CESTAT Rules In Favor Of Secure Meters On Classification of Communication Modules

CESTAT Rules in Favor of Secure Meters on Classification of Communication Modules

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has ruled in favor of Secure Meters Limited in a case concerning the classification of communication modules used in the manufacturing of smart meters. The Tribunal overturned the classification determined by the Principal Commissioner of Customs, New Delhi, providing significant relief to the importer.

The key issue before the Tribunal was whether communication modules should be classified under Customs Tariff Item (CTI) 9028 90 10 / 9028 90 90—as components of electricity or gas meters—or under CTI 8517 70 90, which covers independent communication equipment.

The Revenue Department argued that since communication modules are integral to communication hubs within smart meters, they should be classified as part of electricity meters. However, the Appellant contended that these modules function independently as components of communication hubs designed for data transmission, making CTI 8517 70 90 the appropriate classification.

After examining the arguments, the Tribunal ruled in favor of Secure Meters Limited, making the following key determinations:

1. 1. Duty Assessment: By virtue of Section 12, Customs Act, 1965, charge of duty is only on the goods in its as-imported form. CESTAT, New Delhi emphasized that assessment cannot be influenced by potential future use of the goods post- clearance.
2. 2. Classification as independent goods: 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.
3. 3. Self – Assessment: The Tribunal reinforced that importers are responsible for self- assessing duties based on their understanding without anticipating how customs officials/investigating agencies might classify the goods in future. Consequently, allegations of "willful suppression of facts" against the importer were dismissed.

The Appellant was represented by V. Lakshmikumaran, along with Anurag Kapur, Rubel Bareja, and Anisha Arya from Lakshmikumaran and Sridharan Attorneys.