2024 (8) TMI 1068 - HC - Customs

Classification of three devices - Echo Dot (5th Gen) - Echo Dot (5th Gen) with Clock - Echo Pop - whether the devices in question are classifiable under Customs Tariff Heading CTH 8517 62 90 or under CTH 8518? - HELD THAT - The inclusion of the expression wireless would have to be read alongside the principal commodities which are covered by and fall within the expanse of CTH 8518. The word wireless would thus have to be read alongside loudspeakers , headphones and earphones . Merely because the subject devices are also enabled to perform and operate in a wireless environment, they would not be liable to be placed under CTH 8518. The impugned orders dated 12 July 2023 and 27 September 2023 set aside - the three subject devices would be liable to be classified under CTH 8517 62 90 - appeal allowed.

Issues Involved: Classification of Echo Dot (5th Gen), Echo Dot (5th Gen) with Clock, and Echo Pop under Customs Tariff Heading (CTH) 8517 62 90 or CTH 8518.

Detailed Analysis:

P1. Background and Appeal:
The appellant contested the decisions by the Customs Authority for Advanced Rulings (AAR) regarding the classification of three devices: Echo Dot (5th Gen), Echo Dot (5th Gen) with Clock, and Echo Pop. The primary issue was whether these devices should be classified under CTH 8517 62 90 or CTH 8518.

P2. AAR's Decision:
The AAR ruled that Echo Dot (5th Gen) and Echo Dot (5th Gen) with Clock should be classified under CTH 8518 22 10, and Echo Pop under the same heading, as per orders dated 12 July 2023 and 27 September 2023.

P3. Previous Judgments:
The court had previously addressed similar classification issues in Amazon Wholesale India Private Limited vs. Customs Authority for Advance Rulings, New Delhi & Anr. 2023 SCC OnLine Del 7817, where Echo Family Devices were recognized as "convergence devices" rather than mere speakers.

P4. Principal Function Analysis:
The court emphasized the importance of Note 3, which requires classification based on the principal function of a device. The Echo Family Devices were identified as primarily functioning for the transmission and reception of data, capable of performing multiple tasks in a wi-fi environment, thus constituting their principal function.

P5. Ambit of CTH 8517:
CTH 8517 includes apparatus for the transmission or reception of voice, image, or other data, covering devices designed for communication in wired or wireless networks. The court found that the Echo devices qualify under this heading due to their primary function of data transmission and reception.

P6. Scope of CTH 8518:
CTH 8518 is confined to loudspeakers, headphones, and earphones, and does not cover devices used for data transmission or reception. The court concluded that the Echo devices, being communication devices, do not fit within the scope of CTH 8518.

P7. International Classification and HSN System:
The court noted the importance of international classifications and the HSN system for achieving uniformity in trade. The classifications of similar devices in other jurisdictions should be considered, although not binding, for consistency.

P8. Amendments in CTH 8518:
The Finance Act, 2022 introduced the term "wireless" in CTH 8518, but the broad heading remained unchanged. The court clarified that the term "wireless" should be read in conjunction with the principal commodities under CTH 8518, such as loudspeakers and headphones, and does not alter the primary classification criteria.

P9. Final Decision:
The court allowed the appeals, setting aside the AAR's orders. It held that the Echo devices should be classified under CTH 8517 62 90, aligning with the principal function of data transmission and reception.

P10. Exemption Entitlement:
Following the precedent in Amazon Wholesale India Private Limited, the appellant-assessee is entitled to claim exemption under Serial No. 20 of Notification No. 57/2017-Cus dated 30 June 2017.

This comprehensive analysis ensures that the classification of the Echo devices aligns with their primary function, supporting the appellant's position and providing clarity on the application of relevant Customs Tariff Headings.

← Previous Next →