CESTAT Mumbai Sets Aside ₹1.19 Crore Customs Duty Demand Against Sonova Over Hearing Aid Charging Cases

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently set aside a customs duty demand of about Rs 1.19 crore against Sonova Hearing India Pvt. Ltd.

The order also wipes out the interest liability, an equal penalty, and a redemption fine of Rs 1 crore that had been imposed in the classification dispute over imported charging cases used with hearing aids.

A bench of Judicial Member Dr. Suvendu Kumar Pati, and Technical Member M.M. Parthiban held that the product described as a “charging case without power supply” was correctly classified as a part or accessory of hearing aids. It rejected the department's attempt to classify it as a static converter or battery charger.

The dispute traces back to the reassessment of 247 consignments imported between October 2018 and August 2023. Sonova had declared the goods as parts and accessories of hearing aids attracting 7.5% basic customs duty. After clearance, the department reclassified them under the heading for electrical static converters attracting 20% duty and issued a demand of Rs 1,18,93,367 along with interest, equal penalty and a redemption fine of Rs 1 crore.

Sonova argued that the imported charging case did not contain any power supply, battery or conversion mechanism. It submitted that the device only acted as a medium between an external USB-compatible wall adapter and the hearing aids placed inside it for charging. The conversion from AC to DC, it pointed out, was carried out by separately procured wall adapters and not by the imported product.

The tribunal accepted this explanation. It recorded that a product must have the capacity to convert electrical energy from one form to another to fall within the scope of a static converter. In this case, no such function was present in the charging case. The bench also relied on the Chartered Engineer's certificate and product material on record, which showed that the device merely acted as an interface and did not perform any conversion.

During the hearing, the members physically examined the product. The charging case was opened in their presence and was found not to contain any battery. Even on a broader view, the tribunal noted that the device was meant to hold and charge hearing aids and was suitable for use solely or principally with them.

The bench reiterated that the burden to change the classification declared by the importer lies on the department. It found that this burden had not been discharged in the present case.

On limitation, the tribunal noted that earlier consignments had been assessed, and in some instances physically examined, by customs officers who had accepted the classification. It held that there was no suppression or misstatement by the importer and that invocation of the extended period was not sustainable in law.

“We have got no hesitation to confirm that the classification of the imported goods was properly made by the Importer-Appellant under Tariff Item No. 9021 90 10 as part and accessory of the 'hearing aids' while we reject the classification confirmed by the Adjudicating Authority,” the tribunal said.

In view of these findings, the tribunal set aside the demand, penalty, confiscation, and redemption fine. The appeal was allowed with consequential reliefs.

For Appellant: Advocates J.C. Patel with V.K. Singh, Consultant 

For Respondent: Shri Mahesh Yashwant Patil, Additional Commissioner, Authorised Representative