2019 (10) TMI 505 - AT - Customs

Classification of imported goods - Multimedia speakers - whether classifiable under CTH 8519/8527 or not? - HELD THAT - The matter is no longer res integra as it has already been decided by this Tribunal in the case of LOGIC INDIA TRADING CO VERSUS COMMISSIONER OF CUSTOMS 2016 (3) TMI 5 - CESTAT BANGALORE ; that the multimedia speakers even if they are having additional features like USB port, etc. will appropriately be classified under CTH 8518 as pre-dominant function of the electric apparatus remains as a speaker. The decision of this Tribunal in the case of M/s. Logic India Trading Co. vs. CC, Cochin had also been endorsed by Hon ble Supreme court in the case of COMMISSIONER VERSUS LOGIC INDIA TRADING CO. 2017 (1) TMI 477 - SC ORDER . Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Classification of imported multimedia speakers.
2. Applicability of Customs Tariff Headings 8518, 8519, and 8527.
3. Invocation of extended time proviso under Section 28(4) of the Customs Act, 1962.
4. Charging of interest under Section 28AA of the Customs Act, 1962.
5. Penal provisions under Sections 112 and 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Classification of Imported Multimedia Speakers:
The appellants classified multimedia speakers under Customs Tariff Heading (CTH) 8518, which covers microphones, loudspeakers, headphones, earphones, and audio frequency electric amplifiers. The Department contended that the speakers, equipped with USB ports, SD card readers, FM radios, MP3 players, and LED displays, are multi-function devices and should be classified under CTH 8519 or 8527. The Department argued that these features make the speakers sound reproducing apparatus rather than simple speakers.

2. Applicability of Customs Tariff Headings 8518, 8519, and 8527:
The Department issued a show cause notice demanding customs duty under CTH 8519/8527, arguing that the multimedia speakers are not just loudspeakers but multi-function devices. The Commissioner (Appeals) upheld this view, classifying the speakers under sub-heading 85198990, which covers sound recording or reproducing apparatus. The appellants argued that the primary function of the speakers is amplification and that additional features do not alter their classification under CTH 8518. They cited the Tribunal's decision in M/s. Logic India Trading Co. vs. CC, Cochin, which held that multimedia speakers with additional features should still be classified under CTH 8518.

3. Invocation of Extended Time Proviso under Section 28(4) of the Customs Act, 1962:
The appellants contended that the extended time proviso for demanding customs duty is not applicable as there was no suppression, mis-statement, or mis-declaration on their part. They argued that all facts were disclosed to the Department from the beginning, making the invocation of the extended time proviso illegal. They relied on the Tribunal's and the Hon'ble Supreme Court's decisions in cases like M/s. Cosmic Dye Chemicals vs. CCE, Bombay and Aban Llyod.

4. Charging of Interest under Section 28AA of the Customs Act, 1962:
The show cause notice also invoked provisions for charging interest under Section 28AA of the Customs Act, 1962. The appellants did not specifically address this issue in their arguments, focusing instead on the primary issue of classification and the extended time proviso.

5. Penal Provisions under Sections 112 and 114AA of the Customs Act, 1962:
The show cause notice included penal provisions under Sections 112 and 114AA of the Customs Act, 1962. The appellants argued that these penalties should not apply as there was no suppression or mis-declaration.

Tribunal's Decision:
The Tribunal found that the matter was no longer res integra, referencing the case of M/s. Logic India Trading Co. vs. CC, Cochin, where similar multimedia speakers were classified under CTH 8518. The Tribunal held that the primary function of the speakers is amplification, and additional features like USB ports and FM radios do not change their classification. The Tribunal set aside the impugned order, allowing the appeal and ruling that the multimedia speakers should be classified under CTH 8518.

Conclusion:
The Tribunal concluded that the multimedia speakers, despite additional features, should be classified under CTH 8518 as their primary function is amplification. The extended time proviso for demanding customs duty was deemed inapplicable due to full disclosure by the appellants. Consequently, the appeal was allowed, and the impugned order was set aside.

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