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Logic India Trading Co Versus Commissioner of Customs

2016 (3) TMI 5 - CESTAT BANGALORE

Classification of import of Multimedia Speakers - Appellant claimed the classification of the same as falling under Customs Tariff Heading 8518 22 00 while the Revenue’s contention is to classify it under Chapter Heading 8519 81 00 where speakers imported were having additional functions of USB Port with playback port and under 8527 99 19 where speakers imported were having the facility of FM Radio along with USB port playback - Held that:- the speaker is primarily a speaker and some additional .....

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body would buy a huge speaker for the purpose of FM radio. - Also, the 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. W .....

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ice 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 view is also strengthened by the decision of the Hon’ble Supreme Court in the case of Xerox India Ltd. vs. Commissioner of Customs, Mumbai: 2010 (11) TMI 20 - SUPREME COURT OF INDIA. Though the said decision did not deal with .....

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C/20140/2014-DB, C/20141/2014-DB - Final Order No. 20239-20241 / 2016 - Dated:- 9-2-2016 - SMT. ARCHANA WADHWA, JUDICIAL MEMBER AND SHRI ASHOK K. ARYA, TECHNICAL MEMBER For the Petitioner : Mr. G. Shivadass, Advocate For the Respondent : Mr. Ajay Saxena, Commissioner (AR) ORDER PER : ARCHANA WADHWA All the three appeals have been decided by a common order as the issue involved is identical. 2. After hearing both the sides duly represented by Shri G. Shivadass learned counsel for the appellants a .....

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ention is that the said Multimedia Speakers , being imported by the appellant are properly classifiable under Chapter Heading 8519 81 00 and 8527 99 19 depending upon whether the same are having features of FM Radio, etc. Though the Basic Customs Duty in respect of the two contending entries is the same but there is a difference of CVD, thus resulting in excess duty liability against the assessee. 2.1 The appellant was importing three types of Multimedia Speakers . The first type of speakers whi .....

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hapter 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 encl .....

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yback or Radio (ii) CTH 8519 81: Speakers having USB port with USB playback but without radios (iii) CTH 8527 99: Speaks having radio (irrespective of whether they were having USB playback facility or not) It is not disputed that what is being imported by the appellant is a speaker. However, inasmuch as some of the speakers have additional functions of USB playback as also of FM radio, the same are being held as other products and classifiable under separate headings. The appellant s contention .....

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uilt facilities given in the speakers will not convert the speakers into either FM radio or reproducing apparatus. Reading of the above entries, according to the learned advocate, clearly shows that items intended to be covered by Chapter Heading 8519 and 8527 are entirely different products. For the above propositions, he also relies upon various Circulars of the Board as also to various decisions. Learned advocate submit that the lower authorities have merely relied upon a Circular of the Boar .....

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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 dr .....

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classified under chapter Heading 8519 and 8527 as held by the lower authorities. 4. We have considered the submissions made by both the sides. We have also gone through the contending tariff entries which stand reproduced by us in the preceding paragraphs. There is no dispute on the facts that some of the speakers being imported by the appellant have USB port with USB playback in addition and some of them have the facility of F. M. radio also. As is seen from the above reproduced entries, Headi .....

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hich has been explained to us as a facility wherein a pen drive can be inserted and the sound recorded in the pen drive can be amplified by the speaker, Heading 8519 covers Sound recording or reproducing apparatus . The question which is required to be decided is as to whether introducing such facility of USB port for USB playback is otherwise admittedly speaker can be considered to be a reproducing apparatus or not. The reading of the various subheadings of the said Heading reveals that it cove .....

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on, 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 .....

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ncy electric amplifiers: electric sound amplifier sets; 8519 - Sound recording or reproducing apparatus; 8527 - Reception apparatus for radio-broadcasting whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock. 4. The view that in case of a multifunction speaker system , the reception apparatus for radio-broadcasting (heading 8527) or reproduction function of sound as provided by USB playback (heading 8519) is less important than the function of am .....

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r the Interpretation (GRIs) of the First Schedule to the Customs Tariff Act (CTA), 1975. GRI 1 requires that, in classifying articles, for legal purpose it shall be determined according to the terms of the headings and any relative Section or Chapter Notes,.. . Hence, all relevant legal texts must be considered. In this regard, Note 3 to Section XVI stipulates that, unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and ot .....

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nder heading 8518 include both passive speakers and active speakers. Active speakers, like many subwoofers, contain a built-in audio amplifier. The subheading under which speakers are classified depends on the number of drive units - the actual loudspeaker cones or ribbons - in each cabinet or enclosure. Speakers with a single drive unit in each cabinet are classified under subheading 851821. Speakers with more than one drive unit in each cabinet - for example one woofer and one tweeter - are cl .....

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l 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 appa .....

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d in the said circular are identical to the products being imported by the assessee. For arriving at the conclusion that the speaker with the USB playback would fall under Heading 8519 and the speakers with FM radio would fall under Heading 8527, the Board has referred to the General Rules for the interpretation specifically to Rule 1 and to Section Note 3 to Section XVI. The said Note is to the effect that where composite machine consists of two or more machine, the classification would be deci .....

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e main and principal function of the product is as speaker. As such, according to us, even in accordance with Section Note 3 to Section XVI, the items in question have to be classified as speakers as admittedly that is the principal function of the product. The interpretation adopted in the said Circular is, in fact, contrary to the interpretation adopted by the Board in other circulars, though not dealing with the same items but expressing opinions on the items with advanced multi functions. 4. .....

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vers, camera and many other features. After taking into account the various provisions of 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 .....

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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) standard, Code Division Multiple Access (CDMA) cellular systems, Wireless Local Loop (WLL) or any other Mobile technologies, principally used as communication device would get covered under sub-heading 8517 12. These are essenti .....

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aled/received /missed call), names and addresses, to-do lists, notes, appointments, E-mail address, facility for Short Message Service (SMS)/Multimedia Messaging Service (MMS), calculator, alarm clock, calendar, games and other similar facilities as a standard feature. These facilities assist the user to make calls to desired person, identify the caller, keep track of his calls, send/receive messages and enhanced use of communication using any of the above facility. Hence, these features of cell .....

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es work on operating systems (software) like Symbian OS, Microsoft Windows Mobile OS, Linux OS, which are similar to the software used in desktop PC/laptop. All these functionalities grouped as PDA or pocket PC or camera or GPS receiver, contained in cellular/mobile phones, though represent as composite machine, for the purpose of classification, it will be governed by the Customs Tariff Act and the General Rules for Interpretation (GRI) as explained in para 4 above. Accordingly, in terms of Sec .....

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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., He .....

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es shall not be classified under Heading 8471 when they are presented separately. In other words, only when such phones are presented along with ADP machine or when composite machines consisting of ADP and mobile phones, where ADP is the principal function, these would be classified under Heading 8471. Further, it is clarified that GPS receivers having phone function that does not operate through any of the cellular network or mobile technologies for the transmission or reception of signals, but .....

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ir ability to transmit data in all situation and locations, and at all times, not just in specified places that offer Wireless/ Wi-Fi access. In short, it is found that goods are marketed and consumers purchase a smart phone or other similar cellular/mobile phone, because of the phone function with additional facilities and not for their PDA or GSM capabilities alone; as such these additional facilities will not become operational without subscribing to a cellular phone service plan. Hence, it i .....

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and being purchased by the consumers as smart phone or other similar cellular or mobile phone, the additional facilities will not convert the phones into any other item. 4.3 In fact to the same effect is another Circular of 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 .....

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e 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 authorities have solely and mainly relied upon the said circular of the Board. It is well settl .....

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atutory provisions cannot be followed and cannot allow to override the statutory provisions in case of conflict. 4.6 In fact, there cannot be any dispute about the above legal proposition as it stands fully settled. 4.7 As we have already observed that even the lower authorities are not disputing the fact that the 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 .....

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