MRP valuation - Pay more for a Smart watch

NEW DELHI : ON the subject, Customs - Where do you classify a Smartwatch?, an extract from DDT 2616 -

The HSN is the ultimate in tariff classification and it is supposed to contain a heading for every item in the world. But technology and ingenuity of the human mind do not wait for Customs officers gathered in Brussels to decide

classification. Mind boggling and unimaginable products beyond the comprehension of the Tariff makers are hitting the market everyday. The HS has to be kept up to date in the light of changes in technology or in patterns of international trade. The Harmonized System Committee (HSC), at its 55th session in March 2015, examined the Harmonized System classification of a wide range of products. The classification decisions taken at the Session have now been published. These decisions comprise Classification Rulings, as well as the Amendments to the Explanatory Notes and to the Compendium of Classification Opinions.

Smartwatches   are effectively wearable computers. The new HSN classification and description for this is:

8517.62: Wrist wearable device ("smart watch"):   a battery-operated device in the form of a wrist-watch, incorporating a touch-sensitive, active-matrix organic light-emitting diode (AMOLED) display, a central processing unit (CPU), random-access memory, a flash memory, a radio transceiver, an electronic watch module, a motion sensor (accelerometer), agyro-sensor, a digital camera module with auto focus, a speaker and two microphones. The radio transceiver utilizes an open wireless technology standard (Bluetooth®), which enables the device to communicate wirelessly with certain mobile devices, such as mobile telephones for cellular networks or tablet computers. The device performs the following functions independently of any other device: recording and reproducing sound; taking and recording photos and videos; displaying time and information embedded in the watch module; measuring and displaying step counts and heart rates .

When “paired” with a host device, additional features are available to the wearer, including: making and receiving calls over the paired device; using voice commands to control the paired device (e.g., to send messages, take photos, set an alarm and check a weather forecast or schedules); displaying notifications from the paired device; playing music stored in the host device; performing functions of timekeeping instruments; measuring and displaying certain data, e.g., step counts, heart rates and calorie consumption; downloading (over the paired device) and running applications suitable to be used on the device.

The Central Government has now realized the significance of the revenue that the exchequer can garner out of this precise classification.

And so, the following entry makes an appearance in Notification 49/2008-CE(NT) dated 24.12.2008 thanks to the amending notification 12/2016-CE(NT). The Third Schedule to the Central Excise Act also sees an amendment by clause 142(i) of the Finance Bill, 2016 which comes into immediate effect courtesy the declaration under the Provisional Collection of Taxes Act, 1931.

You guessed it right…MRP valuation!

Notification 12/2016-CE(NT) inserts the following entry –

Now, flaunt that Smart watch!