Bluetooth-enabled wireless headsets are classifiable under CTH 85176290 as apparatus for transmission/reception of voice/data because their principal function as active network components, facilitated by transceiver technology, supersedes their secondary function as audio output devices classified under CTH 8518.

Per Bench

1. The Appellant, M/s. Redington Limited, Chennai - 600 91, are engaged in import and sale of electronics goods including Bluetooth Wireless Headsets / Head phones / Ear phones / neck bands etc. For the period from 28.08.2021 to 30.04.2022, they had filed Bills of Entry at Air Cargo Complex, Meenambakkam, Chennai for the import of clearance of JABRA brand Bluetooth devices and had sought classification of the goods under CTI 85176290 and in pursuance of assessment of the Bills of Entry, Appellant had paid concessional rate of BCD in terms of SI.No. 20 of Customs Notification No. 57/2017-Cus. dated 30.06.2017.

2. It appears that the Revenue had initiated investigation on the premise that the Imported items were classifiable under CTI 85183000 under the category of wireless speakers and liable for payment of BCD@15% in terms of SI.No. 18 of Notification No. 57/2017-Cus. During the course of investigation, statements of some of the staff were recorded by the Officers of Customs under Section 108 of the Customs Act, 1962, who appears to have inter-alia submitted that the Imported Bluetooth wireless headsets/ head phones/ ear phones / ear buds/ neck bands etc. are having principal function of communication in mobile telephony systems. The Appellant’s representatives also appear to have submitted the website details of the supplier and also submitted the catalogues for the JABRA brand wireless Bluetooth devices.

3. Post Investigation, a SCN was issued to the importer/Appellant to show cause as to why: -

i. The CTH 85176290 claimed by the importer for Bluetooth Wireless headphones / earphones/ Ear buds/ neckbands imported vide Bills of Entry listed in the Annexure-l should not be rejected.

ii. The Bluetooth Wireless headphones/ earphones/ ear buds/ Neckbands imported vide Bills of Entry listed in the Annexure-l should not be reclassified under CTH 85183000;

iii. Customs duties of Rs.2,71,95,456/- (BCD Rs.2,09,51,815/- +SWS Rs.20,95,181/- + IGST - Rs.41,48,459/-) on the import of Bluetooth Wireless headphones/ earphones/ear buds/neckbands through Air Cargo Complex, Chennai vide Bills of Entry listed in the Annexure-l should not be recovered from the Importer in terms of Section 28(1) of Customs Act, 1962;

iv. Interest on the amount demanded at (ii) above should not be recovered from the Importer in terms of Section 28AA of Customs Act, 1962;

v. The amount of Rs.2,00,00,000/- paid vide TR Challans No. 000904 dated 24.03.2023 and No. 001801 dated 30.03.2023 should not be appropriated against the Customs duties demanded at (ill) above;

vi. The imported goods i.e., Bluetooth Wireless headphones/Earphones/ Ear buds/Neckbands valued at Rs.41,79,09,706/- imported vide 30 Bills of Entry listed in the Annexure-l through various ports should not be held liable for confiscation under the provisions of Section 111(m) of Customs Act, 1962;

vii. Penalty should not be imposed on the Importer under the provisions of Section 112(a) of Customs Act, 1962; and

viii. Penalty should not be imposed on Importer under the provisions of Section 117 of Customs Act, 1962.

4. It appears that the appellant filed a detailed reply to the above SCN before the Original Authority and also appeared for Personal hearing. In the said reply which is part of documents filed along with this Appeal, it was inter-alia submitted by the Appellant that the issue is covered by the Circular No. 36/201