1983 (12) TMI 333 - AT - Customs

Ceramic Magnets Classified as Loudspeaker Components under Indian Customs Tariff

M/s. Philips India Ltd. Versus  Collector of Customs, Bombay

The Bench upheld the classification of Ceramic Magnets as components of loudspeakers under Heading 73(11) of the Indian Customs Tariff (ICT). It was ... - Issues: Classification of goods under Indian Customs Tariff (ICT) - Ceramic Magnets as components of loudspeakers or under a different heading.Analysis:The case involved a group of eight appeals by M/s. Philips India Ltd., challenging the classification of Ceramic Magnets imported by them under Item 73(11) of the Indian Customs Tariff (ICT). The Assistant Collectors and the Appellate Collector of Customs classified the goods as components of loudspeakers, rejecting the claim for reassessment under Item 87 of ICT and consequent refund. The Appellate Collector emphasized that the magnetization process did not alter the essential characteristic of the magnets, considering them as essential components of loudspeakers. He noted that magnetization was a standard process done after assembly into magnetic circuits, and it did not qualify as a manufacturing process to classify the magnets differently.Argument by Appellant:The Shipping & Clearing Manager of the appellants argued that the Ceramic Magnets had to undergo various processes like cleaning, pre-magnetization, de-magnetization, and final magnetization before being fitted as loudspeaker components. He highlighted the low cost of these processes compared to the total cost, suggesting that the goods should be classified under Heading 87 of ICT. He referred to previous Government orders supporting this classification without levying additional duty.Departmental Representative's Position:The Departmental Representative reiterated that the Ceramic Magnets were special components of loudspeakers, complete articles by themselves, and any processing post-importation did not change their essential character. He argued that the magnetization process was merely for fitment and did not alter the classification under Item 73(11) of ICT. He pointed out the appellants' previous claims for classification under the same item.Bench's Evaluation:During the arguments, the Bench questioned the role of magnetization in loudspeakers and the specifics of the cleansing process on the imported articles, which the appellants' representative could not adequately address. The Bench noted the historical practice where post-importation expenses exceeding 5% of the landed cost indicated incomplete parts, though not a statutory rule. The analysis of cost figures for processing showed that the post-importation expenses, excluding cleansing, were less than 5% of the landed cost, making them insignificant.Conclusion:The Bench concluded that the Ceramic Magnets, having assumed the shape, size, and quality as component parts of loudspeakers, were appropriately classified under Heading 73(11) of ICT. The magnetization process was not deemed a manufacturing process to warrant a different classification under Item 87 ICT. Therefore, the appeals were dismissed, affirming the initial classification decision for the Ceramic Magnets.