TMI Blog2016 (3) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods in question are speakers with added function, as such the main role of the item in question remains amplifying the sound received by it either from outside source or from inbuilt feature. As such, going by the Interpretative Rules and Section note 3 to Section XVI, the criteria for classifying the product is the principal and the main function it performs, which in the present case remains to be that of a speaker. We accordingly hold that the goods in question are properly classifiable under Chapter Heading 8518 22 00. We may also add that the invoices raised by the seller of the goods stand examined by it and the description stand given as “Multimedia Speaker”. This also reflects upon the fact that the goods in question, in common parlance are also traded as speakers. The appellants have also submitted an affidavit of the dealers, the invoices raised by them against the customers and the statement of Service Manager of the assessee. Examination of these documents shows that goods are primarily sold as speakers. Even the brochures placed on record indicate that the goods are being traded as speakers only and not as either FM radio or the sound reproduction system. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the said speaker. The second type of speaker being imported by the appellant were having additional functions of USB Port with playback port, which the Revenue intends to classify under Chapter Heading 8519 and the third type of speakers is where there was facility of FM Radio along with USB port playback, which the Revenue intends to classify it under Chapter Heading 8527. 2.2 For better appreciation of contending entries, the same are being reproduced below: 8518 Microphones and stands therefor; loudspeakers, whether or not mounted in their enclosures, headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers, audio-frequency electric amplifiers; electric sound amplifier set. 8518 10 00 8518 21 00 ... 8518 22 00 Multiple loudspeakers, mounted in the same enclosure. 8519 Sound recording or reproducing apparatus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions. Learned advocate submit that the lower authorities have merely relied upon a Circular of the Board being No.27/2013-Cus. dated 1.8.2013. However, he fairly agrees that the said Circular deals with an identical product being imported by the appellants but submits that the interpretation given in the said Circular is not appropriate. It is his argument that the Circular issued by the Board are not binding upon the Courts and as such, independent interpretation has to be adopted and ruling is required to given. For the said proposition, he also refers to various decisions laying that Circulars issued by the Board cannot overrule statutory provisions. 3. Countering the arguments, learned Commissioner (AR) appearing for the Revenue draws our attention to the impugned orders passed by the authorities below and submits that the goods imported by the appellant are not speakers simpliciter but as they contain additional feature of having a USB port with playback and a radio facility, it has to be held that they cannot be classified as speakers falling under Chapter Heading 8518. He also draws our attention to the Circular of the Board being Circular No.27/2013-Cus. dated 1.8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaker, in our opinion, would again not convert the huge speaker into a FM radio. Even going by the common parlance test, nobody would buy a huge speaker for the purpose of FM radio. 4.1 At this stage, we may advert to the Circular No.27/2013-Cus. dated 1.8.2013 which alone stands relied upon by the lower authorities for coming to the conclusion against the assessee. The said circular stands given by the Ministry of Finance on the representations received from the industry in respect of the identical products being imported. The opinion as expressed in the said circular is based upon the outcome of the Conference of Chief Commissioners of Customs and Directorate General on the customs tariff and allied matters. Relevant paras of the said Circulars are reproduced :- 3. The competing headings are : 8518 - Loudspeakers, whether or not mounted in their enclosures: headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers: audio-frequency electric amplifiers: electric sound amplifier sets; 8519 - Sound recording or reproducing apparatus; 8527 - Reception apparatus for radio-broadcasting wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 851822. Speakers that are not mounted in a cabinet or enclosure are classified under subheading code 851829. (b) Speaker with USB Port having USB playback but without FM radio , the principal function of the device is imparted by USB playback facility. Therefore the said multifunction speaker system is classifiable in subheading 851981 of the Harmonized Customs Tariff, which provides for Sound recording or reproducing apparatus : Other apparatus : Using magnetic, optical or semiconductor media : Other : Other. (c) Speaker with USB port having FM radio but without USB playback the principal function of the device is imparted by Radio (reception apparatus for radio-broadcasting) and hence the multifunction speaker system classifiable under subheading 852799 by virtue of General Rules 1, Note 3 to Section XVI and 6. (d) Speaker with FM, USB port and USB playback , if it is held that the principal function of the device is imparted equally by Radio (reception apparatus for radio-broadcasting) and USB playback facility then it would be classified by sequential application of GRI, according to Rule 3(c). According to this rule, of all the possible heading or subhead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law, it was observed as under: 2. It is represented that mobile, cellular handset/telephone has the essential characteristic of transmission and reception apparatus, such as aerial, display screen, keypad and that the same should be of small size so that it can be hand-held and is of lightweight for use as telephone instrument. The other functions such as radio receivers, music players, e-mail, net browsers, calculators, stopwatch, alarm, computing on software platform are subsidiary to the main function of transceiver. 3. . 4. ... 5. In terms of the First Schedule to the Customs Tariff, telephones for cellular networks or other wireless networks, push-button type or other , would be classifiable under sub-heading 8517 12. Similarly, portable automatic data processing machine weighing not more than 10 Kgs., consisting of at least a CPU, a key board and a display would be classifiable under sub-heading 8471 30; and radio navigational aid apparatus would be classifiable under sub-heading 852691. From the scope of the headings/sub-headings. Board found that all mobile or cellular telephones whether working on the Global System for Mobile Communications (GSM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etwork rather than as an Automatic Data Processing (ADP) machine or camera or GPS receiver. i. use transmission of signals (representing speech, messages, data or pictures) by means of electromagnetic waves which are transmitted through the ether without any line connection i.e., wireless, in any of the bandwidth allotted to mobile/cellular networks say 850 MHz to 1900 MHz; and ii. consist of transmission and reception hardware such as trans-ceivers, antenna, microphone, speaker, battery, radio-frequency chip, basic band chip, power management chip, Subscriber Identity Module (SIM), International Mobile Equipment Identity (IMEI) or other unique identity for cellular/mobile phone as well as radio-frequency transmission software such as GSM, General Packet Radio Service (GPRS) and Enhanced Data rates for GSM Evolution (EDGE) etc., Hence, such cellular/mobile phones remain classified in sub-heading 8517 12, as the principal function of these equipments remain as telephony . 8. It is further explained that cellular/mobile phones can also be employed as data modems to form a wireless access point connecting a personal computer to the Internet. In this use, the mobil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board being Circular No.20/2013-Cus. dated 14.5.2013 wherein it was held that the classification of the Tablet Computer having an additional facility of connecting to an cellular network to make a voice calls will not make the Table Computer divert from its main function and Table Computer would remain so. 4.4 When all the three circulars are viewed together, it is seen that the opinion expressed by the Board in Circular dated 1.8.2013 in respect of multifunctional speaker system is diagonally opposite to the opinion expressed in the earlier two circulars being Circular No.17/2007-Cus. dated 19.4.2007 and Circular No.20/2013-Cus. dated 14.5.2013. In the other two Circulars, the same Interpretative Rules have been taken into consideration and the same Section Note 3 to Section XVI stands taken note of and the products have been held to be classifiable according to their main and principal and essential function. We really fail to understand as to how subsequent Circular stands issued wherein a different view stands expressed without assailing the fact that a speaker remains a speaker but with some additional facilities and features. 4.5 We find that the lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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