FINAL ORDER NO. 50815/2026

JUSTICE DILIP GUPTA:

This appeal has been filed by M/s G-Mobile Devices Pvt. Ltd.¹ to assail the order dated 08.01.2025 passed by the Principal Commissioner of Customs, Air Cargo Complex, (Import)². This order denies the benefit of Notification No. 57/2017 dated 30.06.2017³ that was availed by the appellant on import of Bluetooth Wireless Earphones/ Headphones/Earbuds/ Neckbands and, accordingly, differential customs duty has been confirmed under section 28(4) of the Customs Act, 1962⁴ with interest under section 28AA and penalty under section 114A of the Customs Act. The goods have also been confiscated under section 111(m) of the Customs Act.

2. The appellant had classified the goods under Customs Tariff Item⁵ 8517 62 90 of the Customs Tariff Act, 1975⁶ as Wireless Headphones/ Earphones and availed the benefit of the Notification by paying concessional 10% of basic customs duty under serial no. 20 of the Notification. The department, however, believed that the goods imported by the appellant would be classifiable under CTI 8518 30 00 which would entail 15% basic customs duty.

3. Accordingly, a show cause notice dated 10.01.2024 was issued to appellant under section 28(4) of the Customs Act for the period from February, 2020 to January, 2022. After referring to the two competing tariff items and the Notification, the show cause notice mentions:

“11.2 M/s. G-Mobile Devices Pvt Ltd while justifying the mis-classification of the Bluetooth Wireless Earphones/ headphones/earbuds /neckbands under CTI 85176290, relied on the Circular No. 36/2013- Customs dated 05.09.2013. M/s G-Mobile Devices Pvt Ltd in their reply dated 15.02.2023 (Annexure-8) stated that according to the above circular, all goods which satisfy the conditions of Bluetooth Wireless Headsets for mobile phones given in the circular No. 36/2013-Customs dated 05.09.2013 and have the same characteristics and specifications are covered under it and therefore, appropriately classifiable under CTH 851762. On the basis of their characteristics and specifications and clarification issued by CBIC vide circular No. 36/2013-Cus dated 05.09.2013, the subject goods merit classification under CTH 85176290.

However, M/s. G-Mobile Devices Pvt Ltd failed to produce any documentary evidence that the impugned goods are designed with "communication function for mobile telephony" as the principal function; that the impugned goods i.e., Bluetooth Wireless Headphones/Earphones are manufactured or designed primarily for use with mobile phone/cell phone.

11.3 On the contrary, it is established during the investigation that the main function of the impugned goods i.e. Bluetooth Wireless Earphones/headphones/earbuds/neckbands is similar to the traditional earphones/headphones which are classifiable under CTH 851830 i.e. to listen through the earphones/headphones (where they transform the electrical signals to low intensity sound signals) and to speak through the microphones (where they transform the sound signals to electrical signals, which may then be further amplified, transmitted or recorded). While performing this core function of an earphone/headphone fitted with a microphone, the impugned goods differ from traditional earphones in terms of their technological enhancements and sophistication / ease of use viz.

A. audio enhancing and quality aspects of listening:

B. transmission of music/voice through noise reduction while listening/speaking.

C. latest technology to charging the earphones.

D. compatibility/pairing mechanism with multiple devices which brought the impugned goods their own identity.

It may be noted that as years have gone by, the pairing/compatibility of various Bluetooth wireless earphones/headphones has expanded and not limited to pairing with mobile phones/cell phones.

However, the importer appears to indicate that mere existence of Bluetooth connectivity in the earphones/head