Classification of "multifunction speaker system" - Board clarifies
THE Board informs that Representatives of trade have claimed classification of "multifunction speaker system" (combination of one or more of the following: Universal Serial Bus (USB) port, USB playback, Frequency Modulation (FM) radio) as loudspeakers under heading 8518 based on premise that the principal function is that of a speaker system which involves conversion of digital signal to analogue, amplification, and relay to the listener.
Pursuant to the discussion on this issue at the Conference of Chief Commissioners of Customs and Directors General on Customs Tariff and Allied Matters, held on 05-06 June 2013, at Vishakhapatnam, the following general agreement was reached -
(a) "Speaker with USB port but without USB playback or FM radio", the product would be classified in heading 8518, by application of General Rules 1. Speakers classified under heading 8518 include both passive speakers and active speakers. Active speakers, like many subwoofers, contain a built-in audio amplifier. The subheading under which speakers are classified depends on the number of ‘drive units' - the actual loudspeaker cones or ribbons - in each cabinet or enclosure. Speakers with a single drive unit in each cabinet are classified under subheading 851821. Speakers with more than one drive unit in each cabinet - for example one woofer and one tweeter - are classified under subheading 851822. Speakers that are not mounted in a cabinet or enclosure are classified under subheading code 851829.
(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 subheading 851981 of the Harmonized Customs Tariff.
(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 subheading 852799 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 principal function of the device is imparted equally by Radio (reception apparatus for radio-broadcasting) and USB playback facility then it would be classified by sequential application of GRI, according to Rule 3(c). Hence the said product is classifiable under subheading 852799 by virtue of General Rules 1, Note 3 to Section XVI, 3(c), and 6.
The Board says that the issue was also examined at its end and in view of the general consensus arrived at the Conference, the Board desires that, as mentioned above, based on the specifications "multifunction speaker systems" may be classified under heading 8519, heading 8527 or the appropriate heading, as the case may be.
It would be pertinent to note that since the classification has been arrived at by ‘general consensus' the field formations should not have any difficulty in the matter.
Circular No.27 / 2103 - Customs Dated: August, 1, 2013.