Components of Routers Classified as 'Parts' Under Customs Tariff, Extended Limitation Period Not Applicable
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in New Delhi has sided with M/s Bharti Airtel Limited in a long-standing customs classification dispute. The tribunal has overturned the decision of the Principal Commissioner of Customs, New Delhi, who had reclassified certain imported components of routers as Network Interface Cards (NICs) under Customs Tariff Item (CTI) 8517 62 90. Instead, these components have been classified as parts under CTI 8517 70 90, resulting in a favorable outcome for Bharti Airtel.
The dispute revolved around the classification of various router components imported by Bharti Airtel, including Modular Port Concentrators (MPCs), Modular Interface Cards (MICs), and Switch Fabric Boards. The Principal Commissioner had previously classified these items as NICs, invoking an extended period of limitation under Section 28(4) of the Customs Act, 1962, citing deliberate suppression by Bharti Airtel.
However, the CESTAT, led by Mr. Justice Dilip Gupta and Mr. P.V. Subba Rao, found that the imported components did not perform the complete function of a router on their own and are essential parts of Juniper routers. The Tribunal noted that the components could not be classified as standalone apparatus and should be regarded as parts of routers, meriting classification under CTI 8517 70 90.
Furthermore, the Tribunal rejected the invocation of the extended period of limitation, stating that Bharti Airtel held a bona fide belief regarding the classification of the goods. The Tribunal emphasized that mere non-payment of duty, without any element of intent or suppression, does not justify the invocation of the extended limitation period.
This ruling aligns with previous decisions in similar cases, such as M/s Vodafone Idea Limited v. Principal Commissioner of Customs, where similar components were classified as parts under the same tariff item.
The decision has significant implications for the telecommunications industry, particularly regarding the classification and duty assessment of imported components used in network infrastructure.
Bottom Line:
Classification of imported goods under Customs Tariff Act - Components of Routers cannot be classified as Network Interface Cards (NICs) under CTI 8517 62 90 but should be classified as parts under CTI 8517 70 90 - Extended period of limitation under Section 28(4) of Customs Act, 1962 cannot be invoked in absence of deliberate suppression.
Statutory provision(s): Customs Tariff Act, 1975; Customs Act, 1962, Section 28(4); Harmonized System of Nomenclature (HSN) Explanatory Notes
