Departmental Circular could not run contrary to Judicial Pronouncements: CESTAT

Bharti Airtel Ltd Vs Commissioner of Customs (CESTAT Mumbai)

Conclusion: CESTAT observed that the products in question would be classifiable under CTH 85177090 and not CTH 85176290 based on HSN and the Departmental Circular could not run contrary to the Judicial Pronouncements.

Facts: In the said case, the appeal have been filed by the appellant is directed against order in appeal No. 32(Arshiya FTWZ)/2021(JNCH)/Appeals dated 22.06.2021 passed by the Commissioner of Customs (Appeals), Mumbai-II, Nhava Sheva. By the impugned order, the Commissioner (Appeals) held as follows:

“12. In view of above, I find that assessments of imported Antenna (Parts of telecommunication equipments) made by the OA by revising the claimed classification from CTH 8570 7090 to 85176290 in 51 Bills of Entry (mentioned in table above) are sustainable. Accordingly, I upheld the Speaking Order – Order-in-Original No. 65/2020-21/AC/NS-GEN/CAC/JNCH dated 12.05.2020 in respect of said 51 Bills of Entry.

13. The Appeal filed by M/s. Bharti Airtel rejected accordingly.”

In present facts of the case, the Appellant have filed 51 Bills of Entry for the clearance of the antenna for base station claiming classification under CTH 85177090. These Bills of Entry were reassessed without any speaking order as per Section 17(5) of the Custom Act, 1962 and the classification as claimed by the respondents was modified to 85176290.

The CESTAT after taking submissions of both sides into consideration observed that undisputedly both the sides agree that the same issue has been considered by the coordinate bench of CESTAT, in case of Reliance Jio Infocom [2019 (369) ELT 1713 (T-Mum)] and bench have decided the issue in favour of appellant. Further, it was observed that in the impugned Order the Ld. Commissioner (Appeals) have observed as under:

“11. Further, the appellant relied upon the decision of the Hon’ble CESTAT in the case of CC v Reliance Jioinfocom Ltd.-2019(369)ELT 1713 vide Order A/87015-87016 of 2019 dated 06.11.2019 where Hon’ble CESTAT held that Antenna are not Machines but only parts of Machines and therefore are classifiable under Taiff Heading No 85177090, In this regard, I find that the department has filed an appeal before Hon’ble Supreme Court against this judgment of Hon’ble Tribunal. Also, vide the para 13 of the impugned order the OA stated that CBEC has decided not to withdraw the circular which classify Antenna under sub heading 8517 62 90 even after H.S. Committee decision”.”

To the above, the Tribunal observed that distinction sought to be made is not based on any sound logic except by referring to the Board Circular. The approach of Commissioner (Appeal) is contrary to the decision of Hon’ble Supreme Court in case of Ratan Melting and wire Industries [2008 (231) ELT 22 (SC)], wherein it was observed that the Department Circulars  are not binding upon the Courts.

The CESTAT while allowing the appeal of observed that the issue was again considered by the Tribunal in case of Reliance Jio Infocomm vide the order reported at [2022- TIOL-604-CESTAT-Mum] and the bench dismissed the appeals filed by revenue sating as follows:

“20. We also find that Hon’ble Apex Courts has dealt the issue of classification of parts in the case of N.I. Systems India P. Ltd. – 2010 (256) ELT 173 (SC) = 2010-TIOL-52-SC-CUS and held as under:-

“28. For the reason given hereinafter, we hold on the basis of technical material (including the importer’s own catalogue and webcast) that Controllers (including embedded controllers) are not merely PCs/ADPMs, but have a specialized structure and specific functions to perform and are therefore classifiable under Chapter 90.

29. Similarly, I.O. Modules and Chassis, which are the subject matter of import in this civil appeal are meant to operate as parts of industrial Process Control equipments like sensors. These I.O. Modules come with software tailored to their specific pre-defined functions. Therefore, one has to see the package in the holistic manner. The package as a whole both hardware and software- constitutes one single functional unit. Accordingly, we hold that I.O. Modules and Chassis are classified as parts and accessories of Automatic Regulating or Controlling Instrument/Apparatus under CTH 9032.90.00.”

30. In view of the above, we find that the Department could not support their contention. No technical literature was submitted; in spite of the fact that the imports have been taking place over a period of time. Learned Commissioner (Appeals) has been upholding the contention of the appellants. In one instance Revenue has accepted the order of Commissioner (Appeals). We find that the Department has not drawn any samples and did not obtain technical opinion to support their claim that the impugned goods are complete machines or equipment capable of independent function themselves so as to merit classification under CTH 85176270. On the contrary, the respondents could demonstrate by technical literature; samples and the ratio of judgments cited above that the goods imported by them are Populated Circuit Boards (PCBs) used in PSS 1830 and therefore, the impugned goods are parts of PSS and as such merit classification CTH 85177010. We also find that the appellants have submitted US Customs Rulings on the classification of the impugned goods, though they are not binding on us, they would certainly have a persuasive effect more so in the absence of any evidence to the contrary. In view of the discussion as above, and considering the fact that Commissioner (Appeals) has been consistent in rejecting the department’s claim, we are of the considered opinion that there is no merit in the appeals filed by the Department.”

Accordingly, the appeals were allowed.

FULL TEXT OF THE CESTAT MUMBAI ORDER

This appeal filed by the appellant is directed against order in appeal No. 32(Arshiya FTWZ)/2021(JNCH)/Appeals dated 22.06.2021 passed by the Commissioner of Customs (Appeals), Mumbai-II, Nhava Sheva. By the impugned order, the Commissioner (Appeals) held as follows:

“12. In view of above, I find that assessments of imported Antenna (Parts of telecommunication equipments) made by the OA by revising the claimed classification from CTH 8570 7090 to 85176290 in 51 Bills of Entry (mentioned in table above) are sustainable. Accordingly, I upheld the Speaking Order – Order-in-Original No. 65/2020-21/AC/NS-GEN/CAC/JNCH dated 12.05.2020 in respect of said 51 Bills of Entry.

13. The Appeal filed by M/s. Bharti Airtel rejected accordingly.”

2.1 M/s Bharti Airtel Ltd (Appellant) filed 51 Bills of Entry as detailed in table 1 below, for the clearance of the antenna for base station claiming classification under CTH 85177090. These Bills of Entry were reassessed without any speaking order as per Section 17(5) of the Custom Act, 1962 and the classification as claimed by the respondents was modified to 85176290.

Table 1: Details of Bills of Entry filed
Description of Goods		Antenna for Base Station
S No	Bill of entry No and date	Classification of Goods
		Claimed	Determined
1	2002411/04.02.2020	85177090	85176290
2	2002413/04.02.2020	85177090	85176290
3	2002414/04.02.2020	85177090	85176290
4	2002427/04.02.2020	85177090	85176290
5	2002412/04.02.2020	85177090	85176290
6	2002415/04.02.2020	85177090	85176290
7	2002311/04.02.2020	85177090	85176290
8	2002136/05.02.2020	85177090	85176290
9	2002436/05.02.2020	85177090	85176290
10	2002434/05.02.2020	85177090	85176290
11	2002437/05.02.2020	85177090	85176290
12	2002435/05.02.2020	85177090	85176290
13	2002488/05.02.2020	85177090	85176290
14	2002714/07.02.2020	85177090	85176290
15	2002694/07.02.2020	85177090	85176290
16	2002696/07.02.2020	85177090	85176290
17	2002695/07.02.2020	85177090	85176290
18	2002697/07.02.2020	85177090	85176290
19	2002853/10.02.2020	85177090	85176290
20	2002846/10.02.2020	85177090	85176290
21	2003305/14.02.2020	85177090	85176290
22	2003304/14.02.2020	85177090	85176290
23	2003331/15.02.2020	85177090	85176290
24	2003329/15.02.2020	85177090	85176290
25	2003328/15.02.2020	85177090	85176290
26	2003327/15.02.2020	85177090	85176290
27	2003352/15.02.2020	85177090	85176290

2.2 Appellants got the goods cleared by paying the duty as assessed under protest and requested the assessing officer to issue Speaking Order as per Section 17(5).  Speaking orders were issued under Section 17(5) of the Custom Act, 1962 vide Speaking Order- Order in Original No 65/2020-2021/AC/NS-Gen/CAC/JNCH dated 12.05.2020, reassessing the imported goods as stated above the assessment made on the Bills of Entry by the proper officer were challenged by the appellant before the Commissioner (Appeals) who by the impugned order, referred in para 1 above, rejected the appeal and denied the classification as claimed by the importers while filing the Bill of Entries.

2.3 Aggrieved appellant has filed this appeal.

3.1 We have heard Shri J C Patel, Advocate for the appellant and Shri Ramesh Kumar, Assistant Commissioner, Authorized Representative for the Revenue.

3.2 Arguing for the appellant, learned counsel submitted that:

> The Issue involved in this appeal is whether “Antenna” for Base Station is classifiable as “Part” under CTSH 8517 7090 or as a “Machine for reception, conversion and transmission or regeneration of voice, images or other data” under CTSH 851762 90. The said issue stands decided in the Respondent’s favour by the following decisions of this Hon’ble Tribunal in the Respondent’s own case, in which it is held that “Antenna” for Base Station are classifiable as “Part” under CTSH 8517 7090 and not under CTSH 8517 62 90: – CC v Reliance Jio Infocomm Ltd – 2019 (369) ELT 1713 – Reliance Jio Infocomm Ltd v CC – 2022 (2) TMI 967.

• •  Customs Tariff and Statutory Notifications of the Government clearly recognize and consider Antenna as “Parts”:

> Prior to 2007, Heading 85.17 covered only Apparatus for Line Telephony and did not cover apparatus for Radio Telephony. The transmission apparatus for radio telephony was covered under Heading 85.25 and the reception apparatus for radio telephony was covered under Heading 85.27. Antenna for the apparatus of headings 85.25 and 85.27 were specifically covered as Parts under Heading 8529.

> It would therefore follow that the Tariff itself recognized that Antenna are not in themselves complete apparatus for transmission or reception of radio telephony but are only parts of apparatus for transmission and reception of radio telephony.

> In the year 2007, the HSN was amended so as to shift apparatus for transmission and reception of radio telephony from Headings 8524 and 8527 to Heading 8517. As a result, while prior to 2007, Heading 85.17 covered only apparatus for Line telephony, with effect from 2007, even radio telephony apparatus was brought under Heading 85.17. As a consequence of such change, Parts of apparatus for transmission and reception of radio telephony which prior to 2007 were covered under Heading 8529, were from 2007 onwards covered under Heading 8517 which specifically covered “parts”.

> Consistent with the said changes in HSN, the Indian Customs Tariff was also amended with effect from 01.01.2007 whereby transmission and reception apparatus for radio telephony were removed from Headings 8524 and 8527 and brought under Heading 85.17. Resultantly, parts of transmission and reception apparatus for radio telephony, which prior to 2007 were covered under Heading 85.29, stood shifted to Heading 8517.70 which covers Parts.

> The effect of the aforesaid changes was clearly that “Antenna’ for transmission and reception apparatus for radio telephony, which prior to 2007 were covered as “Parts” under Heading 85.29, stood shifted to Heading 8517,70 which covers Parts.

> Accordingly, with effect from 01.01.2007, Base Stations which are transmission and reception apparatus used in radio telephony (Cellular network) stood covered under Heading 8517 61 00 and Antenna for such Base Stations, being parts stood covered under Heading 8517 70 which specifically mentions “Parts”. –

> The following two Notifications of the Central Government clearly recognize and consider Antenna as Parts classifiable under CTH 8517 7090 and not as Machines or Apparatus of CTH 8517 62 90:

• • Sr. No.vi of Notification No.18/2007-Cus dated 22-2­-2007 read with Sr. No.30 of Notification No.69/2004-Cus dated 9-7-2004, issued by the Government of India, as per which “ Aerials or antennae of a kind used with apparatus for radio telephony”, fall under tariff item 8517 70 90 which covers “Parts” and
  • Sr. No.31 of Notification No. 11/2018 dated 02.02.2018, which covers, ‘Aerials or antennae of a kind used with apparatus for radiotelephony and radiotelegraphy falling under Tariff item 8517 7090’. Decision of the HS Committee (World Customs Organization) 62nd session supports the Respondent’s case:

> As per the decision of the HS Committee (World Customs Organization) 62nd session, antenna for base station are classifiable as parts under heading 8517.70 and not as a complete machine or apparatus for reception conversion or transmission or regeneration of voice images or other data under 8517.62. The said decision clearly supports the Respondent’s case.

> As laid down by the Hon’ble Delhi High Court in the case of Manisha Pharma Plasto Pvt. Ltd. 1999(112) ELT 22, in paragraph 18, that the opinion of the HS Committee has a lot of weight and should ordinarily be taken as binding since the very name of the committee suggests it is meant to harmonize the conflicting interpretation of products and formulae in the member countries in view of international trade. The said decision has been followed by the Tribunal in the case of CCE v. Telco Limited 2002(143)ELT 548 which has been upheld by the Supreme Court as reported in 2003(152)ELT A259. The said decision has also been followed by the Tribunal in the aforesaid decision in CC v Reliance Jio Infocom Ltd – 2019 (369) ELT 1713.

> After the said HS committee decision holding Antenna to be “Parts”, the HSN and the Indian Customs Tariff, have with effect from 1-1-2022, specifically mention Antenna under “Parts”. The very fact that Antenna are now specifically mentioned under “Parts” leaves no manner of doubt that the same are Parts and not complete Machine or apparatus. Reliance is placed on the following decisions which hold that when the legislature carves out a specific sub-heading for given product under a given heading which remains unchanged, it is statutory recognition of the fact that such product answered the description of such heading even for earlier period:

Nestle India v CCE – 1999 SCC Online CEGAT 2011 = 2000 (124) ELT 898, Upheld by Supreme Court in Commissioner v Nestle India – 2005 (184) ELT A164SC.

3.3 Arguing for the Revenue, learned Authorized Representative reiterated the findings recorded in the impugned order and stated:

> Admittedly classification of identical products has been decided by the Hon’ble Tribunal in the case of Commissioner of Customs (Import), Mumbai vs M/s. Reliance Jio Infocomm Ltd in its Final Order No. A/87015­87016/2019 dated 06.11.2019 [2019 (369) ELT 1713 (Tri-Mum)]. Commissioner (Appeal) in his impugned Order in Appeal No.920-922 dated 10.06.2019 has relied on the aforesaid judgment of the Hon’ble Tribunal and has ordered classification of telecommunication antennas under CTH 85177090.

> Admittedly, Revenue is bound by the CBIC instruction No. 01/2018 – Cus dated 15 Jan 2018 which clarifies that telecommunication antenna being a complete device with a specified function i.e. conversion of electrical signals into electromagnetic waves and vice versa in a wireless communication system, is appropriately covered by the single dash heading “-other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network)” of heading 8517 as an “transmitting and receiving apparatus for radio-telephony.”

> As per the said instruction the telecommunication antennas, at double dash level, squarely covered by the heading “851762- machines for reception, conversion and transmission or regeneration of voice, image or other data, including switching and routing apparatus.”

> Hon’ble Supreme Court in case of Collector of Central Excise vs Dhiren Chemical Industries wherein it has been held that;

> “1. The issue involved in these appeals is covered by the decision of a Constitution Bench in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries, also reported in [2002 (139) E.L.T. 3(S.C.). The Constitution Bench interpreted the phrase “on which the appropriate amount of duty of excise has already been paid” in favour of the Revenue. However, it held that, regardless of the interpretation placed by it on that phrase, if there were circulars which had been issued by the Central Board of Excise and Customs which placed a different interpretation upon that phrase, that interpretation would be binding on the Revenue. It is not disputed that there are circulars issued by the Central Board of Excise and Customs which place a different interpretation upon that phrase and which apply to the facts of these two appeals.”

> Revenue has filed an appeal before the Hon’ble Supreme Court vide CIVIL APPEAL Diary No(s). 14979/2020 wherein the Final Order No. A/87015-87016/2019 [2019 (369) ELT 1713 (Tri-Mum)] has been challenged. On 18.12.2020, the case has been heard by the Hon’ble Supreme Court and the notice

> Hearing of the instant appeal may be deferred till decision of the petition filed by Revenue, is decided by the Hon’ble Supreme Court.

4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments and in written submissions made by the both the sides.

4.2 Undisputedly both the sides agree that the same issue has been considered by the coordinate bench of CESTAT, in case of Reliance Jio Infocom [2019 (369) ELT 1713 (T-Mum)] and bench have decided the issue in favour of appellant.

4.3 Commissioner (Appeals) has in the impugned order while deciding the appeal observed as follows:

“8. Further, I observe that the basic issue to decide for the classification of the Telecommunication Antenna is, whether it is a part of the device/machine/apparatus of heading 8517 and classifiable under CTH 8517 70 90 or it is a telecommunication apparatus classable under any other heading of heading 8517. In view of this, para (iii) & (iv) of the Board circular no. 01/2018-customs dated 15.01.2018 are reproduced here as under:-

“iii) The classification of parts of the goods of Chapter 85 is governed by rules enumerated in section Note 2 of section XVI read with general Explanatory Notes to this Section Note According to rule (e), parts which are goods included in any of the headings of Chapter 84 or 85 are in all cases to be classified in their respective headings. In other words, the parts which in themselves constitute an article covered by a heading of this section, in all cases are to be classified in their own appropriate heading even if specially designed to work as part of a specific machine. Therefore, the goods under consideration would fall under CTH 8517 70 90 as a part of the machine/apparatus classifiable under CTH 8517 only in the situation when it is not covered by any other heading of the section.

iv) However, as discussed above, the telecommunication antenna being a complete device with a specified function ie, conversion of electrical signals into electromagnetic waves and vice-versa in a wireless communication system, is appropriately covered by heading “Other apparatus for transmission or reception of voice, images on other data including apparatus for communication in a wired or wireless network (such as a local or wide area network):” of heading 8517 as an ‘transmitting and receiving apparatus for radio-telephony’. Further, at double dash level, it is squarely covered by the heading “8517 62— Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.”

From the above it is very clear that the impugned goods are appropriately covered under CTH 85176290 as others @ 20% BCD.

9. Further, the appellant has contended that the OA erred in relying on the Board’s circular 1/2018-cus dated 15.01.2018, which has duly considered by the Tribunal in its decision in CC vs Reliance Jio lnfocom Ltd.-2019(369)ELT 1713 and the aforesaid Board’s circular cannot prevail over the Tribunal’s decision. In view of this find that it is mandatory to follow instructions issued by Board by all the officers appointed under Custom Act, 1962 as per provisions under section 151A of the Customs Act, 1962, which is as under:

151A. Instructions to officers of customs.- The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon, issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all the other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board:”

10. I find that Board Circulars/instructions are binding on the department. In view of this I rely on the Hon’ble Supreme Court’s decision in the case of Commissioner of Central Excise, Jaipur-II vs. Super Synotex (India) Ltd., wherein vide para 24 it is held that:

We may, at this stage, also clarify the position relating to circulars. Binding nature of a circular was examined by the Constitution Bench in CCE v. Dhiren Chemical Industries – (2002) 2 SCC 127 = 2002 (139) E.L.T. 3 (S.C.), and it was held that if there are circulars issued by C.B.E. & C. which placed different interpretation upon a phrase in the statute, the interpretation suggested in the circular would be binding on the Revenue, regardless of the interpretation placed by this Court. In CCE v. Ratan Melting & Wire Industries – (2008) 13 SCC 1 = 2008 (231) E.L.T. 22 (S.C.) = 2008 (12) S.T.R. 416 (S.C.), the Constitution Bench clarifying paragraph 11 in Dhiren Chemical Industries (supra) has stated thus :-

“7. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the court to declare what the particular provision of statute says and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law.”

11. Further, the appellant relied upon the decision of the Hon’ble CESTAT in the case of CC v Reliance Jioinfocom Ltd.-2019(369)ELT 1713 vide Order A/87015-87016 of 2019 dated 06.11.2019 where Hon’ble CESTAT held that Antenna are not Machines but only parts of Machines and therefore are classifiable under Taiff Heading No 85177090, In this regard, I find that the department has filed an appeal before Hon’ble Supreme Court against this judgment of Hon’ble Tribunal. Also, vide the para 13 of the impugned order the OA stated that CBEC has decided not to withdraw the circular which classify Antenna under sub heading 8517 62 90 even after H.S. Committee decision”.”

4.4 Distinguishing the decision of Tribunal in case of Reliance Jio Infocomm as per para 11 of the impugned order, Commissioner (Appeals) has decided the classification of “Antenna for base station” under heading No 85177090. However the distinction sought to be made is not based on any sound logic except by referring to the Board Circular. The approach of Commissioner (Appeal) is contrary to the decision of Hon’ble Supreme Court in case of Ratan Melting and wire Industries [2008 (231) ELT 22 (SC)] wherein five judges bench of the Hon’ble Apex Court has observed as follows:

“6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law.

7. As noted in the order of reference the correct position vis-a-vis the observations in para 11 of Dhiren Chemical’s case (supra) has been stated in Kalyani’s case (supra). If the submissions of learned counsel for the assessee are accepted, it would mean that there is no scope for filing an appeal. In that case, there is no question of a decision of this Court on the point being rendered. Obviously, the assessee will not file an appeal questioning the view expressed vis-a-vis the circular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be no scope for adjudication by the High Court or the Supreme Court. That would be against very concept of majesty of law declared by this Court and the binding effect in terms of Article 141 of the Constitution.”

4.5 Learned Authorized representative submitted that revenue has filed the Civil Appeal Diary No 14797/2020 against the order of CESTAT before the Hon’ble Apex Court. The said Civil Appeal has been listed before the Hon’ble Apex Court on 18.12.2020, 05.08.2021, 17.09.2021, 11.11.2021 and 28.03.2022. The order passed by the bench on the last day is reproduced below:

“CIVIL APPEAL Diary No(s). 14979/2020

(Arising out of impugned final judgment and order dated 06-11­2019 in CA No. 85882/2018 06-11-2019 in CA No. 85883/2018 passed by the Custom Excise Service Tax Appellate Tribunal, West Zonal Bench At Mumbai)

COMMISSIONER OF CUSTOMS (IMPORT) Petitioner(s)

VERSUS

M/S RELIANCE JIO INFOCOM LTD. Respondent(s)

(IA No.82614/2020-EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT and IA No.82613/2020-STAY APPLICATION and IA No.82612/2020-CONDONATION OF DELAY IN FILING APPEAL )

Date : 28-03-2022 This petition was called on for hearing today.

CORAM : HON’BLE MR. JUSTICE A.M. KHANWILKAR HON’BLE MR. JUSTICE ABHAY S. OKA

For Petitioner(s) Mr. Balbir Singh LD ASG Mr. Mukesh Kumar Maroria, AOR Mr. Rupesh Kumar, Adv. Mr. Bhuvan Mishra, Adv. Mr. Udai Khanna, Adv.

For Respondent(s) Mr. K. R. Sasiprabhu, AOR (NP) Mr. Vishnu Sharma, Adv. Mr. Tushar Bhardwaj, Adv.

UPON hearing the counsel the Court made the following O R D E R In view of the letter circulated by the learned counsel for the respondent seeking adjournment on the ground of personal difficulty, list the matter after two weeks. Rejoinder filed by the petitioner is taken on record.”

From the above it is observed that neither the appeal has been admitted by the Hon’ble Apex Court nor any stay granted by the court. In view of the above we are not inclined to agree with the submissions made by the authorized representative to adjourn the matter till the decision of Hon’ble Apex Court in the Civil Appeal Diary No 14979/2020.

4.6 The issue was again considered by the Tribunal in case of Reliance Jio Infocomm vide the order reported at [2022- TIOL-604-CESTAT-Mum] and the bench dismissed the appeals filed by revenue sating as follows:

“17. We also find that Revenue submits that on the basis of Explanatory notes to the HSN the items are complete machines or equipments classifiable under CTH 85176270. The Department submits alluding to the HSN that as per explanation (G) the equipment referred to therein allowed for connection to a wired or wireless communication network or the transmission or reception of speech or other sound, images or other data within such networks. A look at this explanatory notes shows us the following.

“85.17 – Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including Apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 84.43,85.25,85.27 or 85.28 (+).

– Telephone sets, including telephones for cellular networks or for other wireless networks:

8517.11 – – Line telephone sets with cordless handsets

8517.12 – – Telephones for cellular networks or for other wireless networks

8517.18
–Other

– Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network):

8517.61 – – Base stations

8517.62 – – Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus

8517.69 – – Other
8517.70 – Parts

This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radiotelegraphy, local and wide area networks.

…..

(E) Telephonic or Telegraphic Switching Apparatus. (1) Automatic switchboards and exchanges.

These are of many types. The key feature of a switching system is the ability to provide, in response to coded signals, an automatic connection between users. Automatic switchboards and exchanges may operate by means of circuit switching, message switching or packet switching which utilize microprocessors to connect users by electronic means.

Many automatic switchboards and exchanges incorporate analogue to digital converters, digital to analogue converters, data compression/decompression devices (codecs), modems, multiplexors, automatic data processing machines and other devices that permit the simultaneous transmission of both analogue and digital signals over the network, which enables the integrated transmission of speech, other sounds, characters, graphics, images or other data.

…..

(F) Transmitting and receiving apparatus for radio-telephony and radiotelegraphy.

This group includes:

(1) Fixed apparatus for radio-telephony and radio-telegraphy (transmitters, receivers and transmitter-receivers). Certain types, used mainly in large installations, include special devices such as secrecy devices (e.g., spectrum inverters), multiplex devices (used for sending more than two messages simultaneously) and certain receivers, termed “diversity receivers”, using multiple receiver technique to overcome Fading.

(2) Radio transmitters and radio receivers for simultaneous interpretation at multilingual Conferences.

(3) Automatic transmitters and special receivers for distress signals from ships, aircraft, etc.

(4) Transmitters, receivers or transmitter/receivers of telemetric signals.

(5) Radio-telephony apparatus, including radio-telephony receivers, for motor vehicles, ships aircraft, trains, etc.

(6)  Portable receivers, usually battery operated, for example, portable receivers for calling, alerting or paging.

(G) Other communication apparatus.

This group includes apparatus which allows for the connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data within such a network. Communication networks include, inter alia, carrier-current line systems, digital-line systems and combinations thereof. They may be configured, for example, as public switched telephone networks, Local Area Networks (LAN), Metropolitan Area Networks (MAN) and Wide Area Networks (WAN), whether proprietary or open architecture.

This group includes :-

(1) Network interface cards (e.g., Ethernet interface cards).

(2) Modems (combined modulators-demodulators).

(3) Routers, bridges, hubs, repeaters and channel to channel adaptors.

(4) Multiplexers and related line equipment (e.g., transmitters, receivers or electro-optical converters).

(5) Codecs (data compressors/decompressors) which have the capability of transmission and reception of digital information.

(6) Pulse to tone converters which convert pulse dialed signals to tone signals.

PARTS

Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVI), parts of the apparatus, of this heading are also classified here.”

12. Corresponding Customs Tariff entries for 8517 are read as under

” – Other apparatus for transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network):

8517 61 00 — Base stations

8517 62 — Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus:

8517 62 10 — PLCC equipment

8517 62 20 — Voice frequency telegraphy

8517 62 30 — Modems (modulators-demodulators)

8517 62 40 — High bit rate digital subscriber line system (HDSL)

8517 62 50 — Digital loop carrier system(DLC)

8517 62 60 — Synchronous digital hierarchy system(SDH)

8517 62 70 — Multiplexers, statistical multiplexers

8517 62 90 — Other

“

…. ….

18. On going through the relevant HSN notes, we find that the apparatus or equipments referred in the notes are complete apparatus and not Populated Printed Circuit Boards of such apparatus. As submitted by the respondent the Network Interface Cards referred to in the notes are not PCB of any transmission or reception apparatus of heading 8517. Network Interface Cards connect the computers to the internet and therefore can be considered to have independent function. Going by the product literature and our discussions as above, we find that the impugned cards are incorporated in and or parts of DWDM equipments.

19. We find that this Bench has gone into the issue of classification of parts or equipment while dealing with the classification of antennas imported by the very same respondent case. This Bench observed that

“Now, a simple analysis of Heading 8517 effective from 1-1­2007, it is clear that the instruments/telephone sets for cellular networks/wireless net works, apparatus both for transmission and reception of voice, images or other data in a wired or wireless network, and “parts” classified under the said heading broadly placed under three categories of single dash (-). First single dash (-) for telephone sets, including telephones for cellular network or for other wireless network; second single dash (-) for ‘other apparatus for transmission or reception of voice, images, or other data including apparatus for communication in wired or wireless network (such as local or wide area network); and the third single dash (-), for “parts”. The ‘base station’ is classified under the second category under CSH 8517 61 00, to which neither side disputes.

42. Revenue, referring to the definition of ‘machine’ prescribed under Note 5 of Section XVI classified the ‘antenna’ for base station under second category, as ‘machines’ for reception, conversion and transmission or regeneration of voice, images or other data including switching and routing apparatus. The Revenue’s argument is based on the clarification issued by the Board on 1-1-2018 that antenna is an essential device of a wireless communication system; the information can travel only in the electromagnetic wave form. The antenna radiates the information in the form of electromagnetic wave in an efficient and desired manner to the base station, where the information is picked up by the receiving antenna and passed on to the receiver via transmission line. The signal is demodulated and the original message is then recovered at the receiver. Thus, the wireless communication gets established. It is the contention of the department that since the antenna can generate electromagnetic wave from current and voltages and which can convert electromagnetic wave to current and voltages with these waves impinge on it, therefore, it can be considered as a machine, which independently receives and transmits electromagnetic waves.

43. The respondent’s contention, on the other hand, is that the antenna is a passive element. It cannot function on its own unless connected to the base station, Therefore, the same does not fall within the scope and meaning of ‘machine’ prescribed at Note 5 under Section XVI.

44. In support of their contention that the antenna imported for base station is a passive element, the respondent placed on record the opinion of Vinod Gandhi & Associates, Government registered Chartered Engineer. Also, they have placed a letter dated 12-11-2018 issued by the manufacturer of antenna i.e. M/s Ace Technology, Korea i.e. antenna supplied by them are passive part of base station i.e. e Node B (Sic). It is clarified that the antenna on its own is not capable of performing any function and when connected, it only transmits and receives only the signals. It is further stated that the antenna is not performing in any other functions like conversion or regeneration of voice, images or other data signals or switching and/or routing of signals. No technical literature has been placed by the Revenue in support of their contention that the imported antenna for base stations are designed to function independently as a machine, contrary to the claim of the Respondent that these are passive elements and can function only when attached to the base station for receiving and sending signals. The Revenue has placed the general information available on net about the multi fold use of e node antenna in 4G & 5G network in the developed wireless cellular technology. Comparing the data placed on the imported goods, we find merit in the contention of the Learned Advocate for the appellant that to be antenna as machine, it needs to be something more than a passive element of receiving and sending electromagnetic waves when attached to a base station. The meaning of ‘machine’ provided under Note 5 to Section XVI reads as :

“5. For the purposes of these Notes, the expression “machine” means any machine, machinery, plant, equipment, apparatus or appliance in the headings of Chapter 84 or 85.”

The meaning of ‘machine’ has to be understood in the context of Heading 8517. This is clear when we read the scope of Heading 8517 as explained under HSN which reads as follows :-

“This heading covers apparatus for the transmission or reception of speech or other sounds, images or other data between two points by variation of an electric current or optical wave flowing in a wired network or by electro-magnetic waves in a wireless network. The signal may be analogue or digital. The networks, which may be interconnected, include telephony, telegraphy, radio-telephony, radio-telegraphy, local and wide area networks.”

45. In the present case, the manufacturer of antenna as well as the chartered engineer’s certificate, in clear terms clarified that the antenna in question transmits and receives only signals and not performing any other function like conversion or regeneration of voice, images or other data signals and switching/routing of signals. Therefore, the antenna stand alone cannot be considered as a ‘machine’, attracting classification under Heading 8517.62. Consequently, the observation of the department in the circular dated 15-1-2018 that the Antenna itself is a complete device and has capability of functioning on its own of conversion of electrical signals into electromagnetic waves and vice versa in a wireless communication system cannot be applied to the present goods as it would be complete only when connected to a base station. In the event if the antenna so designed, instead of working as a passive element, besides the above function, it also performs some more functions as in the case of other entries under the same category, its classification under sub-heading 8517 62 may be attracted considering the same as an independent of ‘machine’.

46. The Revenue’s contention to classify the ‘antenna’ for base station under sub-heading 8517 62 rests on the ground that as per Note 2(a) of Section XVI, parts which in themselves constitute an article covered by a heading of this section, in all cases are to be classified in their own appropriate heading even if specially designed to work as part of a specific machine. Further it is contended that Antenna is a part of a machine classifiable under Heading 8517, only in the situation when it is not covered by any other headings of the section. As per department, since it is classifiable under 8517 62, hence, not to be considered under sub-heading8517 70 as ‘parts’. The said Chapter note reads as follows :

“2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules :

(a)  parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538, and 8548) are in all cases to be classified in their respective headings;

(b)  other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517;

(c)  all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548.”

47. A simple analysis of Clause (a) of the above Note reveals that parts which are ‘goods’ required to be classified in the respective headings; in the present case, ‘Antenna’ being a part of the BTS, hence applying the said Rule, classifiable under Chapter Heading 8517. Revenue’s interpretation of the said clause (a) in the present case is that in the event if the goods are not falling under any of the sub-heading of Heading 8517, then only it will be classifiable as ‘parts’, is incorrect. Clause (b) of the said Note 2 indicates that “other parts”, by implication which are not goods, if suitable for use solely or principally with a particular kind of machine of the same heading are to be classified with the machines of that kind or the headings mentioned under the said clause (b) as appropriate. Further, it is mentioned that parts which are equally suitable for use principally with the goods of Heading 85.17 and Headings of 8517 and 8525 to 8528 are to be classified as Headings of 8517. Therefore, antenna since parts of BTS, as held by Hon’ble Supreme Court in Hutchison Essar South Ltd.’s case (supra), therefore, be classified as “parts” under Tariff Item 8517.7090.

20. We also find that Hon’ble Apex Courts has dealt the issue of classification of parts in the case of N.I. Systems India P. Ltd. – 2010 (256) ELT 173 (SC) = 2010-TIOL-52-SC-CUS and held as under:-

“28. For the reason given hereinafter, we hold on the basis of technical material (including the importer’s own catalogue and webcast) that Controllers (including embedded controllers) are not merely PCs/ADPMs, but have a specialized structure and specific functions to perform and are therefore classifiable under Chapter 90.

29. Similarly, I.O. Modules and Chassis, which are the subject matter of import in this civil appeal are meant to operate as parts of industrial Process Control equipments like sensors. These I.O. Modules come with software tailored to their specific pre-defined functions. Therefore, one has to see the package in the holistic manner. The package as a whole both hardware and software- constitutes one single functional unit. Accordingly, we hold that I.O. Modules and Chassis are classified as parts and accessories of Automatic Regulating or Controlling Instrument/Apparatus under CTH 9032.90.00.”

20. In view of the above, we find that the Department could not support their contention. No technical literature was submitted; in spite of the fact that the imports have been taking place over a period of time. Learned Commissioner (Appeals) has been upholding the contention of the appellants. In one instance Revenue has accepted the order of Commissioner (Appeals). We find that the Department has not drawn any samples and did not obtain technical opinion to support their claim that the impugned goods are complete machines or equipment capable of independent function themselves so as to merit classification under CTH 85176270. On the contrary, the respondents could demonstrate by technical literature; samples and the ratio of judgments cited above that the goods imported by them are Populated Circuit Boards (PCBs) used in PSS 1830 and therefore, the impugned goods are parts of PSS and as such merit classification CTH 85177010. We also find that the appellants have submitted US Customs Rulings on the classification of the impugned goods, though they are not binding on us, they would certainly have a persuasive effect more so in the absence of any evidence to the contrary. In view of the discussion as above, and considering the fact that Commissioner (Appeals) has been consistent in rejecting the department’s claim, we are of the considered opinion that there is no merit in the appeals filed by the Department.

21. In the result, we uphold the impugned orders and reject the appeals filed by the Department.”

4.7 Since the same issue has been considered by the coordinate bench and the appeals filed by the revenue have been dismissed, in our view this appeal also needs to be allowed.

5.1 The appeal filed by the appellant is allowed.

(Order pronounced in the open court on 12.10.2022)