Cable Casing
Fiber Optic Cables
"The electronics and telecom sectors merit special attention. In 217 Technology Agreement Information (ITA) bound items, the law is required to be reduced to zero. Consequently, to provide a level playing field to domestic industry I suggest you remove the customs duty on specified capital goods and all inputs required for the manufacture of ITA bound items "
Minister Finance of the Union on February 28, 2005 announced on the floor of Parliament during the presentation of the Union budget for the year 2005-06. It was the application of Ministerial Declaration on Trade in Goods of Information Technology (ITA), concluded at the Singapore Ministerial Conference in December 1996. The ITA provides participating countries to completely eliminate duties on products covered by the Agreement At that time, the finance minister could not see that this situation be a cause of great embarrassment to the agency first Indian research namely the Directorate of Revenue Intelligence (DRI).
Recently, the Court Bombay High in the case of Essar Vodafore v Union of India [WP 8379/2008] whipped DRI in the following words:
"In these circumstances, we are clearly of the opinion that in this case, the conduct of the officers of DRI is not only arbitrary but is in the serious abuses powers conferred on them by the Customs Act. It is evident that the officers of DRI in total disregard to the order approved by the Commissioner of Customs (A), Mumbai have forced the petitioners to pay the sum by the threat and coercion is not permitted by law. Therefore, the conduct of the officers of DRI in this case in the collection of the amount of petitioners alleged the right to difference is completely arbitrary, illegal and contrary to law. After the petitioners terrorized with the threat of arrest, is not open to DRI officials maintain that the amount has been paid by the petitioners voluntarily. We strongly condemn the arbitrary action of officers in the DRI completely ignore the rules established in the Customs Law regarding re-evaluation procedures and aimed at bringing together the amount even before reassessment. We hope that such incidents do not occur in the future. "
In addition to spending severe stenosis, the High Court also imposed costs to the Government. The controversy revolves around the classification of telecommunication grade optical fiber cables ("CFE"). Exemption Notification No 24/2005-Cus dated March 1, 2005 exempts goods falling under Chapter Heading 854 470 and all goods imported for the manufacture of products included in the final chapter 854 470 line. According to HSN, OFC consists of individually sheathed fibers, whether or not assembled with electric conductors or connectors are classifiable Chapter Heading 854 470 OFC, while other than those of heading 8544 is classified in heading Chapter 900 190.
In the recent past, communication call was made around the world through electrical signals along the copper wire cables. With the advent of the Internet and the proliferation of facilities phone, there was a demand that is, greater bandwidth capacity to carry the amount of information that copper cables can not fulfill. Optical fibers offer strong communication skills and therefore now widely used for telecommunications purposes. The optical fiber, thinner than a human hair can transmit large data around the world at the speed of light. OFC down under the earth and the sea, overheads and also used for networking computers. There is no doubt that OFC is the backbone of information technology and therefore must have been one of the most eligible candidates for the award the ITA.
Unfortunately, the fate of the OFC for exemption is not determined by end use, but by the classification. As noted above, OFC benefit from the exemption only if it is made up of individually sheathed fibers. Usually OFC is made of a member of the central force around which dual - coated optical fiber is the main focus, which is full of jelly. This core is covered with the case inside and outside of HDPE and nylon. The core of the whole controversy is whether the double covering optical fibers are individually sheathed or not or in other words, if coating can be considered as a coating or not.
Explanatory Notes to heading No. 85.44 provides that covers are often of different colors to allow identification fiber at both ends of the cable. Optical fibers are mainly used in telecommunications capacity for data transmission is greater than that of drivers electric. Explanatory Note to heading 90.01 provides that the optical glass fibers from a very thin layer of plastic, invisible to the naked eye, which makes fibers less prone to fracture. OFC also claims that this heading include a sheath that contains one or more bundles of optical fibers, fibers which are not individually sheathed.
The classification of the OFC made double - coated optical fiber has been a controversial issue for many countries. In India, for Optel Telecommunications Ltd, the Court held that thin coating of UV cured acrylate fiber optics, invisible to the eye, does not mean all layers. In this case, revenue was asking that the coating of UV cured acrylate in the optical fiber should be treated as investment. As to income not any material on record to show that the coating of UV cured acrylate coating amounts to fiber optic cables, it was argued that UV cured acrylate coating fiber is not equivalent to all layers.
In the case of Alcatel India Ltd, the Authority of Advance Rulings ("TCA") held that the coating was not the same as a "pod", especially as a coating proved to be an integral part of manufacturing process of optical fibers. In this case, it was stated party on behalf of UV cured acrylate in the optical fiber should be treated as investment. However, this decision was TCA have no relevance to the other parties as TCA case law are binding only for the match and the revenue for that party the provisions of Article 28j of the Act 23E of the Customs and Excise Act Central.
In the United States of America, similar questions were raised by Sumitomo Electric Lightwave Corporation Limited and Corning Cable Systems. U.S. See Customs Judgement No. 963 256 and headquarters both dated April 3 963 016 2001 ruled that the 62.5 micron dual acrylate coating color and add substantially affect the overall protection, security and reliability of each individual fiber, and fibers are considered individually sheathed and the same was subsequently reaffirmed in the Judgement See No. 965 593 dated July 16, 2003.
Explanatory Notes to the Combined Nomenclature of the European Communities of subheading 8544 were amended in 2007 to 2007/C296/02 See include fiber optic cables, designed for use in telecommunications, optical fiber composite fibers individually coated with a double acrylate polymer layer and placed into a protective shell. The coating consists of an inner layer of soft acrylate and an outer layer of hard acrylate, the latter being coated with a layer of various colors.
However, in India, disputes classification take a while to settle. There is a tendency on the part of the Bureau of Revenue of blindly following resolutions TCA, despite specific provision law that such resolutions are not applied elsewhere. One of my client is a manufacturer of the OFC, which also faces similar classification dispute. I have sent numerous data to the contracting authority to support the secondary coating is a protective cover or sheath of the fiber and therefore OFC merit classification under heading 854 470. In addition, samples were analyzed by different laboratories and 3 out of 5 labs found that OFC was made of individually sheathed fibers. But, without even looking at the evidence and test reports, the judge held that blindly following TCA OFC should be classified in heading 900 190. Similar has been the fate of Vodafore Essar in Chennai.
An optical fiber is a glass or plastic fiber that carries light along its length. The light is maintained in the "core" of the optical fiber by total internal reflection. Fiber optics are used in telecommunications and networks, sensors to measure pressure, temperature, pressure and other parameters, lighting, light guides in services and medical imaging.
Optical fibers for telecommunications needs very thin and very long fiber runs several kilometers in length to minimize the needs for a frequency of union that can lead to leakage of light or impede the total internal reflection, thus causing data loss. The major disadvantages of fiber glass are weak mechanical properties that cause susceptibility to fracture and delicacy, making it difficult to manage. Fiberglass in the management of packaging size Reel require a buffer (primary coating) to improve bending properties of very thin optical glass fibers as glass is fragile by nature.
OFC undersea cables often face extreme changes in temperature and the difference in response to temperature change between the glass and the buffer contribution of microbending fibers leading to the loss of transmission. During microbending wiring is also produced. Therefore, a sheath or layer of protection was necessary to protect optical fiber to the handling and use of the OFC. Mr. Paul Shustack J in his patent (1992) describes the secondary layer to function as a hard protective layer that allows the fiber from damage during processing and use. Corning Incorporated in patents (2004) describes the secondary coating should have the following characteristics: sufficient rigidity (ie module) to protect the encapsulated glass fiber yet enough flexibility (ie, elongation) for handling, low absorption water, low adhesion to allow the use of fiber optics, chemical resistance, and sufficient bond for the primary coating. There is unanimity among the inventors that the secondary coating is a protective layer to the primer so that the fibers to withstand stress during wiring, the environment and pollution.
departmental officials and research organizations tend to be partial income and are therefore often ignore the evidence that may favor the case of importer or manufacturer. Given the fundamental role of trade in information technology in the development of information industries and dynamic expansion global economy will increase living standards and human welfare, 70 countries around the world has pledged to completely eliminate duties on products. India is one of the countries participating in the ITA. Improved information and telecommunications infrastructure is also one of the priority areas of government in recent years. Obligation to charge for the OFC because the classification of disputes is an obstacle to the spread of IT infrastructure. U.S. and EU countries have resolved this dispute. The time is ripe for political leaders CBEC and notice and take urgent remedial measures such as India is failing in the global commitment and India world is watching very closely in these extraordinary times of economic hardship and turmoil.
About the Author
The author is a member of the Institute of Chartered Accountants of India and also a member of Institute of Cost & Works Accountants of India. He has gained vast experience in the Customs, Central Excise and Service Tax while working in the Indian Customs and central Excise Department under the Ministry of Finance, Government of India. Presently he is associated with Khaitan & Co., Mumbai, India
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