2004(05)LCX0052

IN THE CESTAT, NORTHERN BENCH, NEW DELHI

Justice K.K. Usha, President and Shri C.N.B. Nair, Member (T)

C-NET COMMUNICATIONS (I) PVT. LTD.

Versus

COMMR. OF CUS. (IMPORT), MUMBAI

Final Order No. 551/2004-NB(A), dated 25-5-2004 in Appeal No. C/90/2004-NB(A)

Advocated By :        Shri R. Parthasarathy, Advocate, for the Appellant.

Shri S.M. Tata, SDR, for the Respondent.

[Order per : Justice K.K. Usha, President]. - In this appeal the issue arising for consideration relates to the classification of Set Top Boxes imported by the appellant. While the appellant sought to classify the goods under 8517.80 of the Schedule to the Customs Tariff Act, the customs authorities classified the same under Tariff Item 85.28. The adjudicating authority as well as the appellate authority confirmed the classification under Tariff Item 85.28. Aggrieved by the above the importer has come up in appeal.

2. The appellant imported 1600 pieces of Interactive Set Top Boxes SB 2200 under Bill of Entry dated 16-10-2002. According to the appellant the goods are to be classified under 8517.80 on the ground that set top boxes which have a communication function are covered by the Information Technology Agreement (ITA) wherein the said items are classified under 8517. Appellant also contended that in terms of ITC(HS) classification of import items the said goods had been specifically classified under 8517.80.95.

3. Set top boxes are used with the television receiver as a monitor with modem in-built through which the user can access the internet for various applications such as E-Mail, Interactive Distance Learning, Internet browsing, home banking application etc.

4. The adjudicating authority took the view that the goods are micro processor devices incorporating a modem for gaining access to internet. Goods classified under Heading 8517.80 are set top boxes. On the other hand, goods imported by the appellant are interactive set top boxes and are micro processor based and therefore they are to be classified under 8543.89. Commissioner (Appeals) took the view that the item imported by the appellant was to be more in the nature of decoder for digital video broadcasting having additional features as mentioned with internal modem. As the modem is only an additional feature, the main function being decoding of digital video broadcasting, the goods are appropriately classifiable under Heading 85.28. It is relevant to note that the Commissioner (Appeals) has not referred to the sub-heading under which the goods would come.

5. Learned Counsel for the appellant submits that both the authorities below have given contradictory finding on the nature of the goods imported by the appellant. Relevant entry under the Tariff Schedule read as follows :

6. It is contended by the appellant that set top boxes are an advanced Hi-Power 32-bit microprocessor with internal built-in modem (V-22) for communication connectivity through the PSTN line. Set top box is essential for internet access and performs its functions through interactivity with the user. Interactivity is provided by the television receiver, which acts as the monitor. The conclusion arrived at by the lower authorities that the modem is an additional feature is also not correct. Access to internet is available only through modem for which RJ-11 telephone socket has also been provided in the set top boxes. It has a main lead for connecting it to the power supply and also has a RF coaxial lead for connecting the antenna to the television through the set top box. The interconnecti-vity with the internet is provided through RJ-11 telephone lead. The other leads are for the normal operation of the television. In stead of connecting these directly to the television, these inputs are routed to the television through set top box. Learned Counsel further pointed out that Heading 8543.90 is a residuary heading which can be resorted to only if the imported goods are not more specifically covered by any other heading of the Tariff. Since set top boxes are specifically covered both in terms of ITA Agreement as also under the 8 digit Tariff classification introduced by the Government of India with effect from 1-3-2003, the correct classification should be only 8517.80 and not 8543.89. Learned Counsel further pointed out that in a subsequent order dated 7-5-2003 passed by the Commissioner (Appeals) relating to similar set top box imported by the appellant under Bill of Entry dated 28-6-2002 classification under Tariff Heading 8517 has been accepted. Copy of the order was made available for our perusal.

7. We heard the learned DR. He contended that the view taken by the Commissioner (Appeals) is not correct and that the goods are to be classified under 8543.89. Heading 8543 is a residuary heading. Therefore, the goods imported by the appellants can be classified under 8543 only if it does not come under any other heading. It is not disputed before us that set top boxes has to be connected with telephone line and it has an access to internet while connected with the TV.

8. On going through the materials produced before us, we are inclined to take the view that set top box would come under 8517. The view is supported by its inclusion under 8517.80.30 when 8 digit classification was introduced with effect from 1-3-2003. The reference to the Information Technology Agreement to which India joined on 25th March, 1997 would also show that one of the goods covered by the agreement in respect of which there is a commitment to reduce the Tariff is set top box. It is shown as an IT product falling under Tariff Item 8517.80. It is described as a Microprocessor based device incorporating a modem for gaining access to the internet and having a function of Inter Active Information Exchange.

9. In the light of the above discussion we hold that set top boxes imported by the appellant are to be classified under 8517.80 and not under 8543.89. The order impugned is set aside and the appeal stands allowed.

Equivalent 2004 (170) ELT 0446 (Tri. - Del.)

Equivalent 2004 (095) ECC 0548 (Tri.-Del)