The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, has clarified the classification of a 5G radio unit under the Customs Tariff, affirming that synchronization functionality can bring a device within the ambit of Synchronous Digital Hierarchy (SDH) equipment, even if it is not traditional fiber-optic infrastructure. This decision has significant implications for importers of next-generation telecom equipment seeking duty exemptions.
Background & Facts
The Dispute
The dispute centers on the classification of the Airspan Air Velocity 2700, a 5G radio unit imported by M/s. Anandit Infotech India Pvt. Ltd. The respondent declared the goods under Customs Tariff Heading (CTH) 8517 6260, which covers Synchronous Digital Hierarchy (SDH) systems, and claimed exemption under Sl. No. 20 of Notification No. 57/2017 dated 30.06.2017. The Department challenged this classification, asserting that the device is not an SDH system but a 5G radio unit falling under CTH 8517 6290 ("others"), which attracts basic customs duty.
Key Facts
- The respondent imported the Airspan Air Velocity 2700 on or about 2021 for R&D purposes under Purchase Order No. 6000919751 from M/s. Accenture Operations Services Pvt. Ltd., Bangalore.
- The import was accompanied by technical literature, product catalogues, and a Wireless Planning & Coordination (WPC) license specifying a frequency band of 3300 - 3700 MHz.
- The WPC license and technical documentation described the device as a 5G Radio Unit (RU) for Radio Access Networks (RAN), compliant with O-RAN Alliance standards.
- The device is a 4T4R indoor radio unit designed for Sub-6GHz 5G networks, primarily for private networks and Citizens Broadband Radio Service (CBRS).
- The device handles user plane data, control plane data, synchronization signals, and management plane data between the Radio Unit (RU) and the Distributed Unit (DU).
- M/s. Accenture, in its letter dated 29.11.2021, referred to the item as a "5G Router Kit" prior to import.
- The Adjudication Authority, by Order-in-Original dated 04.02.2022, rejected CTH 8517 6260 and classified the item under CTH 8517 6290, denying exemption.
- The Commissioner (Appeals), by Order-in-Appeal dated 25.05.2023, reversed the Adjudication Authority’s finding and upheld CTH 8517 6260.
- The Revenue filed the present appeal challenging the Commissioner’s order.
Procedural History
- 2021: Import of Airspan Air Velocity 2700 by respondent for R&D purposes.
- 29.11.2021: M/s. Accenture issued a "No Objection" letter referring to the item as "5G Router Kit".
- 04.02.2022: Adjudication Authority classified goods under CTH 8517 6290 and denied exemption.
- 25.05.2023: Commissioner (Appeals) set aside the Adjudication Authority’s order and upheld CTH 8517 6260.
- 02.12.2025: Hearing before CESTAT Bangalore.
- 29.05.2026: Final Order passed by CESTAT.
The Parties' Positions
For the Appellant (Revenue):
- Argued that CTH 8517 6260 is exclusively for SDH equipment used in wired optical transport networks, such as in backbone telecom infrastructure.
- Contended that the Air Velocity 2700 is a wireless access device, not a transmission system, and thus falls under CTH 8517 6290.
- Relied on technical distinctions: SDH handles fiber-optic multiplexing; Air Velocity 2700 handles wireless radio signals.
For the Respondent (Anandit Infotech):
- Emphasized that the device performs synchronization of signals, a core function of SDH systems.
- Cited O-RAN specifications showing transmission of synchronization signals as a mandatory function.
- Argued that under Rule 3(a) of the Customs Tariff Rules, the most specific description applies: the device is a machine for transmission and regeneration of data, including synchronization.
- Highlighted that the Adjudication Authority itself acknowledged the device as a 5G LTE device for indoor network access.
- Submitted that the term "SDH" in the tariff heading is not limited to legacy fiber systems but includes any system performing synchronous digital hierarchy functions.
Relief Sought
The Revenue sought to set aside the Commissioner’s order and uphold the Adjudication Authority’s classification under CTH 8517 6290, thereby denying the exemption under Notification No. 57/2017 and levying applicable customs duty.
The Legal Issue
The central question was whether a 5G radio unit that synchronizes signals as part of its core function qualifies as a Synchronous Digital Hierarchy (SDH) system under Customs Tariff Heading 8517 6260, despite being a wireless device rather than a fiber-optic transmission system.
Arguments Presented
For the Appellant
The Revenue contended that CTH 8517 6260 is narrowly defined to cover only traditional SDH equipment used in wired backbone networks, such as those in power substations or carrier networks. It argued that the Air Velocity 2700 is a radio access unit designed for wireless transmission, not for digital multiplexing over optical fibers. The Revenue relied on technical literature distinguishing wireless RAN components from wired transport systems and asserted that classification must be based on the primary function, which here is wireless signal transmission, not synchronization. It further argued that the term "SDH" in the tariff heading must be interpreted in its established technical context, not expanded to include modern 5G components.
For the Respondent
The respondent argued that the tariff heading does not restrict SDH to fiber-based systems. It emphasized that synchronization of signals is a defining characteristic of SDH, and the Air Velocity 2700 transmits synchronization signals as part of its O-RAN-compliant front-haul interface. The respondent cited the Adjudication Authority’s own finding that the device is a machine for transmission and regeneration of data, and invoked Rule 3(a) of the Customs Tariff Rules, which mandates classification under the most specific description. It further noted that the device’s function - receiving, synchronizing, and routing signals - is functionally analogous to SDH systems, even if implemented wirelessly. The respondent also highlighted that the importer had disclosed all technical details at the time of import, including the WPC license and catalogues, and that the classification was made in good faith.
The Court's Analysis
The Tribunal undertook a functional analysis of the Air Velocity 2700, examining its technical specifications and the nature of its signal handling. It noted that while the device is not a fiber-optic transmission system, it performs a critical function integral to SDH: synchronization of digital signals. The Tribunal observed that the O-RAN architecture, which the device complies with, explicitly requires the transmission of synchronization signals between the Radio Unit and the Distributed Unit.
"The function of the Air Velocity 2700 is actually that of a router and main function of the Air Velocity 2700 is to receive the signals from the tower, synchronize it and route it through the lines in the enclosed area thus making the working of the 5G network more efficient."
The Tribunal held that the term "Synchronous Digital Hierarchy" in CTH 8517 6260 refers to the technical function of synchronizing digital data streams, not the physical medium (fiber or wireless) through which the synchronization occurs. It rejected the Revenue’s narrow interpretation, noting that tariff headings must be interpreted in light of technological evolution and the actual function of the goods, not their historical context.
The Tribunal further affirmed that the Adjudication Authority had correctly identified the device as a machine for transmission and regeneration of data, and that the Commissioner (Appeals) had correctly applied Rule 3(a) by selecting the most specific description - SDH system - over the residual category "others" under CTH 8517 6290. The Tribunal also noted that the respondent had provided full technical disclosure at the time of import, and there was no evidence of misdeclaration or intent to evade duty.
The Verdict
The Revenue’s appeal was dismissed. The Tribunal upheld the Commissioner (Appeals)’s order dated 25.05.2023, affirming classification of the Airspan Air Velocity 2700 under Customs Tariff Heading 8517 6260. Consequently, the goods are entitled to the exemption under Sl. No. 20 of Notification No. 57/2017 dated 30.06.2017. No customs duty is payable on the import. The order of the Adjudication Authority dated 04.02.2022 is set aside.
What This Means For Similar Cases
Synchronization Function Overrides Physical Medium
- Practitioners must now assess whether a device performs the core function of synchronization in digital data transmission, regardless of whether it operates over fiber, wireless, or copper.
- Importers of 5G, 6G, or O-RAN-compliant equipment should document synchronization capabilities in technical specifications and catalogues to support classification under CTH 8517 6260.
Tariff Headings Must Evolve with Technology
- The judgment establishes that tariff classifications cannot be frozen in historical context; functional equivalence trumps physical form.
- Where a device performs the essential function described in a tariff heading, it may qualify even if it uses modern or non-traditional transmission methods.
Documentation Is Critical for Duty Exemption Claims
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Upload of technical literature, WPC licenses, and manufacturer specifications at the time of import is not merely procedural - it is evidentiary support for classification.
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Pre-import correspondence (e.g., Accenture’s "5G Router Kit" reference) can be used to substantiate the importer’s bona fide intent and understanding of the product.
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Always cross-reference the device’s function against the literal description in the tariff heading, not its industry nickname.
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Where a device has multiple functions, apply Rule 3(a) to identify the most specific description, not the most general.
