The Delhi High Court has ruled that certain Amazon Wholesale India Pvt.'s devices, including the Echo Show 5, Echo Dot 4th Generation and Echo 4th Generation with Clock, are eligible for exemptions from customs duty.
The dispute arose because the Customs Authority for Advance Rulings had classified these devices under customs tariff headings 8,518 and 8,528. CTH 8518 deals with microphones, loudspeakers, headphones and earphones, while CTH 8528 is for monitors and projectors.
However, Amazon Wholesale argued that the devices should be classified under CTH 8517 as they belong to the category of 'Echo Family Devices', which are communication devices with built-in speakers. CTH 8517 deals with apparatus for the transmission or reception of voice, images, or other data.
The Authority for Advance Ruling had classified the devices as smart speakers and 'monitors or displays.' Amazon Wholesale contended that the primary function of these devices is the transmission, reception and conversion of data and that they should be recognised as 'convergence devices' and classified under CTH 8517.
In the judgement on Monday, the court disagreed with the AAR's view that their principal attribute is that of a speaker alone. It said the devices perform various functions, including the reception, conversion and transmission of voice or other data, justifying their classification under CTH 8517.
A division bench of Justices Yashwant Varma and Dharmesh Sharma observed that the approach taken by the AAR in determining the classification of certain devices was narrow, if not myopic.
The AAR did acknowledge the principles of interpretation guided by the General Interpretative Rules, the chapter headings and the notes provided in those rules. However, it failed to adequately apply these principles to address the issue of classification, according to the bench.
The court pointed out that the term 'hearable devices' used by the department was not employed in CTH 8518 or 8528 but was found only in the exemption notification.
The bench disagreed with the authority's classification, saying that the devices should be classified under CTH 8517 and, consequently, they are eligible for exemptions.
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