TaxTMI 
TaxTMI 
2023 (12) TMI 263
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....iable under CTH 91021900. Department formed an opinion that such kind of apparatus/device merits classification under CTH 85176290. Resultantly, the Show Cause Notice No. 01/2020 dated 13.01.2020 was served upon the appellant proposing rejection of classification claimed by the appellant i.e. under CTH 91021900. It is proposed that the imported goods be classified under 85176290 to which the duty exemption, as availed, is not applicable. Resultantly, short payment of customs duty amounting to Rs. 86,62,852/- with respect to the import of the impugned goods vide the aforementioned two Bills of Entry was proposed to be recovered along with the interest. The imported goods were proposed to be held liable to confiscation. In addition, the penalty was also proposed to be imposed upon the appellant. The said proposal has been confirmed vide the Order-in-Original bearing no. 55/2020 dated 07.10.2020. While ordering confiscation, option to impose redemption fine has not been given and penalty of Rs. 8,00,000/- has been imposed on the appellant under Section 112 (a) of the Customs Act, 1962. Being aggrieved the appellant is before this Tribunal. 2. We have heard Ms. Jyoti Pal and Shri Amit....
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....s is nothing but technological advancement due to which wrist watch/clock cannot be made to fall under any other tariff entry. The decision in the case of Collector of Customs & Central Excise Vs. Lekhraj Jessumal & Sons reported as 1996 (82) ELT 162 (SC) has been relied upon. Learned counsel further submitted that while importing the goods the benefit of Notification No. 152/2009 has rightly been claimed as the country of origin certificate was duly submitted. All the requirements thereof have duly been satisfied. Above all, the benefit of notification can be claimed at any stage. Finally it is submitted that even if the classification of appellant is not accepted, the act of appellant is merely a claim for incorrect classification. It cannot be alleged as mis-declaration. Question of imposition of penalty upon the appellant does not at all arise. The decision in the case of Northern Plastic Ltd. Vs. Collector of Customs and Central Excise reported as 1998 (101) ELT 549 (SC) has been relied upon. With these submissions, learned counsel has prayed for the order under challenge to be set aside and appeal to be allowed. 4. Learned DR while rebutting these submissions has mentioned t....
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....iginal. (ii) Whether the appellant is eligible to claim concessional rate of basic customs duty under serial no. 955 of the Notification No. 152/2009 dated 31.12.2009 (iii) Whether the imported goods are liable for confiscation and the appellant is liable for being penalized. 6. First point of adjudication: Both the parties have relied upon the General Rules of Interpretation (GRI) and have impressed upon that the chapter notes read with GRI decides the tariff entry for a particular goods. In view thereof, we foremost need to look into the tariff entries in question and then the General Rules of Interpretation. Chapter heading and chapter note for Chapter 85 are as follows: Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas (1) (2) (3) (4) (5) 8517 Telephone sets, including telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528 ....
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....ression "electric accumulators" includes those presented with ancillary components which contribute to the accumulator's function of storing and supplying energy or protect it from damage, such as electrical connectors, temperature control devices (for example, thermistors) and circuit protection devices. They may also include a portion of the protective housing of the goods in which they are to be used. 5. For the purposes of heading 8523: (a) "Solid-state non-volatile storage devices" (for example, "flash memory cards" or "flash electronic storage cards") are storage devices with a connecting socket, comprising in the same housing one or more flash memories (for example, FLASH E2PROM") in the form of integrated circuits mounted on a printed circuit board. They may include a controller in the form of an integrated circuit and discrete passive components, such as capacitors and resistors; (b) The term "smart cards" means cards which have embedded in them one or more electronic integrated circuits (a microprocessor, random access memory (RAM) or read-only memory (ROM)) in the form of chips. These cards may contain contacts, a magnetic stripe or an embedded antenna but do n....
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....ion "watch movements" means devices regulated by a balance-wheel and hairspring, quartz crystal or any other system capable of determining intervals of time, with a display or a system to which a mechanical display can be incorporated. Such watch movements shall not exceed 12 mm in thickness and 50 mm in width, length or diameter. 1. Except as provided in Note 1, movements and other parts suitable for use both in clocks or watches and in other articles (for example, precision instruments) are to be classified in this Chapter. A clock or watch is composed of two main parts: the movement and the container for the movement (case, cabinet, etc.) 6.1 To appreciate as to which of the above precisely apply upon "G-Watch (Smart Watch)", we need to look for General Rules of Interpretation also. Those read as follows: Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and Sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise....
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.... following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those sub-headings and any related sub-heading Notes and, mutatis mutandis, to the above rules, on the understanding that only sub-headings at the same level are comparable. For the purpose....
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.... contactless payment and digital wallet applications; * messaging and calling features, similar to those on a smart phone; * emergency calls for assistance if the watch detects the wearer has fallen; * social media and other notifications from synchronized smart phone applications; * games, music, photos and other entertainment options; * location features, such as maps, a compass and an altimeter; and * GPS tracking 6.3 Smart watches typically integrate with a user's smart phone. Many of the same features and applications available on the phone are available on the watch and can synchronize with it. 6.4 We also take judicial notice of the definition of watch/clock. As per Collins dictionary, clock is a mechanical or electronic device, normally larger than a watch, which is meant for measuring and recording time, usually with two hands or changing or a digital display to indicate the hour and minute. Clock is otherwise originating from Latin word 'CLOCK' which means 'BELL'. It was an invention for period calculation. The clocks we see today are evolved versions of sundials, water clocks, mechanical water clocks and other time pieces. All these clocks have been used, s....
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....Chapter 91 are designed mainly for time and date display though with some extra elements but nothing related to transmission of data in any form. Whereas the smart watch is actually a computer, an apparatus which is capable of transmitting and receiving data, irrespective it is a device wearable on wrist just like watch and is capable of time telling also. 6.7 Reverting to the product in question which is imported as 'GWatch' and is being classified as watch under Chapter 91 by the importer but is alleged by the department to be a device which is capable of converting data and thus are alleged as classifiable under Chapter 80 8517. We observe from the brochure/catalogue of the product on record that it is described as "LG Watch W7" smart watch with swiss effect, mechanical hands with precision movement with the following key specifications. S.No. Dimensions 44.5 x 45.4 x 12.9 mm 1 Weight 79.5g 2 Body Material Stainless Steel; STS31 6L 3 Band Quick-release 22 mm rubber 4 Display 1.2(3.048cm) LCD (360x360,300ppi) 5 Movement 2 Hands (Hr. & Min.) + Micro Gearbox* 6 Chipset Qualcomm APQ8009w 7 Operating System Wear OS by Google 8 Memory 768MB/4G....
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....above cannot be classified as watch/clock. Hence irrespective the product is wearable on wrist and that it has two metal hands with mechanical/quartz movement to show time, it cannot be called as clock and watches as are classifiable under Chapter 91. As discussed above, the products of Chapter 91 have a specific purpose of timekeeping / time telling with certain advance functions but related only to time. Nothing in Chapter 91, either Chapter headings or Tariff entry headings, suggests that a watch which is capable of transmitting data or which is working on operating system of Google or which has anything to do with wired or wireless network shall still fall under this Chapter 91. On the contrary, Chapter 85 notes suggest that anything which works on electronic integrated circuits, microprocessors, smart cards, Random Access Memories (Ram), digital system, signals, such apparatus are all covered under Chapter 85. 6.10 Tariff Entry No. 8517 though talks about telephone sets and the telephones for cellular networks but simultaneously it talks about such apparatus which are capable of transmitting and receiving oral or visual data. The several entries under this heading shows that ....
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....er 9102 1900. These are held classifiable under Tariff Entry 8517 6290. From the Notification No. 152/2009-Cus. dated 31.12.2009, we observe that the entry at serial no. 955 thereof gives the benefit of exemption from customs duty to the goods falling under Tariff Entry 9102 to 9103 only. As already held above the goods are classifiable under 8157 6290, the benefit of the said notification shall not be available to the appellant. The certificate for origin is not sufficient to extend the benefit of nil rate of duty. As the origination from Korea is not the criteria of the Notification no. 152/2009-Cus. but such goods originating from Korea as are mentioned in the table under the said notification. Apparently and admittedly the goods classifiable under 8517 6290 are not mentioned in the said table. Hence, the benefit of nil rate of duty shall not be available to the appellant. Resultantly, the second point of adjudication is also decided against the appellant. 8. Third point of adjudication: From the discussion on the above mentioned both the points of adjudication though it is clear that the goods have wrongly been classified by the appellant and the benefit of exemption of duty ....