Customs Exemptions for Echo Dot 4 and Echo Show 5 Among Echo Devices

Amazon Wholesale India Private Limited Vs Customs Authority of Advance Ruling (Delhi High Court)

Customs Exemptions applied on Echo Dot 4 and Echo Show 5 devices out of Echo Flex, Echo Auto, Echo Link and Echo Link Amp

Conclusion: Eleven devices were correctly classifiable under CTH 8517 and more particularly under Tariff Entry 8517 62 90. Echo Show 5, Echo Dot 4^th Generation and Echo Dot 4^th Generation with Clock were held eligible to claim exemptions in accordance with SI. No. 20 of the Notification dated 30 June 2017, as amended vide Notification dated 01 February 2021.

Held: Assessee-company assailed the correctness of the views expressed by the Customs Authority for Advance Rulings as embodied in the impugned order dated 20 July 2021 and insofar as it held that the 11 impugned devices were classifiable under Customs Tariff Heading 8518 and 8528.  Assessee submitted that the devices in question were correctly classifiable under CTH 8517 and more particularly Tariff Entry 8517 62 90 thereof. The 11 devices in question were asserted to fall in the category of “Echo Family Devices” and which assessee claimed to be essentially communication devices with an inbuilt speaker. The principal question which appeared to have arisen for consideration was whether the subject devices were liable to be placed in CTH 8517 and which includes “apparatus for transmission or reception of voice, images or other data including apparatus for communication in a wired or wireless network” or under CTH 8518 which essentially deals with microphones, loudspeakers, headphones and earphones or under CTH 8528 which was concerned with monitors and projectors, not incorporating television reception apparatus, reception apparatus for television, whether or not incorporating radio broadcast receivers, or sound or video recording or reproducing apparatus. It was held that while these devices may be voice enabled and compatible in a WI-FI environment, those features would, at best, lead one to recognize them as being ^„smart speakers^‟ and thus retaining their principal attribute, namely, of being a speaker as generally understood. In view of the above and bearing in mind the General Rules for Interpretation³ for import tariff as well as Note 3 to Section XVI of the Customs Tariff Act, 1975⁴, the AAR had come to conclude that they were classifiable as ^„smart speakers^‟ under CTH 8518 and more particularly Tariff Entry 8518 22 00. 5. Insofar as Echo Show Devices were concerned, the AAR had taken the view that the primary function of these devices was to act as a display or a monitor and thus enabling the playback of videos from web channels, to display video content during video calling as well as for viewing motion pictures. It thus proceeded to hold that those devices were monitor/display not incorporating television reception apparatus and thus liable to be placed under CTH 8528 and more specifically Tariff Entry 8528 59 00. While evaluating the appropriate classification of Echo Flex, the AAR had accepted the stand of the assessee that it was a communication device and thus classifiable under Tariff Entry 8517 62 90. Proceeding then to consider the Echo Studio Device, the AAR had found it to be in a sense a “smart speaker^‟ akin to the Echo 4^th generation devices and thus classifiable under Tariff Entry 8518 22 00. Insofar as Echo Link was concerned, the AAR recognized its principal function to be that of reception, conversion and transmission of voice or other data to the high-quality speaker and since the amplifier functions embedded in the device was not a principal feature, it was liable to be classified under Tariff Entry 8517 62 90. The same rationale was applied for classifying the device Echo Link Amp under Tariff Entry 8517 62 90, which in essence was similar to the Echo Link device and had an additional built-in amplifier. The court disagreed with the denial of classification and exemption benefits to the Echo Show 5, Echo Dot 4th Generation, and Echo Dot 4th Generation with Clock under CTH 8517. The court emphasized that the devices’ multifunctionality, beyond being mere speakers, warranted their rightful classification and exemption status. Since for reasons aforenoted, the view taken by the AAR was upheld denying the classification of Echo Show 5, Echo Dot 4^th Generation and Echo Dot 4^th generation with Clock under CTH 8517 and more particularly Tariff Entry 8517 62 90/85 17 69 90, the denial of exemption benefits to those products would also not sustain. Eleven devices were correctly classifiable under CTH 8517 and more particularly under Tariff Entry 8517 62 90. Echo Show 5, Echo Dot 4^th Generation and Echo Dot 4^th Generation with Clock were held eligible to claim exemptions in accordance with SI. No. 20 of the Notification dated 30 June 2017, as amended vide Notification dated 01 February 2021. The order of the AAR insofar as it deals with the classification of Echo Flex, Echo Auto, Echo Link and Echo Link Amp was affirmed.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

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