2021 (8) TMI 120 - AT - Customs

Tribunal classifies Bluetooth module under CTH 8517 62 90, not as part of car infotainment. Criticizes misapplication of rules.

Minda D-Ten Private Limited Versus Commissioner of Customs (Import), New Delhi

The Tribunal determined that the Bluetooth module should be classified under CTH 8517 62 90 as it performs functions of data reception, transmission, and ... Classification of imported goods - Bluetooth module - to be classified under Customs Tariff Heading (CTH) 8529 90 90, as claimed by the Department and not under CTH 8517 62 90 as claimed by the appellant? - HELD THAT:- The Bluetooth module receives radio frequency analog signals from other devices (like mobile phone), converts the radio frequency analog signals into digital signals and thereafter transmits the signals back to the Bluetooth module of mobile phone (in radio frequency signal form) or to the micro controller (brain) of the car infotainment system (in electric signal form). For any product to be classifiable under the sub-heading 8517 62, it should receive, convert, and transmit voice, images and other data. The Bluetooth module receives, transmits and converts data, voice, etc. through radio frequency signals to enable connectivity between the user’s mobile phone and car infotainment system - the Bluetooth module is engaged in reception, transmission and conversion of voice and other form of data. Accordingly, it would fall under sub-heading 8517 62 and consequently deserves to be classified it under CTH 8517 62 90. Even after holding that Bluetooth module is not a ‘part’ as it can be used in many devices like printers, computers, hard drive, compact disc, digital camera etc., and all these devices can work independently without Bluetooth module, the Commissioner (Appeals) still accepted the contention of the Department that it would be classifiable under CTH 8529 90 90 on the basis of Section Note 2(b) for the reason that Bluetooth module is principally used with car infotainment system. There is no challenge by the Department to the finding recorded by the Commissioner (Appeals) that Bluetooth module is not a ‘part’ of car infotainment systems as the Department has not filed any cross-appeal. It is, therefore, not possible to accept the contention of the learned Authorized Representative of the Department that despite a specific finding having been recorded by the Commissioner (Appeals) that the Bluetooth module is not a ‘part’, of car infotainment systems, it should still be considered as a ‘part’ because of the description given by the appellant in the Bill of Entry - Once Bluetooth module is classified under CTH 8517 62 90, it would not be necessary to examine the contention advanced by the learned counsel for the appellant that even if Bluetooth module is considered to be a ‘part’ of car infotainment systems, it would still merit classification under CTH 8517 62 90. Bluetooth module deserves classification under CTH 8517 62 90 as contended by the appellant and not under CTH 8529 90 90 as contended by the Department - appeal allowed - decided in favor of appellant. Issues Involved:1. Classification of Bluetooth module under Customs Tariff Heading (CTH) 8517 62 90 or CTH 8529 90 90.2. Determination of whether the Bluetooth module is a 'part' of car infotainment systems.3. Application of Section Note 2(a) and 2(b) of Section XVI of the Customs Tariff Act.4. Validity of the Commissioner (Appeals)'s order.Detailed Analysis:1. Classification of Bluetooth Module:The appellant argued that the Bluetooth module should be classified under CTH 8517 62 90, which pertains to machines for the reception, conversion, and transmission or regeneration of voice, images, or other data. The Bluetooth module receives, transmits, and converts data, voice, etc., through radio frequency signals to enable connectivity between the mobile phone and car infotainment systems. The Tribunal agreed with the appellant, stating that the Bluetooth module performs the functions of reception, transmission, and conversion of data, thus falling under sub-heading 8517 62 and consequently under CTH 8517 62 90.2. Determination of Whether the Bluetooth Module is a 'Part':The Assistant Commissioner and the Commissioner (Appeals) found that the Bluetooth module cannot be termed as a 'part' because car infotainment systems and other devices can function independently without it. The Tribunal upheld this finding, noting that the Bluetooth module is not an essential component without which the device cannot function. Therefore, it cannot be classified as a 'part' under CTH 8529, which covers parts suitable for use solely or principally with the apparatus of headings 8525 to 8528.3. Application of Section Note 2(a) and 2(b) of Section XVI:The Tribunal emphasized that Section Note 2(a) should be considered before Section Note 2(b). Section Note 2(a) specifies that parts included in any headings of Chapter 84 or 85 (other than specified headings) are to be classified in their respective headings. Since the Bluetooth module is not a part but an apparatus performing specific functions, it falls under CTH 8517 62 90. The Tribunal criticized the Commissioner (Appeals) for directly applying Section Note 2(b) without considering Section Note 2(a).4. Validity of the Commissioner (Appeals)'s Order:The Tribunal found that the Commissioner (Appeals) merely reproduced the findings of the Assistant Commissioner without independent analysis. This approach was deemed inappropriate for an appellate authority. The Tribunal also noted errors and inconsistencies in the Commissioner (Appeals)'s order, including the misclassification of the Bluetooth module under CTH 8529 90 90 despite acknowledging it is not a 'part'. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order and upheld the appellant's classification under CTH 8517 62 90.Conclusion:The Tribunal concluded that the Bluetooth module should be classified under CTH 8517 62 90, as it performs the functions of reception, transmission, and conversion of data. The Bluetooth module is not a 'part' of car infotainment systems, and the Commissioner (Appeals) erred in applying Section Note 2(b) without considering Section Note 2(a). The appeal was allowed, and the Commissioner (Appeals)'s order was set aside.