Communication Modules Are Imported Independently, Not As Part Of Communication Hubs Or Smart Meters: CESTAT Quashes Customs Duty

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that imported communication modules function independently as parts of communication hubs, classifiable under CTI 8517 70 90. The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) have observed that “since the communication modules were imported, they should be classified as such. The correct classification of the communication modules is CTI 8517 70 90.”“Since communication modules are imported as such and not as a part of either the communication hubs or smart meters, this ought to be classified “as such” under CTI 8517 70 90 in accordance with Note 2(a) to Section XVI. Consequentially, the goods were also eligible for corresponding exemptions,” added the bench. In this case, the dispute was about the classification of 'Communication modules' used in the manufacturing of smart meters. The Principal Commissioner rejected the importer's/appellant's claim that the communication modules imported by it were classifiable under Customs Tariff Item 5 8517 70 90 as parts of communication hubs and held that they were classifiable under CTI 9028 90 10/ CTI 9028 90 90 as parts of electricity meters / gas meters. The question before the Tribunal was whether such Communication modules should be classified under Customs Tariff Item (CTI) 9028 90 10 / 9028 90 90 or CTI 8517 70 90 under the First Schedule to the Customs Tariff Act, 1975. The importer/Appellant submitted that the communication modules function independently as parts of communication hubs, which are specifically designed for data reception and transmission, thus falling under CTI 8517 70 90. The importer further submitted that the application of Notes 3 and 4 to Section XVI of the Customs Tariff Act is pertinent for classifying composite machines; however, in this case, only individual components (the communication modules) were imported. The Revenue contended that the importer was importing communication modules for smart energy meters. The importer was mis-classifying them under CTI 8517 70 90 to avail the benefit of Notification No. 24/2005-Cus. dated 01.03.2005 (Sl. No. 13) and under Notification No. 57/2017-Cus. dated 30.06.2017 (Sl. No. 5) to evade duty. Both notifications apply only to goods falling under CTH 8517 whereas the appellant's goods were classifiable under CTI 9028 9010 (in case of electricity meters) and CTI 9028 9099 (in case of gas meters). The Tribunal overturned the Principal Commissioner's classification of communication modules as parts of electricity or gas meters under CTI 9028 90 10 / 9028 90 90. The bench opined that the charge of duty of customs under section 12 is only on the goods imported into India and not on what the goods may become after their import. Since the charge is on the goods imported, duty must be assessed on the goods in the form they are imported. In view of the above, the Tribunal allowed the assessee's appeal and dismissed the revenue's appeal. Case Title: M/s Secure Meters Ltd. v. Principal Commissioner of Customs (Imports) Case Number: CUSTOMS APPEAL NO. 51041 OF 2020 Counsel for Appellant/ Assessee: V. Lakshmikumaran, Rubel Bareja, Anisha Arya and Anurag Kapoor Counsel for Respondent/ Department: Mihir Ranjan Click Here To Read/Download The Order

Communication Modules Are Imported Independently, Not As Part Of Communication Hubs Or Smart Meters: CESTAT Quashes Customs Duty

Mehak Dhiman

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