CESTAT Mumbai Reiterates 10% Customs Duty Benefit On Enterprise Ethernet Switches

Reiterating that customs authorities cannot deny a concessional duty without objective evidence, the Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal has allowed Digisol Systems' appeal and extended the benefit of 10% customs duty on imported enterprise Ethernet switches and transceivers.

A bench comprising Judicial Member S.K. Mohanty and Technical Member M.M. Prathiban was hearing an appeal filed by Digisol Systems, a provider of IT networking solutions and consultancy services catering to enterprise and institutional customers.

"Considering the factual matrix of the case and that the dispute involved in the present case has already been decided in favour of the appellants in extending the concessional BCD at 10% in the case of Cisco Commerce India Pvt. Ltd. (supra), we find no reason to depart from the said decision taken by the Tribunal," the tribunal said 

Digisol imports various networking products, including Wi-Fi routers, enterprise wireless solutions, Ethernet switches, IP surveillance equipment, and transceivers.

Digisol had claimed the concessional duty benefit under the Customs Notification dated 30 June 2017. However, the Customs authorities denied the benefit, classifying the goods as ineligible and demanding customs duty at 20%. Digisol paid the differential duty under protest.

Before the Tribunal, Digisol contended that the imported transceivers were not Optical Transport Network (OTN) products, which are carrier-grade telecom equipment designed for high-capacity, long-distance data transmission. It argued that the transceivers were simple modules used in Ethernet switches for data transmission within a Local Area Network (LAN) and, therefore, could not be classified as OTN products used in long-haul telecom networks.

The Mumbai CESTAT accepted the submissions and held that the imported goods were eligible for the concessional 10% duty. Relying on the precedent in Cisco Commerce India Private Limited, which dealt with enterprise-grade Ethernet switches, the Tribunal set aside the denial of the concessional benefit.

The tribunal held that the denial of a concessional duty benefit must be supported by objective evidence. However, in the present case, the imported transceivers were neither tested nor backed by any documentary proof to show that they were ineligible for the duty benefit.

It also relied on a MeitY circular, CBIC Circular No. 08/2023, and a technical opinion from the Telecom Engineering Centre, which clarified that LAN switches are not carrier Ethernet switches used in the telecom sector. Based on the technical features and services supported by the imported Ethernet switches, the Tribunal concluded that Digisol's imports fell within the “enterprise” category and not the “carrier-grade” category.

Finding no reason to depart from the earlier decision of the Coordinate Bench in Cisco Commerce India, the Mumbai CESTAT allowed the appeal.

Case Detail: Digisol System Limited vs. Commissioner of Customs-Goa

Case Number: Customs Appeal No. 86427 of 2023

Citation: 2026 LLBiz CESTAT (MUM) 10

For Appellant: Advocate Mahesh Raichandani

For Respondent: Krishna Azad (Authorised Representative)