Case nº Ruling Nos. AAR/14-27(Cus)/2006 in Application Nos. AAR/01, 02, 03, 04, 05, 06, 07, 08, 09, 24, 25, 26, 27, 28 and 29 (Cus)/2005 of Authority for Advance Rulings, February 28, 2006 (case Alcatel India Ltd. Vs Commissioner of Customs)
| Judge | For Appellant: Charles A. Barber, Director (Customs and Supply Chain) and Steve Gaikwad, Client Partner, Vantis Custom House and For Respondents: A.K. Roy, Joint CDR |
| President | Syed Shah Mohammad Quadri, J. (Chairman), Somnath Pal and B.A. Agrawal, Members |
| Resolution Date | February 28, 2006 |
Order:
(Central Excise, Customs And Service Tax)
Somnath Pal, Member
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The question posed by the applicant in these applications, namely, whether the telecommunication cables of the types proposed to be imported by them are classifiable under Tariff Item 8544 70 90 of the First Schedule to the Customs Tariff Act, 1975 (in short the Act), being common, they are being disposed of together.
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As per the applicant, telecommunication cables of the following description are involved in these applications:-
SI. Application Description of goods
No. No.
1. 1/2005 Submarine Telecommunication Cable OALC7
2. 2/2005 Submarine Telecommunication Cable OALC6
3. 3/2005 Submarine Telecommunication Cable OALC5
4. 4/2005 Submarine Telecommunication Cable OALC4
5. 5/2005 Submarine Telecommunication Cable URC4
6. 6/2005 Submarine Telecommunication Cable URC3
7. 8/2005 Submarine Telecommunication Cable URC2
8. 9/2005 Submarine Telecommunication Cable URC1
9. 24/2005 Terr Telecom Cable -Rodent Prot Non Metallic (2-96
Fibre)
10. 25/2005 Terr Telecom Cable-LAP (2-192 Fibre)
11. 26/2005 Terr Telecom Cable-Fibre & Copper Quad (2-48 or 50-72
Fibre)
12. 27/2005 Terr Telecom Cable-Non metallic (2-36 Fibre)
13. 28/2005 Terr Telecom Cable-Rodent Prot LAP (4-24 Fibre)
14. 29/2005 Terr Telecom Cable-Indoor Arm LAP (4-24 Fibre)
From the above, it is clear that three different types of telecommunication cables are proposed to be imported by them. They are - (a) OALC; (b) URC & (c) Terrestrial (Land). The first two models are 'submarine' while the third is 'terrestrial (land)'.
As per the generic description of goods given for the category OALC in the corresponding applications, these submarine telecommunication cables are a hybrid of optical and mechanical operations that form part of a submarine telecommunication system for use in transmission of aggregate data. The ASN OALC cable design can accommodate up to 48 fibre pairs. The fibres are housed in a jelly-filled (non-hygroscopic filling compound) steel tube surrounded by further layers of steel wires that provide tensile strength. This steel tube is insulated with a layer of polyethylene to form the telecommunication cable. Such cables are designed to protect and facilitate the optical fibre transmission path during operation (carry the signal), during installation (laying and burial at sea), and recovery operations.
For the URC category the same general description of goods as for OALC has been given, the variations being in finer physical characteristics and functional parameters.
The last one, namely, the Terrestrial (Land) category, covers goods described as communication cable for submarine telecommunication systems. It is comprised of optical fibres (glass fibre reinforced with plastic material). It is set in a thermoplastic tube containing up to 12 fibres (except for SI. No. 12 in the Table above, where it contains upto 8 fibres) and filled with a non-hygroscopic compound. The inner and the outer sheaths are made of a non-flammable, black high density polyethylene/copolymer with a nominal thickness of 1.5 mm. For items in SI. Nos. 9, 10 & 11, it has been further added that tubes and fillers are stranded around the central strength member.
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On the classification issue, the applicant has referred to the Rules 1 and 6 of the General Rules for Interpretation of the First Schedule to the Act, and submitted that all these telecommunication cables are classifiable under tariff item 8544 70 90. A copy each of the rulings issued by the Customs authorities in UK, USA and Australia (for OALC and URC categories of telecommunication cables) and by the UK & Australian Customs (for terrestrial telecommunication cable), has also been submitted alongwith the respective applications to show that they have classified these products under tariff sub-heading 8544 70.
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The Commissioner in his initial comments in respect of all these applications stated that on the basis of description of goods given in Annexure-II to the application, and general characteristics given in the Technical Documents, the classification under tariff item 8544 70 90 as proposed by the applicant may be accepted.
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At this juncture, it would be useful to refer to the tariff heading 8544 which reads as under:-
8544 Insulated (including enameled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors
Had it not been noticed at the first hearing itself before the Authority that for any optical fibre cable to be classified under the heading 8544, it is essential to establish that it is made up of individually sheathed fibres, we would have proceeded on the comments of the Commissioner. Since neither the technical information furnished by the applicant nor the comments given by the Commissioner, apparently touched upon the requisite "made up of individually sheathed fibres", the Authority gave the parties opportunity to submit their further response, if any, in this regard. The Authority directed the applicant to clarify whether the optical fibre cables are made up of individually sheathed fibres and also to produce before the Authority the samples of the goods which are the subject matter of classification.
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It appears from the record that at this stage, the Commissioner suo motu sought the opinion of the Department of Information Technology, Ministry of Communications and Information Technology, Government of India, New Delhi (in short, DIT) as to whether the optical fibre cables in question are made up of individually sheathed fibre. The relevant part of the reply of DIT Ref. no. 5(10)/2005-IPHW dated 06.10.2005 reads as follows:-
The matter has been examined in the Department of Information Technology. In this connection, it is clarified that the 14 Nos. Optical Fibre Cables under reference are not made up of individually sheathed fibre
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In their response to DIT's opinion, the applicant, reiterating their own stand taken earlier, referred to the technical information for the cable description that is OALC; URC and Terrestrial (Land), which includes the individual nature of the fibres. They also forwarded ten samples of cables with proper identification which are the subject matter of these applications. However, having noticed that the aforementioned opinion was given without looking into samples of the cables in question, the Authority decided to send the samples to the DIT for verifying the same and reporting whether in the light of the explanation given by the applicant, they could be treated as made up of individually sheathed fibres within the meaning of tariff heading 8544 of the Act.
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In reply, the DIT in their letter Ref. no. 5(10)/2005- IPHW dated 05.01.2006 gave the point-wise comments as under:-
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Whether the samples furnished vouch for the claim of the applicant that the optical fibre cables have been manufactured by a process in which "the fibres are coated with different colours and are housed in jelly material which would amount to individually sheathing the fibre as per the modern technology.
The samples furnished by the party are optical fibre cables of various types. The optical fibres consist of the core and cladding (glass) and the UV curable resin, which for identification of the individual fibre is coloured, in different colors. Several fibres are then housed in a single plastic tubing filled with jelly material. This does not amount to individually sheathing of the fibre.
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In particular, whether the optical cables (in each of the samples) are made of optical fibres which have "individual protective sheath made of a UV-curable resin (also described as coating)", as claimed by the party in their letter dated 13.12.2005.
The optical fibres itself (sic) consist of the core, cladding and UV coating. Thus, it is not correct to try to call the UV coating as a sheath in the context of the tariff heading. In fact, in the input-output norms for import of raw materials for production of optical fibres, the UV curable coating is listed under the list of raw materials for optical fibres. It is not listed under the raw materials for cabling the fibre into cables. The tariff heading refers to a further individual sheath, which is placed over the UV curable resin coated optical fibre,
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Whether as per the description given and on examination/testing of the samples in question, these optical fibre cables can be taken to have been made up of individually sheathed fibres. In this context, what is regarded in the modern technology as individually sheathing of optical fibres may also please be elaborated.
In our technical opinion and on physical examination of the samples in question, these optical fibre cables are not made up of individually sheathed fibres.
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The letter containing the above comments was forwarded by the Authority to the applicant as well as to the Commissioner and the Joint CDR for their further response, if any. While giving detailed comments, the applicant relied upon certain rulings issued by the USA Customs classifying such cables under heading 8544, the technical information on the manufacturing process of fibre optic telecommunication cable, the HSN Explanatory Note and the relevance of the Information Technology Agreement (ITA) in dealing with the classification of telecommunication cables. The Ld. Joint CDR, on the other hand, urged that in view of the clear opinion given by DIT the proper classification would be under tariff item 9001 1000.
It will be useful to refer to heading 9001 which reads as follows:-
9001 Optical fibres and optical fibre bundles; optical fibre cables other than those of heading 8544; sheets and plates of polarising material; lenses (including contact lenses), prisms, mirrors and other optical elements, of any material, unmounted, other...
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