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TMI Blog2023 (7) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... rd etc. where the goods in question have been described as 'Smart Speakers' and emphasis is on the best sound with deeper bass and clearer vocals which are the features related to principal function of the device i.e speaker. Description of Echo Dot 5th Gen by various websites indicates how the goods in question have been perceived and accepted by the general public and how such devices are being introduced before the public, which appears to be the best test to decide principal or essential function of a device and subsequently its classification under the Customs Tariff. In view of the goods in question being described as smart-speaker, it would be appropriate to discuss the coverage of goods under headings 8518. Heading 8518 covers Microphones and stands therefor: Loudspeakers, whether or not mounted in their enclosures: Headphones and Earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more Loudspeakers: Audio-Frequency Electric Amplifiers: Electric Sound Amplifier sets. Moreover, even w/o acting as communication devices for communicating with Amazon cloud/AVS, these devices can connect with smart phone and play songs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th Gen is being imported in commercial quantity, the authorized representative of the applicant has replied in affirmity. Since the commercial import of the goods in question is already underway, the maintaining confidentiality by invoking proviso to rule 27 of the Customs Authority for Advance Rulings Regulations, 2021, is not required in the instant matter. - CAAR/Del/15/2023 In Application No. VIII/CAAR/55/2022/338 to 343 - - - Dated:- 12-7-2023 - SAMAR NANDA (CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHI) Present for the Applicant : Ms. Jyoti Pal, advocate, Ms. Kruti Parashar, advocate, Mr. Anand Tripurari Present for the Department : None RULING M/s Amazon Wholesale India Private Limited, 14th Floor, Unit 1401 to 1421, Block E, International Trade Tower, Nehru Place, New Delhi- 110019, having IEC No. 0513081950 and PAN - AAMCA0671Q (applicant, in short) has filed an application dated 23.12.2022, received in this office on 29.12.2022 seeking advance ruling under section 28-H of the Customs Act, 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi, in short). The application was accordingly registered under Serial No. 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as voice interaction, music playback, making to-do lists, setting alarms, streaming podcasts, playing audio books, providing weather, traffic update, other real-time information and controlling smart devices; the user can also set a routine for performance of these functions basis the ultrasonic-based presence and motion detection by Echo Dot devices; the Echo Dot devices have an ultrasonic-based presence and motion detection feature to detect and react to common household and customs sounds such as when a user enters or exits a room. 3 .4 The applicant has also submitted technical details of Echo Dot devices as under: Particulars Echo Dot (5th Gen) Echo Dot (5th Gen) with clock Dimensions (mm) 100mm x 100mm x 89mm 100mm x 100mm x 89mm Weight (g) 304 grams 304 grams Ambient Light Sensor (ALS) Not Applicable Yes CPU/ Processor Mediatek MT8519 Mediatek MT8519 Storage 512MB Discre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stored in the user's phone; when they are connected to an external speaker, the audio output is played through the external speaker instead of their internal speaker; the Echo Dot devices do not support cellular services; they require an internet connection to perform their functions i.e. they do not have modem incorporated in them; the Echo Dot devices are not Multiple Input Multiple Output (MIMO, in short) and/or Long Term Evolution (LTE, in short), products; moreover, the Echo Dot devices have introduced a new way to enable the users to interact with them through an ultrasonic-based presence and motion detection feature; this feature enables devices to detect when someone enters or exits a room; the users can now feed an Alexa Routine trigger in the Alexa App to assign this gesture as some behavior, such as pause/play music or turn on/off smart home devices (e.g., lights) when someone enters or exits a room. 3.7 As regards classification of the Echo Dot devices, it is submitted by the applicant that these devices receive voice data (audio signals) from the user; the captured voice command is then sent over the internet to Amazon service in the cloud called AVS; Amazon se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of name/nomenclature used for advertising/marketing; it is trite law that the classification has to be governed by examining the true nature of the products and hence the Echo Dot devices cannot be classified under heading 8518 simply because they are advertised as 'smart speakers'. 3.11 The applicant is of the view that, Echo Dot devices do not fall under any of the exclusion categories given under serial number 20 of Notification No. 57/2017-Cus. dated 30.06.2017. hence they are eligible to claim benefit of the notification; however, without prejudice, if the classification of Echo Dot devices is confirmed under the heading 8518, they are eligible to take benefit vide serial number 10 of Notification No. 12/2022-Cus dated 01.02.2022 which provides concessional rate of duty to 'All goods, other than hearable devices'; the definition of the term 'hearable devices' inter-alia means 'portable bluetooth speakers comprising of an amplifier and loudspeaker(s) with maximum output power not exceeding 40 Watts, having battery as a source of power and capable of wireless connectivity through bluetooth; in the present case, the Echo Dot devices are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm; thus the principal function of Echo Dot Device is 'input thorough the inbuilt microphone and output through the inbuilt speakers' and thus, it merits classification under Customs Tariff Subheading 85182210 of the Customs Tariff Act; even if it is considered that the device Echo Dot (5th Generation) has two principal functions equally important for it to function fully, then there is need to refer to rule 3 (c) of the GRI which provides that 'when by application of rule 2(b) or for any other reason, goods are, prima-facie, classifiable under two or more headings, classification shall be affected as follows: '(c) when goods cannot be classified by reference to rule 3(a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.'; so, the items in question, Echo dot (5th Gen) Echo dot (5th Gen) with clock, merits classification under Sub-heading 85182210 of the Customs Tariff Act. The said comments also drew attention to the Ruling No. CAAR/Del/Amazon/17/2021 dated 20.07.2021 issued by CAAR, New Delhi and judgement of the Tribunal in the case of M/s Logic India Trading Co. Vs. Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner. In the end, she requested for classifying the products in questions as communication device under Chapter Sub-heading 85176290. The Authority enquired as to whether the applicant has already imported the products in question and if yes, under which Sub-heading, same have been taken cognizance by the applicant. The representative of the applicant promised to provide the requisite information, at the earliest. 7. Finding that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021, having heard the applicant, and recognizing the importance of timely pronouncement of rulings, I proceed to examine the question on merits. 8. I note that CAAR, New Delhi, had issued an advance ruling dated 05.10.2021 in the application for advance ruling filed by M/s. Spraytec India Ltd. wherein, while noting that goods in question have been imported in the past, the Authority had also observed that the application for advance ruling relates to the on-going activity. However, a ruling by the Authority shall impart certainty to the issue of appropriate classification, provided that the jurisdiction of this Authority is not ousted by provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines consisting of two or more machines fitted together to form a whole and other machine designed for the purpose of performing two or more complimentary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. 9.3 The heading 8517 of the Import Tariff, which has been suggested by the applicant for the goods in question covers Telephone sets, Smartphones and other Telephone for Cellular Networks or for other Wireless Networks; other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network), other than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528. It is the contention of the applicant that goods in question are in the nature of other apparatus for the transmission or reception of voice, images or other data, whose basic function being communication. 9.4 However, a number of articles regarding launch of Echo Dot 5th Generation in India are available in the public domain on various internet websites such as Times of India, Business St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heless the principal function as speaker. Therefore, guided by Rule 1 and Rule 3 of GRI and Note 3 of Section XVI of the Import Tariff, I find that the said the goods in question being treated as smart-speakers, merit classification under heading 8518. 9.7 In continuation, it is also noted that the concerned Commissioner has raised valid provisions for classification of the goods in question under heading 8518 and has correctly mentioned inter-alia that even if it is considered that the device Echo Dot (5th Generation) has two principal functions equally important for it to function fully, then there is need to refer to rule 3 (c) of the GRI which provides that 'when by application of rule 2(b) or for any other reason, goods are, prima-facie, classifiable under two or more headings, classification shall be affected as follows: '(c) when goods cannot be classified by reference to rule 3(a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.'; so, the items in question, Echo dot (5th Gen) Echo dot (5th Gen) with clock, merits classification under Sub-heading 85182210 of the Customs T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. is not admissible. As regards applicability of exemption from duties, as per serial number 10 of Notification No. 12/2022-Cus. dated 01.02.2022, it is noted that under the said serial number of Notification No. 12/2022-Cus. dated 01.02.2022, concessional rate of duties is applicable on all goods other than hearable devices falling under Sub-heading 851821, 851822, 851829 or 851830 and as per the Notification hearable devices inter-alia means portable Bluetooth speakers comprising of an amplifier and loudspeaker(s) with maximum output power not exceeding 40 Watts, having battery as a source of power and capable of wireless connectivity through Bluetooth. As per the declaration of the applicant that the goods in question are blue-tooth/wi-fi enabled capable of wireless connectivity. Based on the above meaning of hearable devices, goods in question are hearable devices thus exemption vide serial number 10 of Notification No. 12/2022-Cus. dated 01.02.2022 is not admissible. 12. As regards applicant's question on effective rate of duty on import of Echo Dot devices, it is ruled that the provisions laid down under Chapter VB of the Customs Act, 1962, relating to Advance Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X
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