Concessional rate of the base customs duty of 7.5% payable on smart plugs: AAR

smart plugs -Taxscan

The Advance Rulings Customs Authority (AAR) ruled that the preferential rate of the base customs duty of 7.5% payable on smart plugs.

The applicant, M / s. Amazon Seller Services Private Limited offers to import a device called smart plug, having model no. C2YY3N.

The advance ruling request, requesting the classification of said device and eligibility for the benefit of serial number 490 of notification no. 50/2017-Cus., Dated 30.06.2017, was received at the secretariat of the former Authority for Advance Rulings (Central Excise, Customs and Service Tax), New Delhi on 17.08.2020.

However, as no decision was issued by said authority, the pending application was transferred to the Customs Authority for Advance Rulings, Mumbai in February 2021. Communications were sent to the applicant by the secretariat of CAAR, Mumbai to indicate whether they are still eager to receive advance rulings regarding the pending claim. The applicant, in his communication, indicates that he still wishes to receive advance rulings and that he will submit the request in the revised format in due course. Subsequently, the application was emailed by the applicant in July 2021, which was followed by the physical submission of the application in August 2021.

The smart plug is described by the Applicant as a hands-free Alexa-enabled device that has several built-in elements, i.e. a plug, an outlet, a switch and a button. The smart plug can be plugged into standard wall outlets. On the other side, a normal plug can be plugged into the smart plug. Such a normal socket can be for any device like a table fan or a table lamp or a refrigerator or any other connected device. It supports both Wi-Fi and Bluetooth connectivity. With such connectivity, the smart plug acts as a smart switch_ The smart plug is paired with the Alexa app on the user’s phone. After such pairing, the user can control the flow of electricity to the connected devices through the smart plug using the Alexa app on their phone, without having to manually reach for the switch. The smart plug button allows its users to reset it to manual configuration mode or factory setting or change network. The user gets a clear visual indication from the LED that the smart plug has successfully returned to the factory default state.

The coram of Manoj Kumar Hessa ruled that the smart plugs of the model no. C2YY3N are rightly classified under subheading 85371000 of the first annex of the Customs Tariff Act 1975. Said smart plugs could claim the benefit of serial number 490 of notification no. 50/2017-Cus., Of 30.06.2017.

‘The relevant entry in said notification provides for a basic customs duty rate of 7.5% for all goods other than those which may be used in motor vehicles falling within heading 8702 or 8704, motor cars falling under heading 8703 or motorcycles falling under heading 8703. under heading 8711. Since smart plugs have been classified under heading 8537 and do not fall under the exclusions listed, they would be eligible for the preferential duty rate under said notification ” , observed the AAR.

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