2002(11)LCX0116

IN THE CEGAT, WEST ZONAL BENCH, MUMBAI

S/Shri Gowri Shankar, Member (T) and G.N. Srinivasan, Member (J)

SET INDIA PVT. LTD.

Versus

COMMISSIONER OF CUSTOMS, COCHIN

Order No. 4051/2002-WZB/C-II, dated 18-11-2002 in Appeal No. C/498/2002-Mum.

CASE CITED

Luminous Electronics Pvt. Ltd. v. Commissioner — 2001(03)LCX0048 Eq 2001 (129) ELT 0605 (Tribunal) — Referred [Para 6]

Advocated By : S/Shri J.J. Bhatt, Sr. Advocate with Anjali Chandurkar and Anil Menon, Advocates, for the Appellant.

Shri P.K. Agarwal, SDR, for the Respondent.

[Order per : Gowri Shankar, Member (T)]. - The question for consideration in this appeal is the classification of the goods that the appellant imported. These goods, described as satellite receivers, were classified by the appellant on import in Heading 8525.20 of the Customs Tariff and the benefit of exemption contained in Notification 49/2000, subject to fulfilment of specified export obligation, was also claimed and granted. Subsequently, the licence under the Export Promotion Capital Goods Scheme, which was issued to the appellant, was cancelled by the Director General of Foreign Trade and it therefore was required to pay duty on these goods which had been forgone on their importation. The Custom House therefore issued notice in respect of seven bills of entry under which the goods have been imported, based on the rate of duty applicable to goods of Heading 85.28. In reply to this, the appellant contended that the goods ought rightly be classifiable in Heading 8525.20. The Deputy Commissioner, whose order has been confirmed on appeal by the Commissioner (Appeals) did not accept this contention, classified the goods in Heading 85.28. Hence this appeal.

2. Heading 85.25 and its sub-headings read as follows :

3. Heading 85.28 and its sub-headings read as follows :

4. The goods under consideration are described by their manufacturer as “Business Satellite Receiver Model D9234”. It is described in the brochure put out by its manufacturer, Scientific Atlanta, as being “one of a series of MPEG-2/DVB digital compression products, is designed for the business TV market”. Its function is stated to be to receive, by means of dish antennae, television broadcast and to transmit broadcast signals so received over by line to subscribers. It is claimed to be part of a cable television network; that it both receives television broadcast and transmits them over the line has been accepted by the Commissioner (Appeals). He says in more than one place in his order that it is “capable of receiving signals from the satellite and also of transmitting the received signals through cable network”. He however finds that these goods are “basically for receiving signals from Satellite as the very name denotes and used as such”. For this reason, and also by applying the provisions of Rule 3(a)(c) of the General Interpretative Notes to the Tariff that in case of dispute, it is the later heading that should prevail, he classified the goods in Heading 8528.12 as reception apparatus for colour television.

5. The contention of the counsel for the appellant is that it is incorrect to say that the receivers are intended basically for receiving signals from the satellite. He contends that the function of receiving the signals is as important as the function of transmitting, and it cannot be said that one function is primary or essential and the other is subsidiary or secondary. The object of the goods is being to function as part of a cable network system, both functions are equally necessary. Therefore the goods are rightly to be classified in Heading 8525.20 as transmission apparatus incorporating reception apparatus. He questions the applicability of Rule 3 of the Interpretative Rules when the heading itself is clear enough and classification can be determined under Rule 3(a), when the heading that is claimed not clear enough.

6. The departmental representative contends that sub-heading 20 of heading 85.25 refers to transmission apparatus incorporating reception apparatus and therefore to qualify for this heading, the apparatus being primarily to be a transmission apparatus which also incorporates reception apparatus. Referring to the explanatory notes to the Harmonised Description and Coding System, he points out that the notes to Heading 85.25 include television transmitters for industrial use, with which apparatus transmission is often by line whereas they include in Heading 85.28 television receiver for industrial use with which apparatus also transmission is often by line. Therefore, since transmission is by line in the case of the goods under consideration, they should be classified in Heading 85.28. He further explains that the principal function of the goods under consideration is receiving which is how they are described. He cites the decision of the Tribunal in Luminous Electronics Pvt. Ltd. v. CCE 2001 (095) ECR 434.= 2001(03)LCX0048 Eq 2001 (129) ELT 0605 (Tribunal).

7. The emphasis upon the principal function of the goods being receipt of television signals, both by the Commissioner (Appeals) and the departmental representative, appears to be misplaced not only for want of substantiation but by ignoring the function of the goods. The only reason advanced by both these persons for saying that the principal function is receipt of signals because the goods are described by the manufacturer as satellite receiver. This naturally leads one to ask whether, if a consignment were described as satellite transmitters, the department would have no objection to classification in Heading 85.25. The answer is obvious; for deciding classification it is not in the nomenclature that is of significance how the function of the goods. The Commissioner (Appeals) has clearly and categorically admitted that the goods are capable of receiving as well as transmitting signals. We do not see how they can be put to the use to which they are intended unless they are capable of receiving signals from the satellite which broadcasts them and transmits them on to the television receivers of the subscribers within the network. To the extent that the signals cannot be received, they cannot be transmitted and from that perspective receipt of signals is significant. Equally, if there is no one to whom to transmit these signals, it would be pointless to receive them from the satellite. It is therefore not correct to say that the function of receiving of signals is more or less important than that of transmitting. The goods are designed to perform both functions.

8. These goods therefore should equally be described as transmission incorporating reception apparatus. It is significant to consider similar goods in Heading 85.25 which includes transmission apparatus for radio-telephony, radio-telegraphy. Heading 85.25 also includes transmission apparatus for radio-telephony, radio-telegraphy and radio-broadcasting. The explanatory notes to the heading include any transmission apparatus for radio-telephony or radio-telegraphy, such goods as portable radio-telephones, usually battery operated, of the walkie-talkie as well as transmitters/receivers of telemetric signals and separately presented cordless handsets for line telephone sets. Each of these three items transmit as well as receive wireless signals. Applying the arguments of the departmental representative, these goods must rightly be classified in Heading 85.27 which covers only reception apparatus for radio-telephony, radio-telegraphy or radio-broadcasting. It would be reasonable to say that an apparatus which is capable of receiving and transmitting such signals could equally have been included in a heading either for the reception or for transmission and the fact that such apparatus have been specified in apparatus for transmission, and not apparatus for reception, is hence not of significance.

9. The explanatory notes included in Heading 85.25 television transmitters for industrial use explaining that with these apparatus, the transmission is often by line. They include in Heading 85.28 television receivers for industrial use explaining also with the apparatus, the transmission is often by line. It is not possible to conclude from this as the departmental representative wants us to do, that where transmission is by line, the goods should be classified in Heading 85.28. The real answer is transmission referred to in the Heading 85.25 refers to the transmission made by the transmitter for industrial use and the transmission by line referred to in the reception apparatus of Heading 85.28 refers to the transmission that is received by such apparatus by line. Obviously, if the transmission apparatus transmits the signal by line, the corresponding reception apparatus will necessarily receive the signal that is transmitted, only by line, we are unable to see the relevance of this point to the classification of the goods under consideration.

10. We are therefore of the view that the goods are correctly classified in Heading 85.25.

11. Appeal allowed. Impugned order set aside. Consequential relief.

Equivalent 2003 (152) ELT 190 (Tri. - Mumbai)