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2023 (7) TMI 839 - AT - CustomsClassification of imported goods - CX 275s and CX180. Model CX 275s earphones have microphones - CX180 earphones - classified under customs tariff heading 8518 30 00 or not - N/N. 57/2017-Cus dated 30.06.2017 as amended by N/N. 22/2018-Cus dated 02.02.2018 (S. No. 18) - HELD THAT:- It is undisputed that earphones CX 275s have two speakers for the ears and an inbuilt microphone. It is also not in dispute that CX 275s can be used with the cell phone. There is nothing on record to show that it cannot be used with any other device. It is common knowledge that earphones with microphone can be used with laptop, i-pad, desktop, i-pod, mobile phone etc., and they perform the same function of providing audio output through the speakers and receiving audio input through the microphone from device they are attached to. The utility of the earphones is limited by the compatibility of the jack with the port on the device. So long as the jack is compatible, the same earphone can be used with tablet, cell phone, gaming devices etc. Therefore, earphone utility of the earphone is not confined to cellular mobile phone. The earphones are neither a part of nor are they essential to use a mobile phone. They only add additional utility. Therefore, the earphone will qualify as an accessory which can be used with cellular mobile phone as well as other electronic devices. When used with the cellular mobile phone, it will be an accessory to mobile phone but will not be its part - What is evident from the entry no. 18 is that only such microphones, wired headsets and receivers as are parts of cellular mobile phones get excluded from the exemption notification and all other goods falling under CTH 8518 are exempted. Earphones CX 275s imported by the appellant, while being earphones, are clearly not parts of any mobile phone. In Dilip Kumar and Company [2018 (7) TMI 1826 - SUPREME COURT], the Supreme Court did not completely rule out the possibility of liberal interpretation of an exemption notification but affirmed its previous decisions in COLLECTOR OF CENTRAL EXCISE VERSUS PARLE EXPORTS (P) LTD. [1988 (11) TMI 108 - SUPREME COURT] and CCE VERSUS M/S HARI CHAND SHRI GOPAL [2010 (11) TMI 13 - SUPREME COURT] that strict and liberal interpretations of the notification should be applied at different stages. To see if the subject is covered by the notification or not, strict interpretation should be applied and once this ambiguity or doubt is resolved, the Court may construe the notification by giving full play bestowing wider and liberal construction. In this case, clearly, all goods falling under CTH 8518 are exempted by S. No. 18 of the notification excluding some ‘parts of the cellular mobile phones’ including ‘headsets’. Clearly, S. No. 18 does not exclude all earphones but only headsets which are parts of cellular mobile phones. The earphones in dispute CX 275s are not parts of any mobile phone but are accessories which can be used with a variety of electronic gadgets including cellular mobile phones. Even for this reason, the benefit of the exemption notification cannot be denied to earphones CX 275s imported by the appellant. The demand of duty in the impugned orders cannot, therefore, be sustained and need to be set aside. Consequently, the penalty imposed in one of the order dated June 1, 2020 also need to be set aside - appeal allowed.
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