Classification Disputes On Networking Equipment Forcing A Policy Change

In recent times, the telecom sector has witnessed multiple litigations over the classification of network equipment. Given the rapid pace of technological evolution, telecom products are frequently upgraded, making classification disputes almost inevitable on such networking products. Every few years, new versions of antennas, RF modules, routers, and optical transceivers etc. enter the market, further complicating the classification of these products.

It is a well-known fact that several multinational companies have been involved in high-stakes classification disputes under Customs law. The primary issue in many disputes is whether goods are properly classifiable as components/ parts of telecom equipment (eligible for exemption) or as complete machine/ apparatus (liable for duty). This is considering the policy backdrop that India incentivises import of parts for manufacture in India. For this, it issues exemptions that cover tariff lines meant for parts.