Case Law Details
Xiaomi Technology India Private Limited Vs Commissioner of Customs (CESTAT Bangalore)
CESTAT Rules Automatic Soap Dispenser Falls Under CTI 8424 Because It Dispenses Rather Than Sprays; CESTAT Allows Appeal on Customs Classification Due to Difference Between Dispensing and Spraying Functions; Soap Dispenser Classified Under Mechanical Appliances Heading Because Product Disperses Liquid Soap; CESTAT Relies on HSN Notes to Hold Automatic Soap Dispenser Outside Scope of CTI 9616.
The appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore concerned the classification of an “Automatic Soap Dispenser” imported through three Bills of Entry. The appellant challenged the order dated 26.09.2024 passed by the Commissioner (Appeals), which had upheld the reassessment order dated 17.01.2024 issued by the Deputy Commissioner of Customs. The reassessment classified the imported goods under Customs Tariff Item (CTI) 9616 10 20 instead of CTI 8424 89 90 claimed by the appellant.
The central issue before the Tribunal was whether the imported “Automatic Soap Dispenser” should be classified under CTI 8424 89 90 or under CTI 9616 10 20.
The appellant described the imported product as a sensor-based automatic soap dispenser designed for touchless dispensing of liquid soap in foam form. The product contained an in-built proximity infrared sensor that detects a hand placed under the outlet and dispenses foam in approximately 0.25 seconds. The sensor communicates with a diaphragm pump and motor to regulate the foam output.
The product also contained a micro high-efficiency motor operating a diaphragm pump. The rubber damping structure in the motor enabled foaming of liquid soap with air received from an air inlet and soap received from a liquid inlet. The diaphragm pump mixed air and soap in a 12:1 gas-to-liquid ratio to generate foam, which was discharged through the foam outlet. The outlet was connected through a polypropylene tube fitted with a leak-proof device.
Counsel for the appellant argued that the imported product was essentially a soap dispenser and therefore appropriately classifiable under Chapter Heading 8424 dealing with mechanical appliances for dispersing liquids. It was contended that the product actually dispersed liquid soap and therefore fell more specifically under CTI 8424 89 90.
The appellant further submitted that Chapter Heading 9616 dealt with sprays, including scent sprays and similar toiletry sprays, whereas the imported product did not perform any spraying function.
The Department, however, argued that the imported product was a toiletry product appropriately covered under Chapter Heading 9616. According to the Department, once the product fell under CTI 9616, it stood excluded from Chapter Heading 8424.
After considering the rival submissions, the Tribunal examined the relevant tariff headings. It observed that Chapter Heading 8424 specifically dealt with mechanical appliances for dispersing liquids. The Tribunal noted that the imported product was an automatic dispenser equipped with an infrared sensor that detected the presence of a hand and dispensed foam generated by mixing soap and air.
The Tribunal observed that there was no dispute that the product dispersed soap in liquid form. It further noted that Chapter Heading 9616 dealt with sprays of different kinds, including scent sprays and similar toiletry sprays.
The Tribunal emphasized that both the expressions “dispersing” and “spraying” had been separately used in Chapter Heading 8424, indicating a distinction between “dispersing liquids” and “spraying liquids.” According to the Tribunal, the imported product could not be classified under Chapter Heading 9616 because it did not spray liquids.
The Tribunal also relied on the Harmonized System of Nomenclature (HSN) notes to Chapter Heading 9616, which specifically stated that the chapter did not apply to dispersing or spraying appliances covered under Chapter 8424.
Based on these findings, the Tribunal held that the “Automatic Soap Dispenser” imported by the appellant through the three Bills of Entry was appropriately classifiable under CTI 8424 89 90.
The Tribunal concluded that the Commissioner (Appeals) had erred in holding that the product fell under CTI 9616 10 20. Consequently, the order dated 26.09.2024 passed by the Commissioner (Appeals) was set aside and the appeal was allowed.
FULL TEXT OF THE CESTAT BANGALORE ORDER
M/s. Xiaomi Technologyl has filed this appeal to assail the order dated 26.09.2024 passed by the Commissioner (Appeals) by which the appeal that was filed to challenge the order dated 17.01.2024 passed by the Deputy Commissioner of Customs, has been dismissed.
2. The Deputy Commissioner of Customs by the aforesaid order dated 17.01.2024 ordered for reassessment of the three Bills of Entry submitted by the appellant for the goods declared by the appellant as “Automatic Soap Dispenser” under Customs Tariff Item2 9616 10 20 and not under CTI 8424 89 90.
3. The issue, therefore, that arises for consideration in this appeal is as to whether the “Automatic Soap Dispenser” imported by the appellant through three Bills of Entry should be classified under CTI 8424 89 90 as classified by the appellant or under CTI 9616 10 20 as claimed by the Department.
4. The appellant has described the functions and technical specifications of the imported product in the following manner:-
a) It is a sensor-based automatic soap dispenser designed for touchless dispensing of liquid soap in the form of a foam.
b) It is an in-built proximity infrared sensor which detects a hand placed under the outlet and dispenses foam in approximately 0.25 seconds. The sensing plate shares the information vis-à-vis foam output required with a diaphragm pump and motor in the dispenser.
c) A micro high-efficiency motor operates a diaphragm pump inside the soap dispenser. The rubber damping structure in the motor enables foaming of the liquid soap with air received from air inlet and liquid soap received from liquid inlet.
d) The diaphragm pump mixes air and soap (foaming is controlled through ratio of 12:1 of gas to liquid) to generate foam which is discharged through the foam outlet.
e) The outlet is connected via a polypropylene tube with a leak-proof device.
5. Ms. Purvi Asati, learned counsel for the appellant assisted by Ms. Ashwini Nag submitted that as the product imported by the appellant is a Soap Dispenser, it would appropriately fall under Customs Heading 8424 and more appropriately under CTI 8424 89 90. Elaborating this submission, learned counsel pointed out that Chapter Heading 8424 includes mechanical appliances for dispersing liquids and the product imported by the appellant actually disperses liquid. Learned counsel submitted that, on the other hand, Chapter Heading 9616 deals with sprays only, which function is not performed by the goods imported by the appellant.
6. Shri M. Sreekanth, learned Authorized Representative appearing for the Department, however, submitted that the product imported by the appellant is a toiletry product and more appropriately covered under Chapter Heading 9616. Learned Authorized Representative, therefore, submitted that when the product imported by the appellant falls under CTI 9616, it stands excluded from Chapter Heading 8424.
7. The submissions advanced by the learned counsel for the appellant and the learned Authorized Representative appearing for the Department have been considered.
8. It is seen that Chapter Heading 8424 deals with mechanical appliances for dispersing liquids. The product imported by the appellant is an automatic dispenser, which has an in-built proximity infrared sensor which detects hand placed under the outlet and disperses foam in approximately 0.25 seconds. The dispenser mixes air and soap to generate foam which is discharged through the foam outlet. There is, therefore, no dispute that the product imported by the appellant disperses soap, which is in the liquid form.
9. Chapter Heading 9616 on the other hand deals with sprays of different kinds, including scent sprays and similar toiletry sprays.
10. The words “dispersing” and “spraying” have both been used in Chapter Heding 8424. It is, therefore, clear that there is a difference between “disperser of liquids” and “spraying of liquids”. In such a situation, the product imported by the appellant cannot fall under Chapter Heading 9616 since it does not spray liquids.
11. What is also important to notice is that HSN to Chapter Heading 9616 specifically mentions that this Chapter does not apply to dispersing or spraying in appliances covered under Chapter 8424.
12. There is, therefore, substance in the submission advanced by the learned counsel for the appellant that the “Automatic Soap Dispenser” imported by the appellant through three Bills of Entry will be appropriately covered under CTI 8424 89 90.
13. The Commissioner (Appeals), therefore, committed an error in holding that the said product would fall under CTI 9616 10 20. The order dated 26.09.2024 passed by the Commissioner (Appeals), therefore, deserves to be set aside and it is set aside and the appeal is allowed.
(Order dictated and pronounced in Open Court.)
Notes:
1 the appellant
2 CTI
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