2022 (8) TMI 718 - AAR - Customs

Classification of devices - wireless speaker device - classifiable under sub-heading 8518 21 00 or not - HELD THAT - The device is a sub-woofer that has Wi-Fi and Bluetooth connectivity features. It is a single speaker with a single drive unit mounted in an enclosure. It converts electrical variations into mechanical variations which are then communicated to air to produce sound. It is designed to produce low frequencies, like those associated with bass or drum for music or thunder and explosions in a home theatre. The device does not have a microphone and is not capable of voice interaction. However, the product is compatible with the Echo device (via Wi-Fi or via Bluetooth). Though the device contains Bluetooth and Wi-Fi features for transmission or reception of data by electromagnetic waves in a wireless network, this functionality, however, is just an additional feature, which makes it compatible with separate Echo devices. This device is only a speaker and its principal function is to reproduce sound by converting electrical variations or oscillations from an amplifier into mechanical vibrations which are communicated to the air, which is correctly classifiable under Heading 8518. Speakers classified under Heading 8518 include both passive speakers and active speakers. Active speakers, like many sub-woofers, contain a built-in audio amplifier. The sub-heading 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 sub-heading 8518 21 00. The impugned device has a single driver. Thus, wireless speaker device Model No. P5B83L merits classification under Heading 8518 and more specifically under sub-heading 8518 21 00 of the First Schedule to the Customs Tariff Act. Application disposed off.

Summary

Issues: Classification of wireless speaker device Model No. P5B83L under the Customs Tariff Act

Issue 1: Classification of wireless speaker device under sub-heading 8518 21 00
The application before the Authority for Advance Rulings sought the classification of a wireless speaker device along with four other devices. The wireless speaker device, a sub-woofer compatible with Echo devices, lacks a microphone but has Wi-Fi and Bluetooth connectivity features. It requires an internet connection to function and is designed for residential or small office use. The applicant argued for classification under sub-heading 8518 21 00, stating that it contains a single drive unit in its enclosure.

Issue 2: Application of General Rules for Interpretation (GRI) and classification suggestions
The applicant initially expressed intention to import the device from specific locations, with Air Cargo Complex, New Delhi suggesting a different classification under sub-heading 8517 62 90 based on Bluetooth compatibility with Echo devices. However, in the revised application, the applicant reiterated their classification preference under sub-heading 8518 21 00, which was supported by comments from customs authorities in Chennai and Mumbai.

Issue 3: Legal interpretation and classification determination
The device in question, a sub-woofer with Wi-Fi and Bluetooth connectivity, functions as a speaker without a microphone, primarily reproducing sound by converting electrical variations into mechanical vibrations. Despite additional features for wireless data transmission, its principal function remains sound reproduction, aligning with Heading 8518 classification criteria. The device's single drive unit places it under sub-heading 8518 21 00, as per the classification rules for speakers based on the number of drive units.

Judgment:
After considering the product specifications, functionalities, and legal provisions, the Authority ruled that the wireless speaker device Model No. P5B83L is appropriately classified under Heading 8518 and specifically under sub-heading 8518 21 00 of the Customs Tariff Act. The decision was based on the device's primary function of sound reproduction, its single drive unit configuration, and its compatibility with Echo devices, emphasizing the classification criteria outlined in the Customs Tariff Act and relevant explanatory notes.