Case Law Details
In re Amazon Wholesale India Private Limited (CAAR Delhi)
The Customs Authority for Advance Ruling, Delhi, recently issued a decision in the matter of Amazon Wholesale India Private Limited. The ruling concerns the classification of Amazon Echo Dot (5th Generation) devices and their eligibility for import tax exemptions. This article provides a detailed analysis of the ruling and its implications.
Background and Ruling: The Customs Authority for Advance Ruling (CAAR) considered a petition for the modification of Advance Ruling No. CAAR/Del/Amazon/15/2023 dated 12/07/2023. The original ruling addressed the classification of two Amazon Echo Dot variants and the applicability of certain import tax notifications.
The ruling determined that both Echo Dot variants, Echo Dot (5th Generation) and Echo Dot (5th Generation) with clock, fall under Sub-heading 85182210 of the first schedule to the Customs Tariff Act, 1975. It also concluded that the exemption under serial number 20 of Notification No. 57/2017-Cus. is not admissible. Furthermore, it stated that the goods in question are “hearable devices,” making them ineligible for exemption under serial number 10 of Notification No. 12/2022-Cus.
Grounds for Modification: The applicant sought modification of the ruling on the following grounds:
i. The concessional rate benefit under serial number 10 of Notification No. 12/2022-Cus. was disallowed without considering the definition of ‘hearable’ provided in Notification No. 12/2022.
ii. To qualify as a ‘hearable device,’ a product must meet specific conditions, including being a portable speaker with a battery as a power source and Bluetooth connectivity. The applicant argued that the ruling failed to consider these conditions, asserting that the devices in question do not meet the criteria. They argued that the devices are not portable speakers and do not have a battery as a power source.
Legal Basis for Modification: The CAAR, in its ruling, acknowledged its authority to modify an order or advance ruling if it was pronounced under a mistake of law or fact, as per Regulation 21 of the Customs Authority for Advance Rulings Regulations, 2021. However, this authority is limited to correcting mistakes and not for reviewing its own rulings.
Conclusion: In this case, the CAAR found that the original ruling was not made under a mistake of law or fact. It was issued after due consideration of the relevant facts and legal provisions. Consequently, the CAAR determined that Regulation 21 of CAAR Regulations, 2021 could not be invoked to modify the ruling.
The modification petition was dismissed, and the original ruling regarding the classification of Amazon Echo Dot devices and the associated import tax exemptions remains in effect. This decision underscores the importance of clarity in tax regulations and the need for businesses to seek advance rulings to ensure compliance with tax laws.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
1 have gone through the petition for modification of Advance Ruling No. CAAR/Del/Amazon/15/2023 dated 12/07/2023 in terms of regulation 21 of the Customs Authority for Advance Rulings Regulations, 2021, and heard the applicant during the personal hearing held on 01 09 2023
2. The aforesaid ad’ ante ruling was pronounced on the question of classification of Echo Dot (5th Generation) Model No. C2N6L4 I` Echo Dot (5th Gent, in short] and Echo Dot (5111 Generation) with clock Model No. C4E8S3 I ‘Echo Dot (5thGen) with clock’, in short] Ruling was also pronounced on the question of applicability of notifications on import of the subject goods. The said Ruling held that “Echo Dot (5th Generation) Model No. C2N6L4 and Echo Dot (5th Generation) with clock Model No. C4E8S3 are classifiable under Sub-heading 85182210 of the first schedule to the Customs Tariff Act. 1975. Vide the said Ruling, it was also held that the exemption under serial number 20 of Notification No. 57/2017-Cus. dated 30.06.2017, as amended, is not admissible and based on the above meaning of bearable 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.
3. The applicant has mentioned the following grounds for modification of the said advance ruling:
(i) Concessional rate benefit under serial number 10 of Notification No. 12/2022-Cus. has been disallowed without consideration of a crucial aspect of the definition of ‘hearable. as provided under Notification No. 12/2022, whereas goods falling under Sub-heading 851822 are eligible for concessional rate of duty under serial number 10 of Notification No. 12/2022-Cus.
(ii) To qualify as a ‘hearable device’, a good must meet both the conditions i.e. it should be a portable speaker, with battery as a source of power and it should have bluetooth connectivity however said advance ruling has failed to consider these conditions and the subject devices do not fulfil the material criteria i.e. it is not a portable speaker and do not have battery as a source of power.
4. It is pertinent to mention that the said advance ruling has been issued by the Authority following the due procedure. It is a speaking order providing specific reasons for classifying the goods in question and answering the question regarding applicability of exemption notifications.
5. This Authority is a creation of law, as detailed in Chapter V-B of the Customs Act, 1962. Section 28M(l) of the Customs Act, specifically prescribes that the Authority shall follow such procedure as may be prescribed. The procedure etc. Have been notified by the Central Board of Indirect Taxes and Customs under Customs Authority for Advance Rulings Regulations, 2021 vide Notification No. 01/2021-Customs (N.T.) dated 04.01.2021, as amended. Regulation 21 relates to modification of order or advance rulings, which reads as follows: The Authority may suo ?now or on a petition by the applicant or the Principal Commissioner or Commissioner but before pronouncement of an advance ruling or before an advance ruling pronounced has been given effect to, on being satisfied that an order or advance ruling was pronounced under mistake of law or fact, modify such order or advance ruling in such respects as it considers appropriate, after allowing the applicant and Principal Commissioner or Commissioner concerned reasonable opportunity of being heard.
6. The said regulation empowers this Authority to modify its orders or rulings in the event that the same was pronounced under mistake of law or fact. This power is only to modify the ruling and is evidently not a power to review its own ruling. The provisions of Chapter V-B of the Customs Act, 1962 do not provide for powers of review, even as appeal provisions are duly included.
7. I also find that in the instant application, the advance ruling pronounced by this Authority on the question of classification of Echo Dot (5th Gen) and Echo Dot (5th Gen) with clock was neither under a mistake of law nor of fact. It is a ruling pronounced after due consideration of facts and law. Under the circumstances, provisions of regulation 21 of CAAR Regulations, 2021 cannot be invoked in the instant case.
8. The modification petition dated 16.08.2023 is, therefore, dismissed
