2022 (1) TMI 325 - AAR - Customs

Classification of goods - Smart Plug - classifiable under CTH 8537 10 00 - Echo Sub rightly classifiable under CTH 8518 21 00 or not - benefit of Serial Number 490 of Notification No. 50/2017-Customs dated 30-6-2017. Classification of Smart Plug - HELD THAT - Observing that Smart Plug is designed to primarily function as an electrical switch but is significantly more than a simple switch it is excluded from Heading 85.36; and would be correctly classifiable under Heading 85.37 and more specifically sub-heading 8537 10 00. Eligibility of smart plug to claim the benefit of Serial Number 490 of Notification No. 50/2017-Customs dated 30-6-2017 - HELD THAT - The relevant entry in the said Notification No. 50/2017-Customs provides for concessional rate of basic customs duty of 7.5% for all goods falling under Heading 85.37. Therefore smart plug classifiable under Heading 85.37 is eligible for the benefit of concessional rate of duty under the said Notification No. 50/2017-Customs. Classification of Wireless Speaker Device with Model No. P5B83L (Echo Sub) - HELD THAT - It is a single loudspeaker with a single drive unit mounted in their enclosure. Noting that a sub-woofer is a speaker that is designed to only reproduce low frequencies also known as the bass it is found that Echo Sub would merit classification as a speaker under Heading 85.18; and since it is a single loudspeaker mounted in their enclosure the appropriate classification would be under sub-heading 8518 21 00.

Summary

Issues Involved:
1. Classification of Smart Plug under Customs Tariff Heading (CTH) 8537 10 00.
2. Classification of Echo Sub under CTH 8518 21 00.
3. Eligibility of Smart Plug for concessional rate of Basic Customs Duty under Notification No. 50/2017-Customs.

Detailed Analysis:

1. Classification of Smart Plug under CTH 8537 10 00:

The applicant proposed to import a Smart Plug with Model No. C2YY3N, described as an Alexa-enabled device with multiple built-in elements such as a plug, socket, switch, and button, supporting Wi-Fi and Bluetooth connectivity. The primary function of the Smart Plug is to act as a switch that can be operated remotely using Alexa devices.

The applicant suggested that the Smart Plug should be classified under CTH 8537 10 00, which covers boards, panels, consoles, desks, cabinets, and other bases equipped with two or more apparatus of Heading 85.35 or 85.36 for electric control or the distribution of electricity. The designated Principal Commissioner of Customs also recommended this classification.

The Authority agreed with the proposed classification, noting that the Smart Plug, while primarily functioning as an electrical switch, is more complex than a simple switch and thus excluded from Heading 85.36. Therefore, it is correctly classifiable under Heading 85.37, specifically sub-heading 8537 10 00.

2. Classification of Echo Sub under CTH 8518 21 00:

The applicant proposed to import a Wireless Speaker Device with Model No. P5B83L, described as a sub-woofer compatible with Echo Family Devices, used to provide high-quality audio services. The Echo Sub is capable of playing music from the Alexa cloud through paired Echo Family Devices.

The applicant suggested that the Echo Sub should be classified under CTH 8518 21 00, which covers single loudspeakers, mounted in their enclosures. The designated Principal Commissioner of Customs also recommended this classification.

The Authority agreed with the proposed classification, noting that the Echo Sub, being a sub-woofer designed to reproduce low frequencies (bass), merits classification as a speaker under Heading 85.18. Since it is a single loudspeaker mounted in its enclosure, the appropriate classification is under sub-heading 8518 21 00.

3. Eligibility of Smart Plug for Concessional Rate of Basic Customs Duty:

The applicant sought to determine whether the Smart Plug, if classified under CTH 8537 10 00, would be eligible for the benefit of Serial Number 490 of Notification No. 50/2017-Customs, which provides a concessional rate of Basic Customs Duty (BCD) at 7.5% for all goods classifiable under Heading 85.37.

The Authority confirmed that since the Smart Plug is classifiable under Heading 85.37, it is eligible for the benefit of the concessional rate of duty under Notification No. 50/2017-Customs.

Conclusion:

The Authority ruled that:
1. The Smart Plug is classifiable under CTH 8537 10 00.
2. The Echo Sub is classifiable under CTH 8518 21 00.
3. The Smart Plug is eligible for the concessional rate of Basic Customs Duty under Notification No. 50/2017-Customs.