Amazon Fire TV Stick 4K Max classifiable under sub-heading 8517 62 90

In re Amazon Wholesale India Private Ltd (CAAR Delhi)

CAAR held that 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.

Therefore, rule that 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  with Alexa voice remote 3′ 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.

FULL TEXT OF ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI

M/s Amazon Wholesale India Private Limited. New Delhi, a company having IEC No. 0513081950 and PAN AAMCA0671Q, (M/s Amazon Wholesale, in short) has filed an application dated 10.09.2021 seeking advance ruling on the question of classification of HDMI Digital Media Receiver [model No. K2R2TE] with Alexa Voice remote 3r^d Generation Model No. L5B83G as a kit (Fire TV Stick 4K Max) 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 registered under Serial No. 15/2021-Delhi dated 10.09.2021.

2. On registration of the application, the six concerned Principal Commissioner/Commissioner of Customs, viz. (i) Delhi Air Cargo, (ii) Bangalore Air Cargo, (iii) Chennai Air Cargo, (iv) Chennai Sea, (v) Nhava Sheva/JNCH Sea, and (vi) Mumbai Air cargo were requested vide letter dated 17.09.2021 to furnish their comments in the matter. The comments from all the six concerned Principal Commissioner/Commissioners have been received and discussed later in this order.

3. The applicant vide their written submissions dated 09.09.2021 have described the features and functionality of Fire TV Stick 4K Max and possible CTH classification as under:

3.1 Features: Fire TV Stick 4K Max is a network appliance and an entertainment device, also known as digital media receiver, designed to stream digital audio/video content via the interne. It is an HDMI digital media receiver designed to stream digital audio/video content to high-definition television. It connects to the HDMI port of a television. Once connected, the user gets access to television episodes and movies on Amazon Instant Video, Netflix, HBO NOW, and more via the internet. The user can also play games, music and download additional applications. The source of signals for Fire TV Stick is Internet. The device comes with inbox voice remote control and accessories. Fire TV Stick is not capable of receiving signals from satellite/cable/terrestrial source to convert them in the form suitable for display on the television. Fire TV Stick does not support cellular services. It requires an internet connection to perform the functions, i.e., they do not have modem incorporated in them. The Alexa voice remote is primarily meant to operate the Fire TV Stick via Bluetooth when paired with the remote. Being infrared enabled, the Alexa voice remote can also be used to control other devices (such as compatible TVs, satellite boxes etc.).

3.2 Functioning: A user sends instruction either by way of audio instruction through inbuilt microphone in the remote or by pressing buttons on the remote. Such instructions are to select the programme/movie/any other media that the user wants to watch through Fire TV Stick. These instructions are transmitted wirelessly in the form of RF signals via Bluetooth to the Fire TV Stick and further transmitted to Amazon server on cloud through the medium of internet. The specific signals containing the media requested by the user are received in return by the Fire TV Stick from the Amazon server in the form of RF signals. These signals are processed and converted into a form readable by a television. The processed signals are then transmitted to the connected television so that the requested media can be viewed by the user. Notably, the Fire TV Stick is not capable to receive signals from satellite/ cable/ terrestrial source to convert them in the form suitable for display on television.

gdfg

3.3 Classification 01 subject devices:

1.1.1 As noted above, the Fire TV Stick conies along with remote control & accompanying accessories for retail sales. Thus, classification of this set (i.e. Fire TV Stick with remote) is governed by Rule 3(b) of the ( iencral Rules of Interpretation (`G1 Rules’) as given under First Schedule of Customs Tariff Act, 1975. Rule 3(h) of (11 Rules provides that a set of different items will be classified as per that item which gives the ‘essential character’ to the entire set. It is submitted, in the instant case, the accompanying remote is only meant to operate the Fire TV Stick, ‘‘ bile the main functions, viz. streaming audio/video is performed by Fire TV Stick. Therefore, the essential character is given to the set by Fire TV stick only, and the set will be classifiable as per the classification of Fire ‘I’V stick. This view has also been endorsed by CBIC vide Circular No. 01/2013-Cus dated 01.01.2013, whereby it was clarified that the main device (i.e., the device which is to be controlled using the remote control) shall give the essential character to the set consisting of device & remote control.

3.3.2 As is evident from the features & functions of the Fire TV Stick (described in foregoing paras), the said device transmit/receive RF signals carrying the user’s instructions, converts the same into a readable format & transmits the said instructions to the Amazon server. Once the request is processed in the server, the Fire TV Stick receives the results in RF signal format and transmits the same to the television to be displayed on the screen. Therefore, Fire TV Stick is a machine used for reception, conversion & transmission of data, classifiable under sub-heading 8517 62 90. Relevant Tariff Entry is being extracted below, for the ease of reference:

Description of Good%

851″ Telephone sets. including telephones 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

851 62 – Machines for the reception, conversion and minsmi^,sion or regeneration of take, images or other data, including switching and routing apparatus:

85176290  —–Other

3.3.3 Reliance is placed upon the Advance Ruling No. CAAR/Del/Amazon/15/2021 dated 05.07.2021 issued by the Customs Authority for Advance Ruling, New Delhi (`CAAR New Delhi’) in Applicant’s own case, wherein previous models of Fire TV Sticks (Fire TV Stick Lite 1′ Gen & Fire TV Stick 3r^d Gen), have been held as classifiable under CTH 8517 62 90, as communication apparatus. Vide the aforesaid ruling, CAAR New Delhi has held that the Fire TV Sticks are reception apparatus for voice/ image & other data in wireless network, thus classifiable under sub-heading 8517 62. Notably, vide the aforesaid ruling it was also observed that since Fire TV Sticks cannot receive satellite/ cable/ terrestrial signals, the same cannot be classified under CTH 8528.

The comments of the concerned Principal Commissioner/Commissioner were shared with the applicant. The suggested classification of the goods under consideration can be summarized as below:

4.1 Commissioner of Customs, NS-V, JNCH has mentioned that applications filed by a group company of Amazon Seller Services Pvt. Ltd./ASSPL pertaining to classification of earlier models of Fire TV Devices are pending before the Customs Authority for Advance Rulings, Mumbai; and also, a Show Cause Notice was also issued by the Commissioner of Customs (Audit), Zone-1, Mumbai to ASSPL on the issue of classification of earlier models of Fire TV Devices. In this regard, he has also mentioned that ASSPL vide Writ Petition No. WP/474/2020 approached the Hon’ble Bombay High Court seeking stay on adjudication of the SCN issued by the Commissioner of Customs (Audit), wherein Hon’ble High Court granted interim stay vide order dated 24.02.2020. He has therefore, submitted that as the issue of classification of earlier items are pending before the Commissioner of Customs (Audit), NCH, Mumbai – I, therefore, as per sub-section 2(a) of Section 281 of Customs Act, 1962, it appears that application is liable for rejection.

4.2 On the issue of eligibility of the applicant and validity of the application, it is seen that ACC (Import), New Delhi and ACC (Import), Mumbai have stated that the applicant is eligible and the application is valid/nothing has come to its notice that the matter in applicant’s case is pending before any officer of Customs, Appellate Tribunal or any Court or that the matter has already been decided by the Appellate Tribunal or any Court.

4.3 The applicant has cited reference to the provisions of Section 28-I (2) to contend that the application is not hit by the proviso to the said section, and in this regard, cited reference, inter alia, to on judgment of GSPL India Transco Limited v. Union of India, 2013 (32) S.T.R. 271 (Guj.). The applicant has argued that in the said case, the Hon’ble Gujarat high Court had the occasion to examine similar issue posed in the context of Advance Ruling mechanism envisaged under the Finance Act, 1994 (`Finance Act’). In the said case, the Advance Ruling Authority had rejected the application of the assessee-applicant by holding that an identical issue was pending before CESTAT in the case of applicant’s holding company, and therefore, the application was barred in terms of proviso to Section 96D(2). It is pertinent to note, proviso (a) to Section 96D(2) of the Finance Act, which is pari materia to Section 28-1 of the Customs Act, also contained a similar embargo, providing that “the Authority shall not allow the application where the question raised in the application is already pending in the applicant’s case before any Central Excise Officer, the Appellate Tribunal or any Court…”. In this background, the Hon’ble High Court held that the applicant and its holding companies were distinct legal persons, and even if the issue pending before CESTAT in the matter of holding Company’s was the same as that involved in the AAR – since the matter was not pending in applicant’s own case, proviso(a) to Section 96D (2) was inapplicable. The Hon’ble High Court emphasized that an advance ruling would only be binding on the applicant & the tax authorities, and since the issue pending before CESTAT was not in applicant’s case, passing of an advance ruling would not result in conflicting or incompatible decisions for the same party and held that the AAR was maintainable. It is submitted, that the aforesaid ratio is squarely applicable to the facts of the instant case.

4.4 I find that Commissioner of Customs, NS-V, JNCH has essentially contended that since a SCN regarding the classification of earlier models of Fire TV stick has been issued to M/s Amazon Seller Services Pvt. Ltd. (ASSPL) by Commissioner of Customs (Audit), Mumbai Customs Zone -I, a group company of M/s Amazon Wholesale, the applicant in the instant case, the application is hit by proviso (a) to section 28-I (2).

4.5 I find that I have had the occasion to examine the said issue in my earlier ruling relating to the present application and the same group company with reference to the same SCN in Ruling No. CAAR/Del/Amazon/15/2021 dated 05.07.2021. It is seen that the first proviso section 28-I (2 prescribes that the authority shall not allow the application where the question raised in the application is, – (a) already pending in the applicant’s case before any officer of customs, the Appellate Tribunal or any court; (b) same as in the matter is decided already by the Appellate Tribunal or any court. Taking liberty to paraphrase the contention of the Commissioner of Customs, JNCH, I find his argument to be that since a SCN on the same matter has been issued to ASSPL (a group company of the Applicant), it would tantamount to question raised in the application being already pending before an officer of customs in the applicant’s case. For this contention to be valid, it would imply that the distinction between ASSPL and the applicant, two independent legal entity, albeit group company, be ignored and they be treated as same. The fallacy of the intended contention of the Commissioner of Customs, JNCH is all too obvious. The two entities are separate legal entity, incorporated as distinct Private Limited Company, bearing separate PAN and IEC. In view of the above, I find that this objection to be without merit and hold that the said proviso (a) to section 28-I (2) is not applicable in the instant case, since nothing has been brought on record before me that the question of classification of Fire TV Stick is pending before any officer of customs or Appellate Tribunal or any court in respect of applicant, viz. M/s Amazon Wholesale India Pvt. Ltd. Further, therefore, in terms of section 28-I (2) of the Customs Act, I allow this application and proceed to discuss the question of classification of Fire TV Stick 4K Max posed before me for advance ruling.

5. In the personal hearing in virtual mode held on 16.11.2021, the authorized representative of the applicant re-iterated the submissions made in this application and emphasized that although the functionality of the product, viz. Fire TV Stick 4K Max is same as of the earlier versions of Fire TV Stick, on which advance ruling by this Authority has already been obtained, the product under question is different and a more advanced version of the earlier device. Therefore, a separate ruling on the same is requested. On the contention regarding the admissibility of the application, as raised by the Commissioner of Customs, NS-V, JNCH, they referred to the previous ruling of this Authority wherein the said contention regarding admissibility on account of a SCN issued on the same/similar product to another party has already been decided.

5.1 Since comments of some of the concerned Principal Commissioner/ Commissioners had not been received, it was decided that it would be appropriate to provide another opportunity for submit their comments. Accordingly, the next date for personal hearing was fixed on 30.11.2021, which was eventually conducted in virtual mode on 10.12.2021, combining the same with PH regarding another application relating to classification of different set of items. In the PH on 10.12.2021, Mr. Laxmikumaran, Advocate emphasized that Fire TV Stick 4K Max merits classification under sub­heading 8517 62 90, as it is an apparatus for the reception and transmission of data, referring to the earlier ruling of this Authority.

6. I now proceed to discuss the salient features of the product under question and issues germane to its classification. I note that advance ruling has been sought on the classification of `HDMI Digital Media Receiver [model number K2R2TE] with Alexa voice remote 3r^d Generation Model No. L5B83G as a kit’ (emphasis supplied), commonly known as Fire TV Stick 4K Max. No separate ruling has been sought in respect of classification of HDMI Digital Media Receiver [model number K2R2TE] and Alexa voice remote 3r^d Generation Model No. L5B83G; and therefore, this ruling shall apply only to Fire TV Stick 4K Max as a kit. I agree with the contention of the applicant that the essential character of the device is determined by the HDMI Digital Media Receiver and the Alexa voice remote is meant only to operate the Digital Media Receiver. Therefore, 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].

7. I observe that 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. I also observe the applicant in his submission has emphasized on the functional similarity of the product under discussion and of the earlier versions, i.e., Fire TV Stick 1st Gen and 3′ Gen, on which an advance ruling has been issued by me. The relevant text of the said ruling is as under:

“14.2 Having perused the alternate contentions, I_.find that the question to be determined is whether Fire TV Stick/HDMI Digital Media Receiver is essentially and substantially a reception apparatus for television, akin to a set top box; or is a device designed for and capable of functions beyond or different from reception of broadcast signals and conversion of the same into a signal suitable for display. On the basis of the description and functions of the device, as submitted by the applicant and information available in public domain, I find that Fire TV Stick is 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, thus not hit by the exclusions mentioned in the CTH 8528. Therefore, HDMI Digital Media Receiver [model number S3L46N1 with Alexa Voice Remote Lite ^(pt Gen) [Model H69A73] as a kit; and HDMI Digital Media Receiver [model number S3L46N] with all-new Alexa Voice Remote (Alexa Voice Remote 2n^d Gen) [Model No. L5B83HJ as a kit are appropriately classifiable under sub-heading 8517 62, and more specifically sub-heading 8517 62 90.”

7.1 In this regard, I have also noted that the concerned Principal/ Commissioners of Customs have suggested classification of the said product under sub-heading 8517 62 90, other than Commissioner of Customs, JNCH who has contested the eligibility of the application.

8. In view of the above, I conclude that 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.

Therefore, rule that 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  with Alexa voice remote 3′ 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.