Home Fiber Broadband Devices ONT, OLT Are Data Transmission Machines, Not Residual Telecom Equipment: CESTAT Delhi

The Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi has held that Optical Network Terminals (ONT/ONU) and Optical Line Terminals (OLT) imported by GX India Pvt. Ltd. are machines used to receive and transmit data. It rejected the company's classification of ONT/ONU as “subscriber end equipment” and OLT under the residual “other” category.

A bench of President Justice Dilip Gupta and Technical Member P.V. Subba Rao partly allowed GX India's appeals. It remanded the company's exemption claims to the Commissioner for fresh consideration.

“Once it is accepted that the ONTs/ONU are meant for reception and transmission of data, the irresistible conclusion is that they fall under CTI 8517 62 and, therefore, they cannot fall under CTI 8517 69.”, it ruled.

The dispute arose after the Directorate of Revenue Intelligence took the view that GX India had wrongly classified ONT/ONU products as “subscriber end equipment.” It also alleged that the company wrongly classified OLT products under the residual “other” category to claim customs duty exemptions.

GX India argued that ONT/ONU devices installed at customer premises qualified as “subscriber end equipment.” It relied on technical opinions, TRAI documents, and earlier customs rulings.

Rejecting this argument, the tribunal said the “subscriber end equipment” entry falls within a residual category. It said that category can apply only if the goods do not already fall within the more specific class of machines used for receiving and transmitting data.

The tribunal also used an illustration involving classification of students by city and gender. It explained why goods falling under a primary category cannot also be placed in a residual sub-category.

On the exemption issue, GX India relied on an expert report by retired Deputy Director General of Telecommunications Ravinder Kumar Mishra. He opined that ONT/ONU and OLT products were not Optical Transport Network equipment excluded from exemption benefits.

The tribunal found that the Commissioner had neither considered the expert report nor examined its conclusions before denying the exemptions.

The tribunal upheld the department's tariff classification. However, it sent the exemption issue back to the Commissioner for fresh examination after considering the expert report, including by examining or cross-examining the expert if necessary.

The tribunal also set aside the extended limitation demand and penalties. It held that tariff classification is a matter of opinion and not, by itself, evidence of suppression or wilful misstatement.

For Appellant: Advocates A.K. Prasad and Surbhi Sinha,

For Respondent: Nikhil Mohan Goyal, Authorised Representative