Case Law Details

Case Name : In re Amazon Seller Services Pvt. Ltd. (CAAR Mumbai)
Appeal Number : Order No. CAAR/Mum/ARC/03-12/2022
Date of Judgement/Order : 17/02/2022
Related Assessment Year :
Courts : CAAR

In re Amazon Seller Services Pvt. Ltd. (CAAR Mumbai)

M/s. Amazon Seller Services Pvt. Ltd. (the applicant, hereinafter) had filed 10 applications for advance rulings before the Authority for Advance Rulings, Customs, Central Excise and Service Tax, New Delhi (AAR, hereinafter). These applications were pending at the time of appointment of the Customs Authorities for Advance Rulings at New Delhi and Mumbai (CAAR, hereinafter), and therefore, under the relevant statutory provisions, these 10 applications were transferred to the CAAR, Mumbai. The applicant was asked by the Secretary to the CAAR, Mumbai as to whether they are still interested in receiving advance rulings in these pending applications. In reply, the applicant informed that they are interested in receiving advance rulings and would file applications in revised format in due course. Thereafter, the applicant filed these applications in August, 2021. The relevant information in respect of these 10 applications are shown in a tabular format below: –

Sr. No. Application No. Nature of
ruling sought
Date of Application before AAR, New Delhi Remarks
1. CAAR/CUS/APPL/23/2021

Classification and eligibility
for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended, in respect of the device Echo Portable Smart Speaker (Model No. RA73E6)

11.11.2019

1. The applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CB IC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. In the application
submitted in August, 2021, the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

4. In the comments received from Chennai Sea Port, the suggested classification is sub-heading 85198990 whereas, the Air Cargo
Complex, Mumbai is of the opinion that while the correct classification is sub-heading 85176290, benefit of Sr. No. 20 of the Notification No. 57/2017- Cus., dated 30.06.2017 is not available.

2.  CAAR/CUS/APPL/26/2021

 Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended, in respect of the device Echo Show 10 (Model No. T4E4AT)

 17.08.2020

 1. The applicant originally requested for appointment of a Commissioner of Customs

2. Chairman, CBIC. appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. In the application submitted in August, 2021, the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

4. In the comments received from Chennai Sea Port, the suggested classification is sub-heading 85285900.

3. CAAR/CUS/APPL/31/2021

Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended, in respect of the following devices: – 1. Echo (4th Gen.), Model No. L4S3RE 2. Echo Dot (4th Gen.), Model No. B7W64E 3. Echo Dot (4th Gen.) with Clock, Model No. B7W644

17.08.2020

1. The applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CBIC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. In the application submitted in August, 2021, the applicant expressed desire to import the subject goods through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

4. In the comments received from Chennai Air Cargo Complex, the suggested classification is sub-heading 85182100.

It is also opined that the devices under consideration are not eligible for the benefit of Sr. No. 20 of the Notification No. 57/2017- Cus., dated 30.06.2017.

4. CAARJCUS/APPL/32/2021

Classification of Echo Studio (Model No. 02T2V3).

11.09.2019

1. The applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CBIC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. Comments sent by Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi dated 10.01.2020 proposed classification under subheading 85176290.

4. In the application submitted in August, 2021, the applicant has expressed their desire to import the subject goods through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

5. In the comments received from Chennai Air Cargo Complex, the suggested classification is sub-heading 85182200.

5. CAAR/CUS/APPL/33/2021

Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended in respect of the device Echo Dot (3rd Gen.) with Clock, Model No. 36EBT3

11.09.2019

1. The applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CB IC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. In the application submitted in August, 2021; the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

4. In the comments received from Chennai Air Cargo Complex, the suggested classification is sub-heading 85182100. The Air Cargo Complex, Mumbai is of the opinion that while the correct classification is sub-heading 85176290, the benefit of Sr. No. 20 of the Notification No. 57/2017- Cus., dated 30.06.2017 is not available

6. CAAR/CUS/APPL/34/2021

Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended in respect of the device Echo (3rd Gen.), Model No. R9P2A5.

11.09.2019

1. The applicant originally requested for appointment of a Commissioner of Customs

2. Chairman, CBIC. appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. Comments sent by Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi, dated 16.01.2020 propose classification under subheading 85176290.

4. In the application submitted in August, 2021, the applicant expressed their desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

5. In the comments received from Chennai Air Cargo Complex, the suggested classification is sub-heading 85182100. The Air Cargo Complex, Mumbai is of the opinion that while the correct classification would be subheading 85176290, the benefit of Sr. No. 20 of the Notification No. 57/2017- Cus., dated 30.06.2017 would not be available.

7. CAAR/CUS/APPL/38/2021

Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended, in respect of the device Echo Show 8 (Model No. C7H6N3)

09.01.2020

1. Applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CBIC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. Comments sent by Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi dated 11.11.2020 proposing classification under subheading 85176290.

4. In the application submitted in August, 2021, the applicant expressed desire to import through the air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

5. In the comments received from Chennai Sea Port, the suggested classification is sub-heading 84715000, while the Air Cargo Complex, Chennai is of the opinion that the correct classification would be subheading 85182100.

8.

CAAR/CUS/APPL/39/2021

Classification of the following devices: –

1. Digital Media Receiver (with touch screen), Model No. DW84JL

2. Digital Media Receiver, Model No. D9N29T

3. Digital Media Receiver, Model No. L9D29R

4. Digital Media Receiver, Model No. C1125P

5. Wireless Speaker Device, Model No. P5B83L

10.09.2018

1. The applicant originally requested for appointment of a Commissioner of Customs

2. Chairman, CBIC. appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. Comments sent by Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi, dated 05.09.2019 propose classification under subheading 85176290.

4. In the application submitted in August, 2021, the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

5. In the comments received from Chennai Sea Port, the suggested classification entries are 84715000 and 85182100; while the Air Cargo Complex, Chennai has proposed sub-headings 85176290 and 85182100.

The Air Cargo Complex, Mumbai has opined that the correct classification entry would be sub-heading 85176290.

9. CAARJCUS/APPL/40/2021

Classification of Echo Spot (Model No. VN94DQ).

09.03.2018

1. The applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CBIC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. In the application submitted in August, 2021, the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

4. In the comments received from Chennai Sea Port the suggested classification is 84715000 while the Air Cargo Complexes, Chennai and Mumbai both propose sub-heading 85176290.

10. CAAR/CUS/APPL/41/2021

Classification and eligibility for the benefit of Sr. No. 20 of Notification No. 57/2017- Cus., dated 30.06.2017, as amended, in respect of the device Echo Show 5 (Model No. H23K37)

16.05.2019

1. Applicant originally requested for appointment of a Commissioner of Customs.

2. Chairman, CBIC appointed Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi as jurisdictional Commissioner.

3. Comments sent by Principal Commissioner of Customs (Import), Air Cargo Complex, New Delhi dated 04.10.2019 proposing classification under subheading 85176290.

4. In the application submitted in August, 2021, the applicant expressed desire to import through air cargo complexes of New Delhi, Mumbai, Chennai and Bengaluru as well as the sea ports of Chennai and Nhava Sheva.

5. In the comments received from Chennai Sea Port, the suggested classification is sub-heading 84715000 while the Air Cargo Complex Chennai is of the opinion that the correct classification would be 85285900 and also that the benefit of Sr. No. 20 of the Notification No. 57/2017- Cus., dated 30.06.2017 would not be available.

2. In the ten applications listed above, classification and eligibility for exemption have been sought in respect of sixteen devices. Out of these, fifteen of the devices belong to Echo family of products. According to the applicant, these are voice command devices with multiple functions, including answering questions, playing music, reading newspaper/audio-books, providing traffic, weather and other real-time information and controlling smart devices. The Echo family devices are communication devices in the form of speaker with Alexa technology built in it. These devices respond to the name `Alexa’, which is the most common ‘wake word’. This ‘wake word’ can be changed by the user to either ‘Amazon’, ‘Computer’ or ‘Echo’. These devices have microphones to detect the wake word. Once, the devices, through microphones, analyse the wake word, they become functional and start recording the user’s voice. When the user finishes speaking, the devices send such voice command, after converting it to radio frequency signals, over the internet to Amazon. The service that processes this recording is called Alexa Voice Services or AVS. AVS converts the RF signals into commands that it interprets. Thereafter, it analyses the command and sends back the results to Echo device in question. The Echo device, in turn, converts the results into electric signals played as audio output on internal speakers and/or display screens for the user to hear/see them.

3. The only device, out of the sixteen, which is not an Echo family device is the wireless speaker Model No. P5B83L which is listed at the Sr. No. 5 at the Entry No. 8 of the preceding table. For this device, the applicant has proposed the sub-heading 85182100 and both Chennai Sea Port as well as Air Cargo Complex commissionerates agree with this proposition.

4. Three of the devices, namely, the Echo Show 5 (Model No. H23K37), 8 (Model No. C7H6N3), and 10 (Model No. T4E4AT) were listed for hearing on 30.09.2021. Shri Lakshmikumaran, advocate, appearing for the applicant, informed that the issue of classification of all these three devices were also before the Customs Authority for Advance Rulings, New Delhi and that the said authority has ruled that the classification of all these devices would be under the sub-heading 85286900. The learned counsel also stated that they have filed appeals against the rulings of the CAAR, New Delhi before the Hon’ble High Court of Delhi. On the issue of maintainability of the present applications, in view of the pending appeals, the learned counsel argued that the applicants before the CAAR, New Delhi and CAAR, Mumbai are different and therefore, the bar of the proviso (a) to the sub-section (2) of section 28-I of the Customs Act, 1962 would not apply. The learned counsel stated that they would submit arguments justifying their stand.

5. In their additional written submissions, the applicant has adopted the following lines of argument: – that, the Advance Ruling No. CAAR/DEL/ AMAZON/17/2021, dated 20.07.2021 was issued to M/s. Amazon Wholesale India Pvt. Ltd., while the applicant in these cases is M/s. Amazon Seller Services Pvt. Ltd., and therefore, the proviso (a) to section 28-I (2) of the Act has no application in these proceedings;

that, in the case of GSPL India Transco Limited [2013 (32) S.T.R. 271 (Guj.)], the Hon’ble Gujarat High Court had the occasion to examine an identical 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 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). 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 the holding company was identical, since the matter was not pending in applicant’s own case, proviso (a) to section 96D (2) was inapplicable;

that, the proviso (a) to section 96D (2) of the Finance Act is pari materia with section 28-I of the Customs Act;

that, the first and foremost rule of interpretation is literal interpretation. In the case of Hiralal Rattanlal [(1973) 1 SCC 216], the Hon’ble Supreme Court held that if the language of the provision in unambiguous, no other rule of construction can be applied. The aforesaid ratio has consistently been followed in the cases of Calcutta Knitwears [(2014) 362 ITR 673 (SC)], Grasim Industries [(2002) 4 SCC 297], Greatship (India) [2015 (39) STR 754 (Born)], and Dilip Kumar & Company [2018 (361) ELT 577 (SC)];

that, if proviso (a) is interpreted by disregarding the phrase ‘Applicant’s case’, it shall tantamount to ignoring the specific prescription of the statute. The Hon’ble Supreme Court, in the case of Chief Information Commissioner v. State of Manipur, 2012 [(286) E.L.T. 485 (S.C.)], observed that the legislature does not waste words or say anything in vain or for no purpose and that a construction which leads to redundancy of a portion of the statute cannot be accepted in the absence of compelling reasons;

that, as per Section 28J, an advance ruling is binding only on two parties, i.e., the applicant who had sought the advance ruling, and the jurisdictional commissioner of customs. By its very nature as well as statutory prescription, an advance ruling is binding only on the applicant who seeks such advance ruling. Therefore, the ruling dated 20.07.2021 was issued & is binding only on AWIPL, a separate entity, and to deny the opportunity of the statutory remedy of obtaining advance ruling to the applicant would be against the prescriptions of proviso (a) to section 28-I (2) as well as section 28J of the Act;

that, neither the Customs Act nor the Customs Authority for Advance Rulings Regulations, 2021 contain any provisions which confer the power on the authority to examine relationship between two separate legal entities, let alone reject an application on that basis. The CAAR being a creation of the statute, is bound by its provisions & procedure of the statute as held in the cases of G.D. Goenka World Institute [2018 (11) TMI 522 (P&H)] and National Oxygen [2010 (18) S.T.R. 241 (Mad.)].

6. All the 10 applications filed by the applicant were listed for personal hearing on 25.11.2021.

Shri Lakshmikumaran, appearing on behalf of the applicant, stated that out of the 16 devices involved in these applications, the CAAR, New Delhi has given rulings in respect of Echo 4th Gen., Echo Dot 4th Gen., Echo Dot 4th Gen. with clock, Echo Studio, classifying all of them under heading 8518; as also, in respect of Echo Show 5, 8, and 10, classifying them under heading 8528; and that, they have challenged these rulings before the Hon’ble Delhi High Court. Only in respect of the device Echo Sub, the classification ruled under heading 8518 was acceptable to them. The learned counsel emphasised that all the 15 Echo family devices are Alexa devices whose function is reception/conversion/transmission of speech/data etc. and the speakers/monitors of these devices are merely modes of conveying the output to the user and these speakers/monitors are not central to the functioning of these devices. The learned counsel also relied upon my own earlier decision in respect of ‘Apple HomePods’ and explained/emphasised the similarities between `Siri’ and `Alexa’ based devices. Shri Prabhakar Nigam, representing the Commissioner of Customs, Chennai – VII (Air Cargo Complex), argued that the proper classification of Echo family devices would be headings 8518 and 8528 since these devices are meant to primarily function has sound reproducing speakers or viewing screens, as the case may be.

7. I have considered all the material facts and evidences. It is a fact that the issue of classification of some of the Echo family devices listed above were under consideration of CAAR, New Delhi and after due consideration, the said authority has given rulings in respect of them. The applicant, being aggrieved by such rulings, have approached the Hon’ble High Court of Delhi for appropriate relief. The applicant is of the view that all the Echo family products merit classification under sub-heading 85176290. However, the CAAR, New Delhi has ruled that Echo (4th Gen.), Model No. L4S3RE; Echo Dot (4th Gen.), Model No. B7W64E; Echo Dot (4th Gen.) with Clock, Model No. B7W644; and Echo Studio (Model No. 02T2V3) are appropriately classifiable under heading 8518. In respect of the devices Echo Show 5, 8, and 10, the CAAR, New Delhi has ruled that the proper classification would be heading 8528. After due consideration of the arguments of the applicant, I am inclined to agree with the contention that the 10 applications before me cannot be rejected. Section 28-I (2) of the Act empowers the Authority to reject an application, subject to the following conditions,

“Provided 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) the same as in a matter already decided by the Appellate Tribunal or any Court.”

CAAR Order on grounds of Awaiting Decision of Delhi High Court

In so far as the applicant before the CAAR, New Delhi was Amazon Wholesale India Pvt. Ltd. and the applicant before me is Amazon Seller Services Pvt. Ltd., and both these applicants are distinctly separate legal entities, one of the two conditions, i.e., the question raised in the applicant’s case (emphasis supplied) must be a subject matter of dispute before an officer of customs, or the appellate tribunal or any court is not satisfied, as while the question raised in these applications are pending before the Hon’ble Delhi High Court, such pendency is not in respect of the applicant before me. This view is also supported by the judgement of the Hon’ble Gujarat High Court in the case of GSPL India Transco Limited [2013 (32) S.T.R. 271 (Guj.)] relied upon by the applicant. Therefore, the 10 applications before me cannot be rejected in terms of the proviso (a) to sub-section (2) of section 28-I of the Act.

8. The learned counsel of the applicant has also drawn my attention to my own decision in the case of M/s. Apple India Pvt. Ltd. In that case, I was confronted with the question of classification of a device named as ‘Apple HomePod’, which was essentially a home entertainment device allowing the user to connect wirelessly to internet via Wi-Fi or Bluetooth and stream music directly from the internet without the need for any accompanying device. The device required the user to subscribe to Apple music store for gaining access to the database and could also stream music directly from another Apple device with Airplay 2 functionality. Besides, the device could provide news, weather, traffic and sports updates, translations, set timers and announced the time, all via voice commands/requests received through a built-in digital assistant (Sifi). The device converted the voice commands/requests into audio text in order to search the internet for information, and once found, it regenerated the information back to the user in the form of speech from the device’s speaker. Further, the device also had the ability to control a wide range of home appliance and accessories via a hardware certification platform and database system that allowed to integrate, configure, and communicate between a wide variety of products like smart locks, lights, security equipment, and other home automation products, from air conditioners to garage doors to security cameras all connected to the same wireless network. After considering all aspects, I had ruled, vide Ruling No. CAAR/Mum/ARC/14/2021, dated 10.06.2021, that `Apple HomePods’ merit classification under sub-heading 85176290 of the first schedule to the Customs Tariff Act,1975.

9. Comparing the specifications, functionalities and intended usage, I am convinced that the Echo family devices featuring `Alexa’ as discussed in the preceding paragraph 2 and the Apple HomePods featuring “Siri’ described above in paragraph 8 are indeed near identical devices. Obviously, in the matter of classification of these two kinds of devices of different manufacturers/marketers, a difference of opinion has arisen amongst the two advance rulings authorities. And, as informed by the ld. Counsel of the applicant, the matter has already reached the first statutory appellate level, i.e., the Hon’ble High Court of Delhi. Such being the undeniable facts, I feel it would be improper on my part to create further discordance on this issue which is already sub-judice. Therefore, in my considered opinion, the issue of classification of the 15 Echo family devices, except the device ‘Wireless Speaker Device, Model No. P5B83L’, which is not an Echo family device, need to await the decision of the Hon’ble High Court of Delhi, which is already seized of the matter in the form of the appeals of M/s. Amazon Wholesale India Pvt. Ltd. In this regard I rely upon the judgement of the Hon’ble High Court of Bombay in the case of Titanor Componenets Ltd. vs. Commissioner of Income Tax reported in 2009 (238) E.L.T 596(Bom)., wherein it was held that if a similar appeal is pending before the Hon’ble High Court, it would have been proper for the Tribunal to wait till the question of law is adjudicated by the Hon’ble High Court in the appeals pending before it. The ratio of the above judgement was followed by the Larger bench of the CESTAT, Mumbai in the case of C. Pinto Vs. Commissioner of Customs, Mumbai reported in 2018 (9) G.S.T.L. 95 (Tri. – LB). Further, the Larger Bench of CESTAT, New Delhi in the case of Dinakar Khindria vs. Collector of Customs, New Delhi reported in 2000 (118) E.L.T. 77 (Tribunal – LB) has also held that Judicial propriety require that a co-ordinate bench should not sit over judgment on the order recorded by another bench.

10. Accordingly, the secretariat is directed to keep track of the progress of the appeals of M/s. Amazon Wholesale India Pvt. Ltd. against the rulings of the CAAR, New Delhi and place these 10 applications for decision as soon as the Hon’ble Delhi High Court decides the appeals of M/s. Amazon Wholesale India Pvt. Ltd. The ruling in respect of ‘Wireless Speaker Device, Model No. P5B83L’, shall, however, be rendered without awaiting the decision of the Hon’ble Delhi High Court as it is not an Echo family device.

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