TaxTMI 
TaxTMI 
2025 (11) TMI 1373
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....099 for "AV Receivers/Stereo Receivers/Receivers" (AVR), and under CTI 8518 2900/8522 9000 for "Home Theatre System/ Packages" (HTS) as claimed by the appellants; or, is it classifiable under 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 on the basis of the determination of the classification of impugned goods. The period of dispute is covering the period from February, 2011 to January, 2016. 3.1 Briefly stated, the facts of the case are that the appellant herein, had imported multifunctional audio & video equipment from M/s Yamaha Corporation, Japan and M/s. Yamaha Music Asia Pte. Limited, Singapore. These imported equipment were sold as such by the appellant in the domestic market. It was the contention of the department that the appellant had imported multi-functional audio video equipment with radio broadcast receivers by mis-declaring the same as "AV Receivers" (A....
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.... of any other external input or media. 3.3 On the above basis, in respect of 152 B/Es, the department had objected to the classification adopted by the appellant and proposed for reclassification under CTI 8527 9100 of the Customs Tariff Act, 1975 by issue of Show Cause Notice (SCN) dated 21.01.2016. In the said SCN, it was proposed for rejecting the classification declared by the appellant importer for "AV Receivers/Stereo Receivers/Receivers" (AVR) in 111 B/Es under CTI 8518 4000/8543 7099, and for "Home Theatre System/Packages" (HTS) in 41 B/Es filed under CTI 8518 2900/8522 9000; and instead revise the classification of both the above said imported goods for all 152 B/Es under CTI 8527 9100 by reassessment and demanding differential duty of Rs.2,28,29,585/- under Section 28(1)/28(4) of the Customs Act, 1962; besides proposing for confiscation of goods covered under above B/Es under Sections 111(d) and 111(m) ibid, imposition of penalty on the appellant under Sections 112/114A and 114AA ibid. The SCN dated 21.01.2016 was adjudicated by the original authority in Order-in-Original dated 07.09.2017 by re-classifying the product as proposed in the SCN, confirming the demand of sh....
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....R) reiterated the findings made by the Commissioner of Customs in the impugned order and submitted that issue of classification of impugned goods has been examined in detail by the learned adjudicating authority. Hence, the classification of impugned goods as held in the impugned order under heading 8527 is sustainable. 6. We have heard both sides and perused the case records and additional paper books submitted in this case by both sides. 7. 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 resp....
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....h 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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....l 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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....ods under CTI 8522 9000 being 'Other Parts and accessories' suitable for use solely or principally with the apparatus of headings 8519 or 8521; and the goods under CTI 8543 7099 cover 'Other Electrical machines and apparatus' having individual functions, not specified or included elsewhere in this Chapter, and other than amplifiers, audio/video special effect equipment etc., it is evident that these are residual headings in nature, which do not provide for any basis for classification of the disputed goods, and even if such classification had been adopted by the appellant in the B/Es, we are not considering it as these prima facie appear to be inappropriate. Therefore, we find that these are not relevant and thus, we do not take up such classification for discussion of the disputed issue herein. Thus, it is clear that between the contending classification of CTI 8518 2900 / 8518 4000 and CTI 8527 9100 at the Chapter heading level itself, there is difference of opinion among the department and the appellants. The dispute in classification therefore lies in the narrow compass of analysis of the appropriate Headings under which the impugned goods are covered as per the Customs Tariff ....
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.... 8527 9900 -- Other: xxx xxx" 8.3 It could be seen that by applying the GIR 1, the position is made clear that Chapter Heading 85.18 covers within its scope and ambit, mainly of four broad categories of goods: (i) first one i.e., "Microphones and stand therefor"; (ii) the second one i.e., "Loud speakers"; (iii) the third one i.e., "head phones and ear phones"; and (iv) the fourth one i.e., "audio frequency amplifiers and electric sound amplifiers". As there is no specific sub-heading or tariff item to be further classified in different individual item level, and that the sub-heading 8518 40 itself takes into account all categories of the goods under it, there is no need to further go down into any specific tariff items for examining its coverage at CTI level and its scope. In other words, be means of 'single dash' before subheading 8518 40, it encompasses all types of Audio-frequency amplifiers under this entry and there is no further sub divisions provided for under it, for qualifying as tariff items for specific type of goods. 8.4 Similarly, by applying same GIR 1, it could also be seen that Chapter Heading 8527 covers within ....
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....out 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 - Loudspeakers, whether or not mounted in their enclosures: headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers: audio-frequency electric amplifiers: electric sound amplifier sets; 8519 - Sound recording or reproducing apparatus; 8527 - Reception apparatus for radio-broadcasting whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock. 4. The view that in case of a "multifunction speaker system", the "reception apparatus for radio-broadcasting (heading 8527)" or "reproduction function of sound as provided by USB playback (heading 8519)" is less important than the function of amplification and relay of sound, thereby leading to the inference that such products are classifiable in heading 8518, overlooks the fact that the HS nomenclature only mentions functions and does not refer to the complexity or sophistication of these functions. It appear....
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....cipal 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 Rules 1, Note 3 to Section XVI and 6. (d) "Speaker with FM, USB port and USB playback", if it is held that the principal function of the device is imparted equally by Radio (reception apparatus for radio-broadcasting) and USB playback facility then it would be classified by sequential application of GRI, according to Rule 3(c). According to this rule, of all the possible heading or subheading that could equally apply the heading/subheading that comes last in numerical order is used to classify the goods. Hence the said product is classifiable under subheading 852799 by virtue of General Rules 1, Note 3 to Section XVI, 3(c), and 6. 7. The issue has also been examined by the Board. In view of the general consensus arrived at the Conference, Board desires that as mentioned in para 6 above, based on the specifications "multifunction speaker systems" may be classified under heading 8519, heading 8527 or the appropriate heading as the case may be. 8. Suitable instructi....
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....invoking any other subsequent GIR arbitrarily. Thus, it is not feasible to determine appropriate classification by application of any other GIR, other than GTR-1. 10. We find that in the case of Logic India Trading Co. (supra), the Tribunal had held that multimedia speakers with FM/AM radio facility along with USB play back would be rightly classified under 8518 as these are known in the market as speakers and the radio is not the principal function of such goods. 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 in as much 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. The relevant paragraphs of the said judgements is extracted and given below: "4.3 In fact to the same effect is another circular of the Board being Circular No. 20/....
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.... not as either FM radio or the sound reproduction system." In the appeal filed by the department against the above decision of the Tribunal in Diary No. D 25388 of 2016, the Hon'ble Supreme Court have held that there is no reason to interfere with the judgement of the Tribunal, and accordingly dismissed the Civil Appeal filed by the department. 11. We further find that the Tribunal in the case of Onkyo Sight & Sound India Pvt. Ltd. (supra) have also held that classification of Audio Visual Receivers (AVR) and Home Theatre Systems (HTS) under sub-heading 8518 and the department's classification under sub-heading 8527 is not maintainable. In the appeal filed by the department against the above decision of the Tribunal in Civil Appeal Diary No. 33296 of 2022, the Hon'ble Supreme Court have dismissed the Civil Appeal filed by the department. 12. The concept of 'Self-Assessment' of Customs duty in respect of imported goods by an importer was introduced with effect from date of enactment of the Finance Bill, 2011 i.e., 08.04.2011. This means that while the responsibility for assessment would be shifted to the importer, the Customs officers would have the power to verify ....