TMI Blog2019 (10) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Sunil Kumar, Authorized Representative for the Respondent ORDER PER C L MAHAR : The brief facts of the matter are that the appellants are importer of Multimedia speakers with and without additional features like USB port, FM radio etc. The appellants, while importing the said goods has been classifying the product under Customs Tariff Heading No. 8518 declaring the same as multimedia speaker system. The Chapter sub heading 8518 covers the product like microphones, loudspeakers whether or not mounted in their enclosures, headphones and earphones and audio frequency electric amplifiers; electric sound amplifier set etc. The Department is of the view that on study of relevant product literature of the consignment under import namely, Multimedia speaker Systems, it appears that the main system, usually sub-woofer is equipped with a USB port, and / or SD card reader, and/or FM Radio and /or MP 3 player along with a LED display for operation, on the front panel. Such systems are invariably accompanied by sophisticated remote control with interactive interface. The main system contain Printed Circuit Boards (PCBs) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... device is imparted by the USB play back facility and therefore, the said multimedia speaker multifunction system is classifiable under sub heading 85198990 of the Harmonized Customs Tariff which covers sound recording or reproducing apparatus. 3. The appellants are before us against the above mentioned Order in Appeal. The learned advocate appearing for the appellant has submitted that the disputed goods namely Multimedia speakers are specifically covered under Chapter Heading 8518 because there is a specific entry for Loudspeakers under Chapter Heading 8518 and as per the General Rules for Interpretation of First Schedule of Customs Tariff Act, 1985, a specific entry has to be preferred over a general description while classifying a particular product under import; that Chapter Sub-heading 8519 is a general tariff entry for sound recording or reproducing apparatus; that the disputed goods are known in the market as speaker and they are marketed as a speaker. It is well settled principle of law that a product need to be classified under the heading where it is generally known in the market to be classified. The speakers are not known as sound reproducing apparatus as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planatory Notes Page No. XVI-8519-2 provides for inclusion in this heading apparatus those are equipped with, or designed to be attached to acoustic devices (loudspeakers, earphones, headphones) and amplifier. It is evident that the impugned goods having only USB playback function are squarely covered by Class (IV)( C) of groups of apparatus classifiable under CTH 8519. Further, Para ( c) of Notes at Page No. XVI-8519-3 mentions exclusion of separately presented microphones, loudspeakers, audio-frequency amplifiers and electric sound amplifier sets (85.18). However, in the instant case, as the speaker is combined in the same housing with sound recording or reproducing apparatus, the impugned goods remain classified here only i.e. under CTH 8519. 6. CTH 8527 covers reception apparatus for radio-broadcasting, whether or not combined in the same housing, with sound recording or reproducing apparatus or clock. Hence, the impugned goods having only FM radio, or combined with sound recording or reproducing apparatus in the same housing are classifiable under CTH 8527. 7. Reliance is placed by Revenue on Cross Ruling NY N244871 dated 20.8.2013. The descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it covers the products like Audio CD player, CD players, MP3 players, time code recorders, etc. In our opinion, the speaker is primarily a speaker and some additional feature or facility for use of USB playback will not convert the same into a product equivalent to the products covered by Heading 8519. Similarly, Heading 8527 takes into its ambit the Reception apparatus for radio-broadcasting, whether or not combined, in the same housing . The additional feature of FM radio in the speaker, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be classified in heading 8518, by application of General Rules 1. Speakers classified under heading 8518 include both passive speakers and active speakers. Active speakers, like many subwoofers, contain a built-in audio amplifier. The sub-heading 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 sub-heading 8518 21. Speakers with more than one drive unit in each cabinet - for example one woofer and one tweeter - are classified under sub-heading 8518 22. Speakers that are not mounted in a cabinet or enclosure are classified under sub-heading code 8518 29. (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 sub-heading 8519 81 of the Harmonized Customs Tariff, which provides for Sound recording or reproducing apparatus : Other apparatus : Using magnetic, optical or semi-conductor media : Other : Other. (c) Speaker with USB p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items but expressing opinions on the items with advanced multifunctions. 4.2 Reference can be made to Circular No. 17/2007-Cus., dated 19-4-2007 wherein the classification of higher technology featured mobile/cellular handsets or telephones was the subject matter of consideration. The cellular phones are classifiable under Heading 8517 12 of the Customs Tariff Act. It was observed that as a result of advanced technology, the cellular phones have additional features of word processing, email, internet, global positioning system, personal digital assistant (PDA), GPS receivers, 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, calculators, stopwatch, alarm, computing on software platform are subsidiary to the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and synchronize with PCs, function as Global Positioning System (GPS) receiver. These devices 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 Section Note 3 to Section Note XVI when the goods satisfy the following conditions these would be characterized as transmission apparatus in cellular/wireless network 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 recept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al without subscribing to a cellular phone service plan. Hence, it is clarified that these instruments are to be categorized as mobile/cellular phones from the point of trade parlance. As is seen from the above, the Ministry itself, while expressing opinion on the classification of the mobile phones having a number of additional features, concluded that inasmuch as the essential purpose of the mobile phone is to communicate, the additional features of having so many other functions will not convert the phones into any other item. As the goods are being marketed 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 and Table Computer would remain so. 4.4 When all the three circulars are viewed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.8 We are also strengthened in our view by the decision of the Hon ble Supreme Court in the case of Xerox India Ltd. v. Commissioner of Customs, Mumbai - 2010 (260) E.L.T. 161 (S.C.). Though the said decision did not deal with the items under consideration in the present appeal but the ratio of law laid down by the Hon ble Supreme Court would be squarely applicable to the facts of the present case. It was held that the multifunctional printing machines having fax facility and screening facility would continue to fall under Heading 8471 of the Customs Tariff Act as di ..... 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