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TMI Blog2019 (10) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant Shri Sunil Kumar, Authorized Representative for the Respondent ORDER PER C L MAHAR : The brief facts of the matter are that the appellants are importer of Multimedia speakers with and without additional features like USB port, FM radio etc. The appellants, while importing the said goods has been classifying the product under Customs Tariff Heading No. 8518 declaring the same as multimedia speaker system. The Chapter sub heading 8518 covers the product like microphones, loudspeakers whether or not mounted in their enclosures, headphones and earphones and audio frequency electric amplifiers; electric sound amplifier set etc. The Department is of the view that on study of relevant product literature of the consignment under import namely, Multimedia speaker Systems, it appears that the main system, usually sub-woofer is equipped with a USB port, and / or SD card reader, and/or FM Radio and /or MP 3 player along with a LED display for operation, on the front panel. Such systems are invariably accompanied by sophisticated remote control with interactive interface. The main system contain Printed Circuit Boards (PCBs) with complex internal circuitry to retrieve, read and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said multimedia speaker multifunction system is classifiable under sub heading 85198990 of the Harmonized Customs Tariff which covers sound recording or reproducing apparatus. 3. The appellants are before us against the above mentioned Order in Appeal. The learned advocate appearing for the appellant has submitted that the disputed goods namely Multimedia speakers are specifically covered under Chapter Heading 8518 because there is a specific entry for Loudspeakers under Chapter Heading 8518 and as per the General Rules for Interpretation of First Schedule of Customs Tariff Act, 1985, a specific entry has to be preferred over a general description while classifying a particular product under import; that Chapter Sub-heading 8519 is a general tariff entry for sound recording or reproducing apparatus; that the disputed goods are known in the market as speaker and they are marketed as a speaker. It is well settled principle of law that a product need to be classified under the heading where it is generally known in the market to be classified. The speakers are not known as sound reproducing apparatus as required for a product to be classified under Chapter heading 8519. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to be attached to acoustic devices (loudspeakers, earphones, headphones) and amplifier. It is evident that the impugned goods having only USB playback function are squarely covered by Class (IV)( C) of groups of apparatus classifiable under CTH 8519. Further, Para ( c) of Notes at Page No. XVI-8519-3 mentions exclusion of separately presented microphones, loudspeakers, audio-frequency amplifiers and electric sound amplifier sets (85.18). However, in the instant case, as the speaker is combined in the same housing with sound recording or reproducing apparatus, the impugned goods remain classified here only i.e. under CTH 8519. 6. CTH 8527 covers reception apparatus for radio-broadcasting, whether or not combined in the same housing, with sound recording or reproducing apparatus or clock. Hence, the impugned goods having only FM radio, or combined with sound recording or reproducing apparatus in the same housing are classifiable under CTH 8527. 7. Reliance is placed by Revenue on Cross Ruling NY N244871 dated 20.8.2013. The description of merchandise/ goods considered under the cited ruling (a 32-inch sound bar speaker system with an FM Radio and Bluetooth wireless technology) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or use of USB playback will not convert the same into a product equivalent to the products covered by Heading 8519. Similarly, Heading 8527 takes into its ambit the "Reception apparatus for radio-broadcasting, whether or not combined, in the same housing". The additional feature of FM radio in the speaker, in our opinion, would again not convert the huge speaker into a FM radio. Even going by the common parlance test, nobody would buy a huge speaker for the purpose of FM radio. 4.1 At this stage, we may advert to the Circular No. 27/2013-Cus., dated 1-8-2013 which alone stands relied upon by the lower authorities for coming to the conclusion against the assessee. The said circular stands given by the Ministry of Finance on the representations received from the industry in respect of the identical products being imported. The opinion as expressed in the said circular is based upon the outcome of the Conference of Chief Commissioners of Customs and Directorate General on the Customs Tariff and allied matters. Relevant paras of the said circulars are reproduced :- "3. The competing headings are : 8518 - Loudspeakers, whether or not mounted in their enclosures : headphones and ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dspeaker cones or ribbons - in each cabinet or enclosure. Speakers with a single drive unit in each cabinet are classified under sub-heading 8518 21. Speakers with more than one drive unit in each cabinet - for example one woofer and one tweeter - are classified under sub-heading 8518 22. Speakers that are not mounted in a cabinet or enclosure are classified under sub-heading code 8518 29. (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 sub-heading 8519 81 of the Harmonized Customs Tariff, which provides for Sound recording or reproducing apparatus : Other apparatus : Using magnetic, optical or semi-conductor 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 sub-heading 8527 99 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 prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a result of advanced technology, the cellular phones have additional features of word processing, email, internet, global positioning system, personal digital assistant (PDA), GPS receivers, camera and many other features. After taking into account the various provisions of law, it was observed as under : "2. It is represented that mobile, cellular handset/telephone has the essential characteristic of transmission and reception apparatus, such as aerial, display screen, keypad and that the same should be of small size so that it can be hand-held and is of lightweight for use as telephone instrument. The other functions such as radio receivers, music players, e-mail, net browsers, calculators, stopwatch, alarm, computing on software platform are subsidiary to the main function of transceiver. 3. ……….. 4. ……….. 5. In terms of the First Schedule to the Customs Tariff, 'telephones for cellular networks or other wireless networks, push-button type or other', would be classifiable under sub-heading 8517 12. Similarly, 'portable automatic data processing machine weighing not more than 10 kgs., consisting of at least a CPU, a key board an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be governed by the Customs Tariff Act and the General Rules for Interpretation (GRI) as explained in para 4 above. Accordingly, in terms of Section Note 3 to Section Note XVI when the goods satisfy the following conditions these would be characterized as transmission apparatus in cellular/wireless network rather than as an Automatic Data Processing (ADP) machine or camera or GPS receiver. i. use transmission of signals (representing speech, messages, data or pictures) by means of electromagnetic waves which are transmitted through the ether without any line connection i.e., wireless, in any of the bandwidth allotted to mobile/cellular networks say 850 MHz to 1900 MHz; and ii. consist of transmission and reception hardware such as transceivers, antenna, microphone, speaker, battery, radio-frequency chip, basic band chip, power management chip, Subscriber Identity Module (SIM), International Mobile Equipment Identity (IMEI) or other unique identity for cellular/mobile phone as well as radio-frequency transmission software such as GSM, General Packet Radio Service (GPRS) and Enhanced Data rates for GSM Evolution (EDGE) etc., Hence, such cellular/mobile phones remain class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 4.3 In fact to the same effect is another circular of the Board being Circular No. 20/2013-Cus., dated 14-5-2013 wherein it was held that the classification of the 'Tablet Computer' having an additional facility of connecting to an cellular network to make a voice calls will not make the Table Computer divert from its main function and Table Computer would remain so. 4.4 When all the three circulars are viewed together, it is seen that the opinion expressed by the Board in Circular dated 1-8-2013 in respect of 'multifunctional speaker system' is diagonally opposite to the opinion expressed in the earlier two circulars being Circular No. 17/2007-Cus., dated 19-4-2007 and Circular No. 20/2013-Cus., dated 14-5-2013. In the other two circulars, the same Interpretative Rules have been taken into consideration and the same Section Note 3 to Section XVI stands taken note of and the products have been held to be classifiable according to their main and princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reproduction system. 4.8 We are also strengthened in our view by the decision of the Hon'ble Supreme Court in the case of Xerox India Ltd. v. Commissioner of Customs, Mumbai - 2010 (260) E.L.T. 161 (S.C.). Though the said decision did not deal with the items under consideration in the present appeal but the ratio of law laid down by the Hon'ble Supreme Court would be squarely applicable to the facts of the present case. It was held that the multifunctional printing machines having fax facility and screening facility would continue to fall under Heading 8471 of the Customs Tariff Act as 'digital printers' only inasmuch as the predominant function of the machine in question was printing. 5. As such, we find no merits in the Revenue's stand. In view of the above, the impugned order is set aside and all the three appeals are allowed with consequential relief to the appellants." 9. The decision of this Tribunal in the case of M/s. Logic India Trading Co. vs. CC, Cochin (supra) had also been endorsed by Hon'ble Supreme court in the case of Commissioner vs. Logic India Trading Co. (supra). 10. Since the facts in the appeal in hand are similar to the one decided in the above mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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