Case Law Details

Case Name : In re Amazon Wholesale India Pvt. Ltd. (CAAR Delhi)
Appeal Number : Ruling No. CAAR/Del/Amazon/14/2021
Date of Judgement/Order : 28/06/2021
Related Assessment Year :

In re Amazon Wholesale India Pvt. Ltd. (CAAR 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 10.03.2021 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 received in the Secretariat of CAAR, New Delhi on 12.03.2021. The application was accordingly registered under serial No. 06/2021-Delhi dated 12.03.2021.

2. The applicant vide entry in column 13 of the application Form CAAR-1 requested that in terms of provisions of regulation 13 of the Customs Authority for Advance Rulings Regulations, 2021 (CAAR Regulations, in short), Central Board of Indirect Taxes and Customs (CBIC, in short) may designate a Principal Commissioner/Commissioner, in the matter. Accordingly, upon reference by the Secretariat of CAAR, New Delhi, CBIC vide letter dated 05.04.2021 designated the Principal Commissioner of Customs, ACC (Import), New Custom House, New Delhi under the provisions of the Customs Act, 1962, read with the CAAR Regulations.

Amazon Fire TV Stick 4K Ultra HD with Alexa Voice Remote

3. On designation of Principal Commissioner of Customs, ACC (Import), New Delhi, in the matter, Secretariat of CAAR, New Delhi sought comments of the designated concerned Principal Commissioner on the application for advance ruling, vide letter dated 08.04.2021. The comments of the Principal Commissioner of Customs, ACC (Import), New Delhi vide letter dated 01.06.2021 have been received.

4. The applicant has sought ruling regarding appropriate classification of the device called “Alexa voice remote 3rd Generation Model No. L5B83G”, which is proposed to be imported by the applicant. The following details and functioning/working of the device has been described in the application:

DETAILS: The Alexa voice remote 3rd Generation Model No. L5B83G [Alexa voice remote (3rd), in short] is a Bluetooth and infrared enabled remote, which is primarily meant to be used to operate HDMI Digital Media Receivers (“Fire TV stick”) via Bluetooth when it is paired with the remote. The Fire TV stick is a small network appliance and an entertainment device designed to stream digital audio/video content to high-definition and 4K television sets. It is a portable device, which connects to HDMI port of a television. Once connected, the user gets access to television episodes and movies on Amazon instant video, Netflix, and other apps like Sony L1V, Zee5, etc. The user can also play games and music. The Fire TV Stick is capable of connecting with television sets, in order to play video content at a higher resolution. The Alexa voice remote (3rd Gen.) helps the user to find their favourite shows, live television programs, check the weather, turn on the lights, view live camera feeds, stream music and more using their voice. The Alexa voice remote (3rd Gen.), being infrared enabled, can control a wide range of other infrared devices also, including compatible televisions, cable and satellite boxes etc., thus, eliminating the need for a second remote. The Alexa voice remote (31d Gen.), inter-alia, features a voice button, whereby the user can search for movies, TV show and directs by simply pressing and holding the voice by speaking simultaneously. It also has a mic that receives these voice commands. For example, by simply saying “Launch Netflix” near the Alexa voice remote (3r Gen.), the Netflix application in the Amazon Fire TV Stick will be launched. Apart from voice button, the Alexa voice remote (3rd Gen.) has other buttons like Menu, Home, Back, Rewind, Play/Pause, Fast Forward, Select and Navigation for their respective functions. In case of audio instructions, the Alexa voice remote (3rd Gen.) receives audio signals, converts the same into radio signals and transmits the same securely through ether / air (wireless environment) to the Amazon Fire TV Stick for further demodulation/ processing of such radio signals. In case of instructions other than audio instructions, electric signals generated by way of push of the buttons are converted into radio signals, which are then transmitted to the Amazon Fire TV Stick. The Alexa voice remote (3rd Gen.) has volume up and down buttons, mute button and power button, pressing of which sends out infrared signals to infrared controlled devices, like television, Audio Video Receivers, sound bars, etc.

4.1 In the light of the aforementioned, the applicant has submitted the following questions for advance ruling:

(a) Whether Alexa voice remote (3″I) proposed to be imported by the applicant is classifiable under Custom Tariff Item 851762 90?

(b) If the answer to the above question (a) is in the negative, then, what is the appropriate classification of Alexa voice remote (3′ Gen.) under the Customs Tariff Act, 1975?

(c) If the answer to question (a) is in the positive, whether the applicant is eligible to claim benefit of Serial number 20 of Notification No.57/2017-Customs dated 30.06.2017?

4.2 In the application, it has also stated that an application pertaining to classification of the earlier models of Alexa voice remote are pending before the Customs Authority for Advance Rulings, Mumbai; such applications were filed by M/s Amazon Seller Services Private Limited and not the applicant; this is a new model being launched now and will be imported into India for the first time by the applicant. It has been ascertained by this office from CAAR, Mumbai that no advance ruling order has been issued in respect of the said application.

5. Further to the above description/functioning of the device, the applicant has explained that classification of the goods mentioned in the First Schedule of the Import Tariff is governed by General Rules for Interpretation (GI Rules, in short); the said rules for interpretation have been adopted from the General Rules for the Interpretation of the Harmonized System; as per Rule 1 of the GI Rules, goods under consideration should be classified in accordance with the terms of the heading or the relevant Section or Chapter Notes. It is further stated that in the understanding of the applicant, the heading most appropriate for classification of the Alexa voice remote or (3other Gen.) is CTH 8517, i.e. apparatus for the transmission or reception of voice, image or other data; as per the HSN, the communication apparatus includes one which allows for connection to a wired or wireless communication network or the transmission or reception of speech or other sounds, images or other data with in such network. Hence, the items classifiable under CTH 8517 are principally equipment for transmission and reception of voice, image or data; as such the subject device is appropriately classifiable under tariff item 85176290.

6. The comments received from the office of the Principal Commissioner of Customs, ACC (Import), New Delhi states, inter-alia, that the item, Alexa voice remote (3rd Gen.) is appropriately classifiable under CTH 85176290, i.e. other apparatus for transmission or reception of voice, image or other data including apparatus for communication in a wired or wireless network (such as a local or wide area network). It is also opined that on the basis of facts mentioned in the application along with work-ability and functionality of the goods, they are of the view that benefit vide Notification No. 57/2017 dated 30.06.2017 (Si. No. 20) is available for import of Alexa voice remote (3rd Gen.). As required under the CAAR Regulations, comments of the Principal Commissioner of Customs, ACC (Import), New Delhi were shared with the applicant.

7. In accordance with the procedure prescribed under the CAAR Regulations, personal hearing in this matter (along with four other applications filed by the applicant regarding classification of other convergence devices) in virtual mode was scheduled on 07.06.2021. In response thereto, the applicant sought clarification whether the said hearing is — (i) for passing an order on admission of our applications under section 28-I (2) of the Customs Act, or (ii) for the final advance ruling to be given under section 28 — I (4) of the Customs Act. This office has clarified that in view of the shortened timelines as per section 28 —I (6) of the Customs Act, 1962 read with the CAAR Regulations, CAAR has been following the practice of single hearing in the application for advance rulings. I note that the practice followed by erstwhile AAR was to hold two-stage hearing on separate dates, first to decide the admissibility of the application and thereafter on the merits of the case. However, this office has been of the view that the procedure can be simplified and process of pronouncing advance rulings expedited by scheduling a common hearing, wherein the two stages relating to the admissibility of the application and technical discussion could be taken up together, noting that such a procedure would not be consistent with the provisions of the Customs Act. This office has been adopting such practice and proposes to continue to do so, unless the facts of a specific case require staggered two-stage hearing.

8. Finding that the application is valid in terms of the provisions of the Customs Act and the Customs Authority for Advance Rulings, Regulations, 2021; and having gone through the details of the goods as described in the application, comments of the designated Principal Commissioner and after hearing the applicant at length during the personal hearing, followed by receipt of additional submission pertaining to possibility of classification of Alexa Voice Remote (3rd Gen) under CTH 8526, I proceed to decide the matter and give ruling on the questions raised in the application.

9. The application is for ruling on two questions, viz. classification of the subject device and applicability of duty exemption vide serial No. 20 of Notification No. 57/2017-Customs dated 30.06.2017 on import of Alexa Voice Remote (3rd Gen). Before taking a view on classification or applicability of notification, it is felt that issue to be decided would involve interpretation of General Rules for Interpretation of Import Tariff. Further, since the question relates to classification of goods proposed to be imported, guidance of the Harmonized Commodity Description and Coding System of the World Customs Organization, to which India is a signatory, would also be useful.

10. Rule 1 of the GI Rules lays down that the titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and rule 3 of the GI Rules provides as below:

“3. 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 effected as follows:

(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

11. Further, I note that while the applicant has suggested classification of the device under CTH 8517, which is also the classification proposed by the designated Principal Commissioner of Customs, ACC (Import), New Delhi, the suggested classification of Fire TV Voice Remote by Amazon Inc. on the website <com> is 8526.92. The applicant in their additional submission have reiterated their view that the appropriate classification for this remote device is CTH 8517, inter alia, on the ground that CTH 8526 does not cover radio remote control apparatus that works on Blue tooth technology.

12. Therefore, I have considered CTH 8517 and 8526 as the two contending classification. CTH 8517 covers Telephone sets, including 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. Sub-heading 8517 62 covers Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus; and 8517 62 90 is the residual sub-heading thereof.

12.1 CTH 8526 covers Radar apparatus, radio navigational aid apparatus and radio remote control apparatus; and sub-heading 8526 92 00 covers Radio remote control apparatus.

13. Therefore, the question before me is whether Alexa voice remote (3″1 Gen), which is a Bluetooth enabled voice remote connected to Amazon Fire TV stick is rightly classifiable under 8526 92 00 as radio remote control apparatus, or under 8517 62 90 as transmission and reception apparatus which works on Bluetooth technology. I observe that Alexa Fire Stick is to be connected to the FIDMI port of a television and its function is to receive the command and transmit message to Internet to receive the desired signals as per the command given through the Alexa voice remote. In this regard, the applicant has declared that the Alexa voice remote (3rd Gen) is primarily meant to operate Fire TV Stick. Therefore, prima facie, the device does function as a transmission and reception apparatus, but the primary objective of the transmission and reception function is to act as a remote control device, giving the device the essential character of a remote control device.

13.1 The applicant has stressed that the Alexa voice remote (3rd Gen) is a Bluetooth enabled remote control device, and all Bluetooth enabled devices are classifiable under sub-heading 8517 62 90 if the principal function of the device is of transmission and reception. Since the sub-heading 8526 92 00 covers radio (emphasis supplied) remote control apparatus, it may be useful to explain Bluetooth technology, which the applicant places stress on to argue that this Alexa remote control device is different from those classifiable under CTH 8526. I find that “Blue tooth devices connected in a Blue  tooth network communicate with each other using ultra-high frequency (UHF) radio waves”. Therefore, the contention of the applicant that Alexa voice remote (3rd Gen) does not merit classification as radio remote control apparatus under 8526 92 00 since it uses Bluetooth technology is facile and not accepted.

13.2 In this regard, I accept the reliance placed by the applicant on Canada Border Service Agency’s Memorandum D-10-14-64 dated 12.03.2015, which clarified that Bluetooth devices are required to be classified as per their principal function; and find that the principal function of Alexa voice remote (3rd Gen) is to act as radio remote control apparatus.

13.3 Further, it is seen that with respect to heading 8526, the HSN inter-alia prescribes the following as general guidelines that the heading covers, “Radio apparatus for the remote control of ships, pilotless aircraft, rockets, missiles, toys, model ships or aircraft, etc.” and “Radio apparatus for the detonation of mines, or for the remote control of machines”. Since Alexa voice remote (3rd Gen) is working on (Bluetooth) radio frequency to control machine/apparatus/device, it is a radio apparatus for remote control. Therefore, the appropriate classification of Alexa voice remote (3rd Gen) based on rule 1 and rule 3(b) of GI Rules is under CTH 8526, and specifically under sub-heading 85269200.

14. As regards the second question posed for advance ruling, it is seen that the benefit of Serial No. 20 of Notification No. 57/2017-Customs dated 30.06.2017 , as amended vide notification No.22/2018-Customs dated 02.02.2018, is available for all goods other than wrist wearable devices (commonly known as smart watches) falling under sub-heading 8517 62 90. Therefore, the same is not admissible to Alexa voice remote (31d Gen), which is classifiable under sub-heading 85269200.

15. In view of the above, I rule accordingly.

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