'Nomenclature Cannot Be Sole Basis For Classification': Delhi HC Allows Customs Duty Exemption Claims For Certain Models Of Amazon's Echo Dot
The Delhi High Court has held that Amazon's Echo series, specifically Echo Show 5, Echo Dot 4th Generation, and Echo Dot 4th Generation with Clock are eligible to claim exemptions from Customs Duty.
The Court observed that the nomenclature alone would not constitute a defining basis for the purposes of answering a question of classification.
In that context, the Bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that, "the mere description of the product as a "hair oil" or "shampoo" would not be conclusive for the purposes of classification under the CTH. The decisions in Sarvotham Care and Ashwani Homeo thus clearly explain the legal position to be that nomenclature alone would not constitute a defining basis for the purposes of answering a question of classification."
It was further said that, "When the aforesaid principles are applied to the facts at hand, it becomes clear that merely because the appellant or others had chosen to describe the products as smart speakers, the same could have neither been accepted as being conclusive of the issue that arose nor could the description of the products detracted from the right of the appellant to urge the AAR to examine the issue of classification by applying the dominant function test."
Counsel V. Lakshmikumaran, among others, appeared for the appellant, while Senior Counsel Satish Kumar appeared for the respondents.
In this case, Amazon Wholesale India challenged the Customs Authority for Advance Rulings (CAAR)'s classification of 11 devices under Customs Tariff Headings (CTH) 8518 and 8528.
Amazon argued that the devices, known as "Echo Family Devices," should be classified under CTH 8517. The dispute centred on whether the devices were primarily speakers (CTH 8518), monitors (CTH 8528), or communication devices (CTH 8517).
The CAAR concluded that the Echo 4th generation devices were "smart speakers" under CTH 8518, while Echo Show Devices were monitors under CTH 8528.
Amazon asserted that the devices were "convergence devices" for data transmission, reception, and conversion, falling under CTH 8517. The department argued for classification as smart speakers per a 2022 customs notification. The case hinged on the interpretation of the devices' principal functions and their alignment with specific tariff entries.
The Court observed that, "the impugned devices perform a host of functions including reception, conversion and transmission of voice or other data to produce the requisite final output warranting their classification under CTH 8517. We are also of the firm opinion that merely because these devices could if so chosen by the user also be used as mere speakers, the same would not justify us recognising their primordial attribute to be that of a speaker alone."
In light of the same, the Court was unable to uphold the view taken by the AAR denying the classification of Echo Show 5, Echo Dot 4th Generation and Echo Dot 4 th generation with Clock under CTH 8517 and more particularly Tariff Entry 8517 62 90/8517 69 90. Resultantly, the the denial of exemption benefits to those products was also not sustained.
Cause Title: Amazon Wholesale India Pvt. Ltd. vs Customs Authority of Advance Ruling
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