2021 (8) TMI 186 - AAR - Customs

Classification of imported goods - Apple HomePod - to be classified under Customs Tariff Heading (CTH) 8517.62.90? - HELD THAT - The device in question is capable of receiving voice commands, covert such voice commands into text to perform multiple tasks, e.g., stream music from the internet or another Apple device, retrieve information available in the net like weather, traffic, news, sports updates etc., regenerate such information back to the user in the form of music/speech, and also act as a home automation device to control reconditioners, locks, lights etc., it is clear that the product in question has multiple facets, and therefore, its classification would depend upon identifying the essential character of the device. The product consists of an Apple designed A8 chip, a six-microphone array, a seven-tweeter array, and a high excursion woofer enclosed in a seamless mesh fabric. The device works wirelessly through Wi-Fi or Bluetooth and as already noted it can play music directly from the internet or from another Apple device through AirPlay 2. The primary mode of interacting with the device is voice commands, though it is possible to play, pause and raise volume by tapping the top of the device. The home automation functions of the device to control a wide range of accessories is carried out via a hardware certification platfonn and a database system that makes possible integrate, configure, and communicate between a wide variety of products. The control of such devices is also done through Siri via voice commands. The product in question answers to the description of six-digit entry 851762 which is meant for Machines for reception, conversion and transmission or regeneration of voice, images, other data, including switching and routing apparatus and more specifically under the residuary sub-heading 85176290 - thus, Apple HomePods merit classification under sub-heading 85176290 of the first schedule to the Customs Tariff Act, 1975.

Summary

Issues Involved:
1. Classification of Apple HomePod under the Customs Tariff Heading.
2. Validity of the original application for advance ruling after the lapse of the prescribed time limit.
3. Applicability of the doctrine of legitimate expectation and promissory estoppel.
4. Consideration of multiple ports of entry in the application for advance ruling.

Issue-wise Detailed Analysis:

1. Classification of Apple HomePod under the Customs Tariff Heading:
The applicant sought an advance ruling on whether the import of Apple HomePod would be classified under Customs Tariff Heading (CTH) 8517.62.90. The Apple HomePod is described as a home entertainment device allowing wireless connection to the internet via Wi-Fi or Bluetooth, streaming music directly from the internet, and providing various functionalities such as news, weather, traffic updates, and home automation control through voice commands. The device's attributes include an Apple-designed A8 chip, a six-microphone array, a seven-tweeter array, and a high excursion woofer. It was concluded that the Apple HomePod answers to the description of "Machines for reception, conversion and transmission or regeneration of voice, images, other data, including switching and routing apparatus" and merits classification under sub-heading 85176290.

2. Validity of the Original Application for Advance Ruling after the Lapse of the Prescribed Time Limit:
The original application was filed on 26.12.2017 but was not disposed of within the ninety days prescribed at that time. The applicant argued that the application should not be considered lapsed and that the proceedings should be treated as a continuation of the original application. The authority reconsidered its initial restrictive interpretation and concluded that the application should be deemed a continuation of the earlier proceedings. This interpretation was based on the fact that the applicant was not at fault for the delay and should not be penalized. Therefore, the applicant remained eligible for receiving advance rulings for imports made after filing the advance ruling application.

3. Applicability of the Doctrine of Legitimate Expectation and Promissory Estoppel:
The applicant cited the doctrine of legitimate expectation and promissory estoppel, arguing that since their original application was admitted by the erstwhile authority, the proceedings should continue rather than be treated as a fresh application. The authority accepted this argument, emphasizing that the applicant's right to receive an advance ruling should not be adversely affected due to the delay in rendering a decision by the erstwhile authority.

4. Consideration of Multiple Ports of Entry in the Application for Advance Ruling:
The applicant indicated five entry ports for the import of HomePods. The authority noted that the scheme of advance rulings in customs envisages that an applicant would indicate only one port/point of entry for their proposed activity. However, considering that this was a transferred application and comments from four of the five Principal Commissioners/Commissioners were on record, the authority did not pursue this issue further in the present proceedings.

Conclusion:
The authority ruled that Apple HomePods merit classification under sub-heading 85176290 of the first schedule to the Customs Tariff Act, 1975. The application for advance ruling was deemed a continuation of the original application, and the applicant's right to receive an advance ruling was upheld despite the delay in rendering a decision by the erstwhile authority.