ONT/OLT Equipment Classifiable Under CTI 8517 62 90: CESTAT

The Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has held that Optical Network Terminals (ONT), Optical Network Units (ONU), and Optical Line Terminals (OLT) imported by GX India Pvt. Ltd. are classifiable under Customs Tariff Item (CTI) 8517 62 90 as machines for reception, conversion and transmission of data, and not under the residual category of subscriber-end equipment. The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) granted partial relief by setting aside the invocation of the extended limitation period and quashing penalties imposed by customs authorities. The appeal arose from an order passed by the Principal Commissioner of Customs, ICD Tughlakabad, involving three show cause notices covering imports through ICD Tughlakabad, Air Cargo Complex Delhi and ICD Patparganj. The total disputed customs demand exceeded ₹25.84 crore. The dispute centered around two imported products — Optical Network Terminals/Optical Network Units (ONT/ONU) and Optical Line Terminals (OLT). GX India had classified ONT/ONU products under CTI 8517 69 50 as “subscriber end equipment” and claimed complete customs exemption under Notification No. 24/2005-Customs. OLT equipment had been classified under CTI 8517 69 90 and partial exemption was claimed under Notification No. 57/2017-Customs. Following an investigation conducted by the Directorate of Revenue Intelligence (DRI), Kochi, authorities concluded that both ONT/ONU and OLT products were correctly classifiable under CTI 8517 62 90 and therefore not entitled to the exemptions claimed by the importer. The customs department accordingly issued notices seeking differential duty along with interest, confiscation of goods and penalties. Before the Tribunal, GX India argued that ONT/ONU products are subscriber-end equipment installed at customer premises and therefore deserved classification under the specific tariff entry for subscriber-end equipment. The company relied on technical opinions, TRAI documents, advance rulings and previous customs adjudication orders supporting its stand. It also argued that the Commissioner had failed to consider expert reports and relevant precedents while passing the order. The Revenue, on the other hand, contended that ONTs and OLTs are devices used for receiving, converting and transmitting data in broadband optical networks. Since these products perform data transmission functions, they necessarily fall under tariff sub-heading 8517 62, which specifically covers machines for reception and transmission of data. After examining the technical functioning of the imported devices, the Tribunal observed that ONT/ONU devices receive broadband connectivity from internet service providers and transmit such connectivity to household devices through cable or Wi-Fi. Since their principal function is receiving and transmitting data, they cannot be classified under the residual category under heading 8517 69. The Bench rejected the argument that ONTs should automatically fall under “subscriber end equipment” merely because they are installed at subscriber premises. The Tribunal emphasized that CTI 8517 69 50 is itself only a subset of the residual category under 8517 69 and would apply only where goods do not fall under the specific category of machines for reception and transmission of data under heading 8517 62. Similarly, the Tribunal held that OLT equipment also performs data reception and transmission functions and therefore rightly falls under CTI 8517 62 90. However, while sustaining the tariff classification, the Tribunal found deficiencies in the Commissioner's denial of exemption notifications. GX India had produced an expert report by a retired Deputy Director General of Telecommunications stating that ONT/ONU and OLT products are not Optical Transport Network (OTN) equipment. The Tribunal observed that the Commissioner neither examined the expert nor dealt with the findings of the report while denying exemption benefits. Consequently, the issue regarding entitlement to exemptions under Notification Nos. 24/2005-Customs and 57/2017-Customs was remanded back for fresh examination. The Tribunal also granted substantial relief on limitation and penalties. It held that merely changing tariff classification or claiming an exemption benefit does not by itself amount to suppression of facts or wilful misstatement. The Bench found insufficient evidence of collusion or intentional evasion by the importer to justify invocation of the extended period under Section 28(4) of the Customs Act. As a result, the demand pertaining to the extended period was set aside. Since penalties under Sections 114A and 114AA require elements such as suppression, wilful misstatement or false declarations, the Tribunal also quashed both penalties. The CESTAT partly allowed the appeals, upheld the tariff classification under CTI 8517 62 90, remanded the exemption issue for reconsideration, and set aside extended limitation and penalties imposed on the importer. Case Details Case Title: GX India Pvt Ltd Versus Principal Commissioner Of Custom Import-New Delhi ICD TKD Citation: JURISHOUR-1312-CES-2026(DEL) Case No.: CUSTOMS APPEAL NO. 51799 OF 2024 Date: 20/05/2026 Counsel For Appellant: A.K. Prasad, Ms. Surbhi Sinha, Advocates Counsel For Respondent: Nikhil Mohan Goyal, Authorised Representative Click Here To Read Order Read More: 10 Unique Features of GSTAT Procedure Rules, 2025 That Will Transform GST Litigation

ONT/OLT Equipment Classifiable Under CTI 8517 62 90: CESTAT

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