2022 (10) TMI 329 - AAR - Customs

Classification of goods - HDMI Digital Media Receiver Model No. K2R2TE with Alexa Voice remote 3rd Generation Model No. L5B83G as a kit (Fire TV Stick 4K Max) - classifiable under sub-heading 8517 62 or not - Section 28H of the Customs Act, 1962 - HELD THAT - Following Rule 3(b) of the General Rules of Interpretation, the classification of Fire TV Stick 4K Max as a kit shall be determined by the classification of HDMI Digital Media Receiver Model Number K2R2TE - the applicant has claimed HDMI Digital Media Receiver Model Number K2R2TE to be classifiable under CTH 8517 62 90 since it is a device that transmits/receives RF signals and converts it into a format readable by the system and transmits the same which is displayed on the screen. HDMI Digital Media Receiver Model Number K2R2TE is also a reception apparatus for voice, image and other data in a wireless network such as LAN/WAN. It is a reception apparatus with an inbuilt PCB and software containing many applications which run on Over the Internet (OTT) platform and media is streamed to television sets for display. These devices do not receive signals from satellite/cable/terrestrial to convert them in the form suitable for display on the television screen. These devices are, therefore, correctly classifiable under sub-heading 8517 62 90. Following Rule 3(b) of the General Rules of Interpretation, the classification of Fire TV Stick 4K Max, a kit comprising HDMI Digital Media Receiver Model Number K2R2TE with Alexa voice remote 3rd Generation Model No. L5B83G would be the classification of HDMI Digital Media Receiver that imparts the essential function to the device, and that is Heading 8517 and more specifically sub-heading 8517 62 90.

Issues Involved:
1. Classification of HDMI Digital Media Receiver [Model No. K2R2TE] with Alexa Voice Remote 3rd Generation [Model No. L5B83G] as a kit (Fire TV Stick 4K Max).
2. Eligibility and validity of the application for advance ruling.
3. Applicability of the proviso to Section 28-I(2) of the Customs Act, 1962.

Detailed Analysis:

1. Classification of HDMI Digital Media Receiver [Model No. K2R2TE] with Alexa Voice Remote 3rd Generation [Model No. L5B83G] as a kit (Fire TV Stick 4K Max):

The applicant, M/s. Amazon Wholesale India Private Limited, sought an advance ruling on the classification of the Fire TV Stick 4K Max under Section 28H of the Customs Act, 1962. The device is described as a network appliance and entertainment device, designed to stream digital audio/video content via the internet. It connects to the HDMI port of a television and requires an internet connection to function, as it does not support cellular services or receive signals from satellite/cable/terrestrial sources.

The classification of this set (Fire TV Stick with remote) is governed by Rule 3(b) of the General Rules of Interpretation (GI Rules) under the Customs Tariff Act, 1975. Rule 3(b) states that a set of different items will be classified as per the item which gives the 'essential character' to the entire set. In this case, the essential character is given by the Fire TV Stick, which performs the main functions of streaming audio/video. Therefore, the set will be classified according to the classification of the Fire TV Stick.

The applicant argued that the Fire TV Stick should be classified under sub-heading 8517 62 90, as it is a machine used for the reception, conversion, and transmission of data. This classification was supported by a previous ruling by the Customs Authority for Advance Ruling (CAAR) in the applicant’s own case for earlier models of Fire TV Sticks, which were classified under CTH 8517 62 90 as communication apparatus.

The concerned Principal Commissioners/Commissioners of Customs also suggested the classification of the Fire TV Stick under sub-heading 8517 62 90, except for the Commissioner of Customs, Chennai-II (Sea - Import), who suggested separate classifications for the Fire TV Stick and the remote.

2. Eligibility and Validity of the Application for Advance Ruling:

The Commissioner of Customs, NS-V, JNCH, Mumbai, contended that the application should be rejected under the proviso to Section 28-I(2) of the Customs Act, 1962, as a Show Cause Notice (SCN) regarding the classification of earlier models of Fire TV Stick had been issued to a group company of the applicant, M/s. Amazon Seller Services Pvt. Ltd. (ASSPL). However, it was noted that the applicant and ASSPL are distinct legal entities, and the matter was not pending in the applicant’s own case.

The applicant cited the judgment of GSPL India Transco Limited v. Union of India, where the Hon’ble Gujarat High Court held that an advance ruling application is not barred if the issue is pending in the case of a related but distinct legal entity. The High Court emphasized that an advance ruling would only be binding on the applicant and the tax authorities, and since the issue was not pending in the applicant’s own case, the application was maintainable.

3. Applicability of the Proviso to Section 28-I(2) of the Customs Act, 1962:

The proviso to Section 28-I(2) states that the authority shall not allow the application where the question raised is already pending in the applicant’s case before any officer of customs, the Appellate Tribunal, or any Court. The Commissioner of Customs, NS-V, JNCH, argued that since a SCN on the same matter had been issued to ASSPL, it would imply that the question raised was pending before an officer of customs in the applicant’s case. However, the authority found this contention to be without merit, as the applicant and ASSPL are separate legal entities with distinct PAN and IEC.

Conclusion:

The HDMI Digital Media Receiver [Model No. K2R2TE] is a reception apparatus for voice, image, and other data in a wireless network such as LAN/WAN. It does not receive signals from satellite/cable/terrestrial sources. Therefore, it is correctly classifiable under sub-heading 8517 62 90.

Following Rule 3(b) of the General Rules of Interpretation, the classification of the Fire TV Stick 4K Max as a kit, comprising the HDMI Digital Media Receiver [Model No. K2R2TE] with Alexa Voice Remote 3rd Generation [Model No. L5B83G], would be the classification of the HDMI Digital Media Receiver, which imparts the essential function to the device. Thus, the Fire TV Stick 4K Max is classified under Heading 8517 and more specifically sub-heading 8517 62 90.

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