𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

“Indirect Tax I Arbitration I Insolvency Advisory I Litigations”

Dated: 08.07.2024

CESTAT sets aside the Order of the Principal Commissioner of Customs- Appeal of Vodafone allowed in the matter of Classification of goods

Customs Appeal No. 51167 of 2020 is being heard by the Customs, Excise & Service Tax Appellate Tribunal in New Delhi.

The appellant, Vodafone Idea Limited, is challenging the classification of Hybrid/Pure Matrix Cards and Small Form Factor Pluggable (SFP) transceivers.

The appellant argues that the subject goods should be classified as parts of goods falling under Heading 8571.

The subject goods are used in Packet Transport Network (PTN) equipment and are proprietary to the main equipment.

The appellant claims that the subject goods cannot function independently and are designed specifically for the PTN equipment.

Previous decisions by the Tribunal and the Supreme Court support the appellant’s classification argument.

The subject goods are not Network Interface Cards (NIC cards) and should not be classified as such.

The main equipment consists of a modular chassis with dedicated slots for the subject goods.

The subject goods derive power and intelligence from the main equipment’s backplane interface.

The subject goods are similar to cards used in DWDM/OTN equipment, which have been classified as parts in previous decisions.

The subject goods do not have a separate identifiable function and cannot operate independently of the main equipment.

The subject goods are populated PCBs and merit classification under CTI 8517 70 10 as parts.

The HSN Explanatory Notes recognize populated PCBs as parts of the primary apparatus.

The Principal Commissioner’s reliance on General Rules of Interpretation Rule 2(a) and Section Note 3 is misplaced.

The impugned order classifying the subject goods as NIC cards is set aside, and the appeal is allowed.

Legal View Summary: 

Vodafone Idea Limited is appealing the classification of Hybrid/Pure Matrix Cards and SFP transceivers, arguing that they should be classified as parts of goods under Heading 8571.

The appellant contends that the subject goods are proprietary to the main equipment used in PTN equipment and cannot function independently.

Previous decisions by the Tribunal and the Supreme Court support the appellant’s argument, as they have classified similar cards used in DWDM/OTN equipment as parts.

The appellant’s claim is further supported by the recognition of populated PCBs as parts in the HSN Explanatory Notes.

The Principal Commissioner’s reliance on certain rules and notes is deemed misplaced, leading to the setting aside of the order classifying the subject goods as NIC cards.

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Source: CESTAT, New Delhi

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