LG Electronics Wins Customs Battle in Smartwatch Import: SC Rules Certificate of Origin Enough for Duty Exemption

Moneylife Digital Team 17 September 2025

Economy & Nation

In a major relief to LG Electronics India Pvt Ltd, in a long-running dispute over customs duty on imported smartwatches, the Supreme Court ruled that a valid certificate of origin from South Korea was sufficient to claim duty exemption under the India–Korea comprehensive economic partnership agreement (CEPA).

In an order last week, a bench of justice JB Pardiwala and justice Sandeep Mehta set aside the orders of the customs, excise and service tax appellate tribunal (CESTAT) which had previously upheld a duty demand raised by customs authorities. The Court directed that the entire duty amount already deposited by LG Electronics be refunded within two months, along with applicable interest.

The case involved the import of 2,000 units of LG’s 'G Watch W7' smartwatch in March 2019. LG had classified the product as a wristwatch under tariff heading 9102 and claimed a nil rate of basic customs duty by citing notification No.152/2009, which provides full exemption for certain Korean-origin goods.

Customs authorities disagreed, reclassifying the product under tariff heading 8517 on the grounds that smartwatches are multifunctional devices capable of transmitting voice and data and, therefore, not comparable to conventional wristwatches. The department’s position was endorsed by the tribunal which rejected LG’s plea that the exemption notification still applied.

The Supreme Court, however, took a different view. While acknowledging that the smartwatches could fall under tariff heading 8517, the Court held that this did not take away the benefit of the exemption available under notification No.151/2009, which covers a wide range of imports from South Korea when accompanied by a certificate of origin.

The judges examined the original certificate of origin issued by the Korean customs department which confirmed that the goods were manufactured in South Korea. This, the Court says, was conclusive proof that the imports qualified for the exemption.

The bench observed that LG’s initial classification under the watches category could be seen as a misunderstanding rather than any attempt to mislead the authorities, stressing that there was no element of bad faith. “Even if they would have declared the entry 8517, they would still have been entitled to the benefit of the notification,” the Court noted.

By setting aside both the teivy order and the original order of the principal commissioner, the Supreme Court cleared the way for LG Electronics to recover the customs duty it had already paid. The ruling not only provides financial relief to the company but also carries wider implications for other importers of high-technology goods who rely on preferential trade agreements for duty exemptions.

The judgement reinforces the primacy of certificates of origin in such matters and may deter authorities from denying exemptions on technical grounds related to product classification. For businesses importing electronics and smart devices from South Korea, the verdict provides welcome clarity and underscores the importance of India’s trade commitments under CEPA.

The appeals filed by LG Electronics under Section 130E of the Customs Act, 1962, were accordingly allowed, with the Supreme Court directing that the refund of customs duty be processed expeditiously along with interest.

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