Set Back to L.G. Electronics: CESTAT rejects Claim of Concessional Rate of Basic Customs Duty on Import of G-Watch [Read Order]

In a major setback to LG Electronics, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), rejected the claim of concessional rate of basic customs duty on import of G-watch.

Show Cause Notice was served upon the appellant proposing rejection of classification claimed by the appellant i.e. under CTH 91021900. It was proposed that the imported goods be classified under 85176290 to which the duty exemption, as availed, is not applicable. Resultantly, short payment of customs duty amounting to Rs.86,62,852/- with respect to the import of the impugned goods vide the aforementioned two Bills of Entry was proposed to be recovered along with the interest.

The imported goods were proposed to be held liable to confiscation. In addition, the penalty was also proposed to be imposed upon the appellant. The said proposal has been confirmed. While ordering confiscation, option to impose redemption fine has not been given and penalty of Rs.8,00,000/- has been imposed on the appellant under Section 112 (a) of the Customs Act, 1962. Being aggrieved the appellant is before the Tribunal.

The counsel for the appellant submitted that the impugned goods carry the look of traditional analog watch and works also like the said analog and acknowledged that though the imported goods perform the smart watch functions with the help of few electrical components (LCD, 4GB RAM, Bluetooth, Qualcomm Chipset etc.), however, still the users can wear the same on their wrist to watch time, to receive alarms etc., just like the traditional watch analog. Hence, the imported goods have rightly been classified by the appellant under CTH 91021900.

It was further submitted that whereas the goods covered under CTH 9102 are wrist watches, pocket watches etc., as the heading suggest and there is no denial that the imported goods are wrist watches for observing time. The brochure of their company describing the imported goods has also been elaborated. From no stretch of imagination they can be called as telephones sets/other apparatus, hence the correct classification is CTH 91021900. The findings under challenge are therefore liable to be set aside.

A Two-Member Bench of the Tribunal comprising Dr Rachna Gupta, Judicial Member and Hemambika R Priya, Technical Member observed that “We hereby hold that the product imported is a Smart Watch which is classifiable under 8517 6290. The appellant has wrongly classified it under 9102 1900. Thus the benefit under exemption Notification No. 152/2009-Cus. was not available to products of 8517 tariff entry hence it is held that same has wrongly been claimed. The order under challenge to the extent confirming demand of customs duty is therefore hereby upheld. However, the order imposing penalty and confiscating the goods is hereby set aside in light of the findings under Point No. 3. Consequently, the appeal in hand is ordered to be partly allowed.”

To Read the full text of the Order CLICK HERE

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