Case Law Details
In re Netlink ICT Private Limited (CAAR Mumbai)
M/s. Netlink ICT Private Limited filed an application on 30.08.2021 seeking advance rulings on the classification of GPON ONT and applicability of Sr. No. 13P of the Notification No. 24/2005-Customs, dated 01.03.2005 or Sr. No. 421 of Notification No. 50/2017- Customs, dated 30.06.2017 on the said device.
2. The applicant is an importer, manufacturer and trader of Fiber-to-the-Home (FTTH) products. They intend to import Gigabit Passive Optical Networks Optical Network Termination (hereinafter referred to as GPON ONT) for the purpose of trading. The applicant has briefly explained the GPON network and has submitted features of GPON ONTs. GPON is a type of passive optical network system specific to fibre technology that delivers broadband network access to customers. GPON network consists of three important components, namely, Optical Line Terminal (OLT), Optical Network Terminal (ONT) and Optical Distribution Network (ODN). ONT is a broadband telecommunication terminating device installed at the customer premise. It acts as the interface with the end user’s equipment. A terminal and associated equipment located at a subscriber’s premises and connected to a carrier’s telecommunication circuit at the demarcation point are known as subscriber end equipment. As per the applicant, subscriber end equipment is specifically mentioned in subheading 851769050. From the product description given above, the applicant has contested, it may be observed that the item GPON ONT, being a customer premise equipment used for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network, falls within the ambit of subscriber end equipment. Therefore, the impugned product is classifiable under subheading 85176950. Further, they are eligible for a nil rate of duty as per Sr. No. 13P of Notification No. 24/2005-Customs, dated 01.03.2005.
2.1 Alternatively, the applicant has proposed classification of said goods under subheading 85176930, as the functions performed by GPON ONTs are similar to that of a router. Routers are networking devices operating at layer 3 or a network layer of the OSI model. It is submitted that the GPON ONTs are used for converting the standard signals used by a Fiber Optic Services Service Provider (FiOS) to the frequency and framing used by the PASSIVE OPTICAL NETWORK (PON) system and coordinating the multiplexing between the conversion devices on the ONTs located on the customers’ premises. GPON ONTs imported by the applicant are said to be akin to a router and performs the same functions as that of a router and are hence classifiable under subheading 85176930. Further, the applicant claimed that they are eligible for a nil rate of duty as per Sr. No. 421 of Notification No. 50/2017- Customs, dated 30.06.2017, if ONT is classified as a router. The said entry exempts (i) Goods specified in List 16, other than those falling under tariff items 85176100, 85176290, 85176990, required for basic telephone service, cellular mobile telephone service, internet service or closed users’ group 64 KBPS domestic data network via INSAT satellite system service; and (ii) parts, for the manufacture of the goods at (i). One of the items in List 16 is routers listed at Sr. No. 2(c).
2.2 In relation to the above-mentioned device, the questions on which advance rulings have been sought are as follows: –
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