has rightly upheld the assessee's contention for classification under heading 8525.10. There is no merit in this Revenue appeal and the same is rejected.

(Pronounced in the open Court on 18-5-2006)

Equivalent 2006 (201) ELT 0503 (Tri. - Bang.)

Equivalent 2006 (076) RLT 0607 (CESTAT-Ban.)