The Supreme Court has agreed to examine whether fitness bands, widely used for tracking physical activities and vital parameters, should be classified as communication devices. The court noted that their Bluetooth connectivity could justify such classification.
Background of the Case
Petitioner GOQii Technologies imported activity trackers and fitness bands. The Customs department classified these as communication devices, requiring the company to execute provisional duty bonds worth Rs 3.64 crore. The goods were released after GOQii furnished a bank guarantee of Rs 1 crore.
GOQii's counsel, Kumar Sambhav, argued before a bench of Justices P S Narasimha, Aravind Kumar, and Shree Chandrashekhar that the fitness bands should have been classified as measuring or counting instruments, such as pedometers. He contended that the Customs department erroneously treated the goods as apparatus for transmission or reception of data, leading to additional duties.
Court's Observations
The bench agreed to examine the questions raised and issued notice to the Commissioner of Customs (Imports), scheduling the next hearing for September 11. The court ordered that the bank guarantee shall not be invoked until then.
Justice Aravind Kumar remarked that when a device can connect to communication devices like mobile phones or satellite systems via Bluetooth, it does not remain a purely measuring instrument but can serve as a communication device. The petitioner countered that the principal function of the goods is measurement and monitoring of physical activity and vital parameters, with Bluetooth being merely an ancillary feature.
Previous Tribunal Ruling
GOQii had earlier approached the Customs, Excise & Services Tax Appellate Tribunal (CESTAT), presenting an expert opinion from IIT Bombay that the fitness bands are measuring devices, not communication devices. However, CESTAT upheld the Customs department's classification.
CESTAT rejected the plea to classify the bands as pedometers, explaining that pedometers operate through mechanical mechanisms like swinging pendulums or electrical circuits triggered by steps, whereas fitness bands use advanced sensors and connectivity. The tribunal noted that when synced with the GOQii app, coaches can access activity and sleep data to provide guidance, supporting the classification as communication devices.
The Supreme Court will now deliberate on this issue, with implications for import duties and the classification of wearable technology.
