Legal principle

Multimedia speakers with added ancillary features of USB/SD/MMC playback and/or FM radio are properly classifiable under CTH 8518 — where MRP/RSP-based CVD does not apply — and not under CTH 8519/8527, and where the issue is settled by binding precedent, the Revenue's reclassification and consequential demands, interest and penalties must be set aside.

Court decision

The Tribunal allowed both appeals, setting aside the Order-in-Appeal. It held that the appellants had rightly classified the multimedia speakers under Chapter Heading 8518, under which MRP-based price is not applicable, and therefore the reclassification under CTH 85279100, the consequent demands, interest and penalties against both appellants were all set aside, with liberty to claim consequential relief as per law.

Facts

M/s. Skylark Electronics Pvt. Ltd. and its Director Shri Sailesh Badiani imported multimedia speakers/computer speakers (with in-built USB/SD/FM/MP3 features) under 39 Bills of Entry between 18.05.2012 and 09.12.2013, self-classifying them under CTH 851822/851829. Based on DRI information, the Revenue alleged the goods were misclassified and should fall under CTH 8519/8527, attracting CVD on Retail Sale Price (RSP) basis, and that the importers also failed to declare correct RSP/MRP. The Additional Commissioner, by Order-in-Original dated 09.01.2018, ordered reassessment of CVD under CTH 85279100, confiscated the goods covered by three live Bills of Entry under Sections 111(m) and 111(d) of the Customs Act, 1962 read with Section 3(3) of the FTDR Act, 1992, allowed redemption on a fine of Rs. 5,00,000 under Section 125, and imposed penalties on the company and its Director under Sections 114A, 114AA and 112(a). The Commissioner (Appeals) rejected their appeals, prompting the present appeals before the CESTAT, Kolkata.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 3(3), The Foreign Trade (Development and Regulation) Act, 1992 — Powers to make provisions relating to imports and exports.