TaxTMI 
TaxTMI 
2024 (3) TMI 1500
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....c market. It was the contention of the department that the appellants had imported multi-functional audio video equipment with radio broadcast receivers by mis-declaring the same as "AV Receivers" (AVR) and as "CD Receivers" (CDR) and classified them under Customs Tariff Item (CTI) 8518 4000 as "audio frequency electric amplifiers", instead of classifying the same under CTI 8527 9100, thereby evading additional duty of customs (CVD) which is applicable on the basis of MRP/Retail Sale Price in terms of Notifications No. 14/2008-C.E. (N.T.) dated 01.03.2008 (Sl. No.96) and No. 26/2012-C.E. (N.T.) dated 01.05.2012 (Sl. No.94). 2.2 On the above basis, Directorate of Revenue Intelligence, Bangalore Zonal Unit (DRI) conducted detailed investigation in respect of various imports undertaken by the appellants-importer during the period December, 2008 to September, 2013 by filing more than 119 Bills of Entry (B/Es) covering the B/Es of date 26.12.2008 to 13.09.2013. Detailed investigation conducted by DRI, included recording of statements from CEO of the appellants company, their Custom Broker/CHA, and other persons concerned. The department had interpreted that AV receivers appear to be ....
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....terest and also confirmed the proposal for confiscation of imported goods and imposition of penalty on the importers, Director and CEO of the appellants-importer. Being aggrieved with the impugned order dated 15.12.2015, the appellants have filed this appeal before the Tribunal. 3.1. Learned Advocate submits that the appellants had imported amplifiers which is used for home theatre system, and in the trade parlance these are called as ACRs and CDRs. Simply because they have the function of radio incorporated therein, it does not change the classification of the product. The product literature of the imported goods was supplied at the time of import to the customs officers at the port of import and upon assessment, such goods were removed from customs control, and hence there in no suppression or mis-declaration in such cases. 3.2 Learned Advocate submitted that the classification of imported goods declared by the appellants were duly supported by the Harmonized System of Nomenclature (HSN) which provides for coverage of the various types of goods under the heading 8518 as amplifiers, loud speakers. Hence, the appellants have correctly classified the item. Further, he stated t....
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....nder CTI 8527 9100 as determined by the learned Commissioner of Customs, for deciding on the appropriate levy of customs duty, in respect of various Bills of Entries filed during the disputed period. Further, it is also required to be decided whether the confirmation of the demand of the differential duty, confiscation, imposition of penalty is legally sustainable based on the determination of the classification of impugned goods. 6.2 In order to address the above issue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute. "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all ....
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....ch provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5....
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....s shall be charged on the basis of the value of the goods as defined in section 14 of the Customs Act, 1962 (52 of 1962), the duty being equal to such percentage of the value as is indicated in that column. 3. In any entry, if no rate of duty is shown in column (5), the rate shown under column (4) shall be applicable. ADDITIONAL NOTES In this Schedule,- (1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all subheadings of tariff items the first four-digits of which correspond to that number; (b) "sub-heading", in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number; (c) "tariff item" means a description of goods in the list of tariff provisions accompanying eight digit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collecti....
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....lassification therefore lies in the narrow compass of analysis of the appropriate Headings under which the impugned goods are covered as per the Customs Tariff and then classifying the impugned product under the corresponding Sub-heading, Tariff Item. Now, we may closely examine the scope of the contending classification for determining correct classification of the imported goods. The relevant headings and their tariff entries in the First Schedule to the Customs Tariff Act of contending Chapter headings 8518 and 8527 are extracted as below: "CHAPTER 85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Notes : xx xx xx xx xx Tariff Item Description of goods (1) (2) 8518 MICROPHONES AND STANDS THEREFOR; LOUDSPEAKERS, WHETHER OR NOT MOUNTED IN THEIR ENCLOSURES; HEADPHONES AND EARPHONES, WHETHER OR NOT COMBINED WITH A MICRO PHONE, AND SETS CONSISTING OF A MICROPHONE AND ONE OR MORE LOUDSPEAKERS; AUDIO- FREQUENCY ELECTRIC AMPLIFIERS; ELECTRIC SOUND AMP....
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....on apparatus" covered under CTI 8527 9100, 8527 9200 and 8527 9900. 8.3 Broadly, we find that the chapter sub-heading 8518 deals with "Sound amplifiers, loudspeakers", which receive input and by changing the frequency of the sound to be amplified, changing the wave form etc., produce much higher level of output with other features such as equalization, tone-control, mixing effects etc. In other words, the input signal received by such amplifier equipment may only measure few hundred microwatts, but its output may be in tens, hundreds or thousands of watts, giving much amplified effect with more precise sound for theatrical effect. Whereas the chapter heading 8527 deals with products of "reception apparatus for radio broadcasting" which have separate mechanism for reception and broadcasting facility. 8.4 In the impugned order, the adjudicating authority had recorded about the imported goods as follows and given his findings for its classification under sub-heading 8527 as below: "32. ... On scrutiny of the commercial brochures pertaining to these imported goods, it is noticed that they are figuring under the category of 'High-end home theatre products' and referred to....
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....f classification of multifunction devices, multi-function speaker systems had examined the issue referred by the trade claiming their classification of "multifunction speaker system" (combination of one or more of the following: Universal Serial Bus (USB) port, USB playback, Frequency Modulation (FM) radio as loudspeakers) under heading 8518 based on premise that the principal function is that of a speaker system, which involves conversion of digital signal to analogue, amplification, and relay to the listener. In the circular No.27/2013-Customs dated 01.08.2023, it was clarified as follows: "2. This issue was discussed in the Conference of Chief Commissioners of Customs and Directors General on Customs Tariff and Allied Matters, held on 5-6 June 2013, at Vishakhapatnam. Broadly following types of "multifunction speaker system", were taken up for discussion, viz. (a) Speaker with USB port but without USB playback or FM radio, (b) Speaker with USB Port having USB playback but without FM radio (c) Speaker with USB port having FM radio but without USB playback (d) Speakers with USB port, FM radio, and USB playback. 3. The competing headings are : 8518 - Loud....
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....ifier. 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 classified under subheading 851822. Speakers that are not mounted in a cabinet or enclosure are classified under subheading code 851829. (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 subheading 851981 of the Harmonized Customs Tariff, which provides for Sound recording or reproducing apparatus : Other apparatus : Using magnetic, optical 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 R....
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....ings', to apply GIR-1 to come to the conclusion as to which of these two classification is more appropriate for classification of impugned goods. In fact such an exercise had been carried out by us in paragraphs 7 and 8.1 to 8.4; alongwith the detailed analysis of the scope of coverage of goods under the specific tariff entries, in order to arrive at appropriate classification of imported goods.. Therefore, we find that there is no need to examine the specific customs tariff entries under the two contending headings, in terms of other Rules of GIR. From the careful reading of the GIRs, it could be seen that these are required to be followed sequentially; in other words when the classification of goods is not possible to be arrived under the first rule GIR1, then one need to proceed further, one by one. Further, for invoking GIR3(a), the preceding rules i.e., GIR 1 & GIR 2, is to be exhausted. As it could be seen that in the present case, when the classification of goods can be arrived at by following GIR-1, by detailed analysis of the specific customs tariff items under the respective headings, then there is no case for invoking GIR-3(a) arbitrarily. Thus, it is not feasible to det....
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....e 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 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. We accordingly hold that the goods in question are properly classifiable under Chapter Heading 8518 22 00. We may also add that the invoices raised by the 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....