Case Law Details

Case Name : In Re Amazon Wholsale India Private Limited (CAAR Delhi)
Appeal Number : Ruling No. CAAR/Del/Amazon/18/2021
Date of Judgement/Order : 10/08/2021
Related Assessment Year :

 Customs Authority for Advance Rulings Regulations, 2021In Re Amazon Wholsale India Private Limited (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 09.03.2021 seeking advance ruling under section 28-14 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. 08/2021-Delhi dated 1103.2021.

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, CBIC designated Principal Commissioner of Customs, ACC (Import), New Customs House, Near IGI Airport, New Delhi under the provisions of the Customs Act, 1962 read with the CAAR Regulations.

3. On designation of Principal Commissioner of Customs, ACC (Import), New Delhi, the Secretariat of CAAR, New Delhi sought comments of the designated Principal Commissioner on the application for advance ruling, vide letter dated 08.04.2021. In this regard, Principal Commissioner of Customs, ACC (Import), New Delhi vide their letter dated 01.06.2021 has forwarded the comments on the application for advance ruling.

4. The applicant has sought ruling on classification of two goods, namely Fire TV Cube Model No. A78V3N and IR extender cable. It is seen that a common application has been filed for two goods on the ground that IR extender cable is an IR accessory of the device Fire TV Cube. The applicant has elaborated details & described functioning/working of these devices as below:

(i) FIRE TV CUBE:

DETAILS: The Fire TV Cube is an advance upgraded version of Fire TV Sticks. It is a 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 users can also download additional applications and games. The source of signals for Fire TV Cube is internet. The user can also play games and music. It comes with a built-in speaker and microphones that give Fire TV Cube functional parity with other devices of the Echo family. In other words, it can also act as an Echo speaker on its own without connecting the same to a television. The user can give commands to the Fire TV Cube through the Alexa enabled voice remote or directly through voice commands using built-in microphones. All Echo functional devices including Fire TV Cube, 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.

These devices are communication devices with Alexa technology, These devices respond to the name “Alexa”, which is C0111111011TY known as the ‘wake word’, he Fire F V Cube has eight microphones that can hear from any direction, With the built- in speaker. the user can ask Alexa to check the weather, turn off the lights, sot timers and reminders and more – even when the TV is off. Fire TV Cube can also control compatible sound bar and A/V receiver and can even change live cable or satellite channels with the voice by controlling the set top boxes through the integrated IR blaster.

The Fire TV Cube is the only streaming media player that lets the user control the compatible cable and satellite box. The user with this feature can change the channel to the next or previous, switch the satellite box on or off, change the volume level and put a specific channel on the satellite box. The Alexa Voice Remote is also included for those times when the user wants to control the F ire TV Cube without making a sound, With Alexa on Fire TV Cube, the user can control a wide range of devices through the cloud, infrared (IR), and HDMI-CEC. The working of Fire TV Cube is as follows: all devices with Echo functionality including Fire TV Cube are pre-programmed to catch few magic words like “Alexa” in the present case. The device has microphones to detect the sound. Once the device, through microphones, analyze these words, it becomes operative and starts recording user’s voice. When the user finishes speaking, the device converts this voice data in radio frequency signals to be sent to AVS. AVS converts the RF signals into commands that it interprets. Thereafter, it analyses the command and sends back the results to the device in question, which in turn converts the results into electric signals played as audio/video output on the device. A user sends instruction either by way of audio instruction through in-built microphone in the remote or in the device 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 Cube. These instructions are transmitted wirelessly in the form of RF signals via Bluetooth. RF signals are received by the Fire TV Cube 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 Cube from the Amazon server. These signals are processed and converted into a form readable by television. The processed signals are then transmitted to the connected television so that the requested media can be viewed by the user. The device can also control smart appliances in a similar manner. Fire TV Cube is also capable of controlling certain satellite boxes by sending IR signals through the IR blaster. When a user says ‘Alexa put HBO channel’, the voice command is sent to the Amazon cloud, wherein the IR code specific to HBO channel is searched in the cloud and sent back to the device. The device then converts the IR code received in the form of RF signals into an IR signal to be sent through the IR blaster to the IR receiver on the satellite box for playing the HBO channel. However, Fire TV Cube can control satellite boxes only for certain specific functions like changing channels to next or previous, switch the satellite box on or off, change the volume level and put a specific channel on the satellite box. Fire TV Cube does not allow the user to put a specific program or navigate through the ‘guide’ section of a satellite box neither does it receives any satellite TV signals. Fire TV Cube is Bluetooth enabled, which makes it possible for it to connect with the user’s phone, Alexa remote control and/or external speaker. When the user wants to use remote instead of giving oral commands to Alexa, the instructions from remote is sent through Bluetooth signals to the Fire TV Cube and thereafter; to AVS in the manner as explained above. When it is connected to the user’s phone, it can play audio stored in then user’s phone. When it is connected to an external speaker, the audio output is played through the external speaker, instead of its internal speaker even when the TV is off. Fire TV Cube does not support cellular services. It requires an internet connection to perform its functions, i.e. it does not have modem incorporated in it.

(ii) IR EXTENDER CABLE

DETAILS: IR Extender Cable is an externally connected infrared (IR, in short) accessory that helps the Fire TV Cube in controlling appliances. The Fire TV Cube can control appliances like A/V receiver, Cable/Satellite set-top box, etc. through the integrated IR blaster or an externally connected IR accessory (IR Extender Cables). The IR extender cable allows Fire TV Cube to control devices that are hidden, out of sight or are far from the range of Fire TV Cube such as behind closed doors, in a cabinet or closet. The user can connect it by plugging the IR Extender Cable into Fire TV Cube and place the other end of it close to the device that the user wishes to control, such as the A/V receiver, Cable/Satellite set-top box, etc. It has an 8-foot cable for flexible placement and access to AV components. The IR extender cable consists of a connector jack at one end and IR blasters at the other end. The cable carries IR codes in the form of electric signals to the IR blasters, wherein IR signals are generated and transmitted to entertainment devices to be controlled kept next to it.

4.1 In the light of above, questions on which advance ruling is sought are as follows-

A) Whether-Fite TV Cube is rightly classiable_under Custom TarifrItem 8517 62 90?

B) Whether IR extender cable is rightly classifiable under tariff item 8543 70 99?

C) If the answer to the above question (a) and (b) is in the negative, then, what is the appropriate classification of Fire TV Cube and IR extender cable under Schedule I to the Customs Tariff Act, 1975?

5.1 As regards the classification of Fire TV Cube, the applicant has further stated that it is a network appliance and an entertainment device, also known as digital media receiver, designed to stream digital audio/video content and perform various other functions with Alexa, via the internet; Fire TV Cube works just like other Echo and Fire TV devices, that it receives voice data (audio signals) (when giving voice commands using built-in microphones) / Bluetooth signals (when using remote) from the user and converts the same into radio frequency (RF) signals to be sent to AVS. AVS converts them into a readable format, finds out the results from Amazon cloud and transmits the same to the device in question; the device, in turn, converts the radio frequency signals received into voice data (e.g. song, news, time, etc.) which is finally audible to the users through the speakers (internal or external) or visual data (e.g. videos, photos, etc.) which is visible to the users on the screen; classification of the goods mentioned in the First Schedule of the Import Tariff is governed by General Rules for Interpretation (“GI Rules”, in short); as per Rule 1 of GI Rules, the goods under consideration should be classified in accordance with the terms of the heading or relevant Section or Chapter Notes; therefore, Section Notes and Chapter notes are relevant for the purposes of determining classification of the goods; Section Note 3 to Section XVI provides guidance for the classification of ‘composite machines’/’multifunction machines’; the said Section Note 3 states, “Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.”; Fire TV Cube can perform multiple functions like it acts as a communication device for communicating with Amazon cloud/AVS for performing voice enabled services; it acts as a media streaming device, which allows the user to watch videos, listen to music, play games, etc.; it acts as a speaker for the audio function; it acts as a controlling device which controls the satellite box and smart devices (e.g. lights, fan, doors, etc.) even when the TV is off; etc.; All the above said functions can be performed only when the device is connected to an already enabled wi-fi or active Bluetooth connection, by the process of communication (transmission, conversion and reception) either with the Amazon cloud or with its user’s phone; in other words, this device cannot function without its communication function; by applying Section note 3 to Section XVI and on the basis of the functioning performed by the device, it can be stated that communicating with the AVS / Amazon cloud to deliver audio/video content is the principal function of the product in question; when it is said that the device communicates with AVS / Amazon Cloud, as explained above, it means that it receives voice/remote signals, converts the same into RF signals that are transmitted to the cloud, where processing takes place; after processing, processed signals, i.e. data / media requested by the user, are received by the device, which again undergoes conversion to be played through the speaker or visible on the television; thus, communication here means transmission, reception, and conversion of voice or other form of data; the items classifiable under CTH 8517 are principally equipment for transmission and reception of voice, image or data; on the basis of the functioning of the Fire TV Cube, read with Section Note 3 to Section XVI and HSN Explanatory Notes to CTH 8517, it can be said that the “reception, conversion and transmission of voice or other form of data” is the principal function of the device; thus, sub- heading 8517 62 90 appears to be the most appropriate classification for Fire TV Cube.

5.2 As regards classification of IR Extender Cable, the applicant has further stated that it is an externally connected IR accessory that helps the Fire TV Cube in controlling appliances; the Fire TV Cube can control appliances like A/V receiver, Cable/Satellite set-top box, etc. through the integrated IR blaster or an externally connected IR accessory (IR Extender Cables); the IR extender cable allows Fire TV Cube to control devices in hard-to-reach locations such as behind closed doors, in a cabinet or closet; it is evident from the features and functions that IR Extender Cable works just like other IR devices, that transmits IR signals; the cable carries IR codes in the form of electric signals to the IR blasters, wherein IR signals are generated and transmitted to entertainment devices to be controlled kept next to it; since IR devices or IR Extender Cable are nowhere specified or included in any of the tariff entries under Schedule I to the tariff Act, hence, they merit classification with other infrared-based devices under the residuary heading of Chapter 85, i.e. CTH 8543; Chapter 85 of the Tariff Act covers various types of Electrical machinery and equipment including apparatus having individual functions, not specified or included elsewhere; CTH 8543 is a residuary heading of Chapter 85 which covers electrical machines and apparatus having individual functions, not specified or including elsewhere in this chapter; Explanatory Notes to Heading 8543 of HSN specifically includes: “(15) Cordless infrared devices for the remote control of television receivers; video recorders or other electrical equipment”; hence, based on the functioning of the IR Extender Cable, read with HSN Explanatory Notes to CTH 8543, it can be said that the IR Extender Cable is an infrared device that transmits IR signals; thus, sub- heading 8543 70 appears to be the most appropriate classification for IR Extender Cable and specifically 8543 70 99, ‘Others’ is most appropriate.

6. The comments received from the office of the Principal Commissioner of Customs, ACC (Import), New Delhi vide letter dated 01.06.2021 have been shared with the applicant. The designated Principal Commissioner of Customs has, inter-alia, suggested that the item, Media Streaming Device (Fire TV Cube) is appropriately classifiable under CTH 8517 62 90, 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). The Principal Commissioner of Customs has also opined that IR extender cable to be imported appears to be classifiable under CTH 8517 62 90. No reasons for suggested classification have, however, been proffered.

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, New Delhi 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 Authority 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 be4consistent with the provisions of the Customs Act. This Authority has been adopting such practice and proposes to continue to do so, unless the facts of a specific case require staggered two-stage hearing.

7.2 During the common personal hearings, which were conducted on 07.06,2021 and 08,06.202: Shri V. Lakshmikumaran, Advocate and his team represented the applicant, wherein the case  the applicant was presented mostly by Shri Lakshmikumaran. During the hearing. Shri Lakshmikumaran made submissions regarding the description and function of the said devices. He highlighted the features of the devices. As regards the Fire TV Cube, Shri Lakshmikumaran explained that media streamina, device, which is an advanced version of Fire TV Stick and has features of Echo Speaker devices as well. The IR Extender Cable is an accessory that helps Fire TV Cube in controlling appliances.

8. After going through the details mentioned in the application and comments of the designated Principal Commissioner of Customs, I find that the application is valid in terms of the provisions of the Customs Act and the CAAR Regulations, 2021. The same is, therefore, allowed in terms of section 28-I (2) of the Customs Act.

9. Thereafter, having gone through the details of the goods as described in the application, comments of the designated Principal Commissioner, hearing the applicant at length during the personal hearing and having perused other relevant material, I proceed to decide the matter on merit and give ruling on the questions raised in the application.

10. The application seeks ruling on the classification of a device, namely Fire TV Cube and its accessory, namely IR Extender Cable.

10.1 I first take up the issue of classification of Fire TV Cube. Since the applicant has suggested classification under CTH 8517, it’s useful to note that the said CTH 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.

10.2 Further, it is observed that the suggested classification of IR Extender Cable is under CTH 8543, which covers electrical machines and apparatus having individual functions, not specified or included elsewhere in the Chapter. WCO explanatory notes of heading 8543 provides that the electrical appliances and apparatus of this heading must have individual functions.

11. Further, since a decision regarding classification would involve interpretation of General Rules for Interpretation of Import Tariff (GI Rules, in short), the relevant rule 3 of the GI Rules is reproduced below;

“3. When by application of rule 2(b) or for any other reason, goods are,prima facie, classifiablei) under two or more headings, classification shall be effected as follows:

12. I now discuss the device Fire TV Cube. It is seen that Fire TV Cube is described on the Amazon website as “Hands-free streaming device with Alexa”; as “the fastest, most powerful Fire TV streaming device”; and with Alexa on Fire TV Cube, you can control compatible TVs, sound bars, tune to live TV channels with DTH set top boxes, etc. The applicant during the personal hearing described the Fire TV Cube as an advance version of Fire TV Stick. In this regard, I find that the Amazon website provides a comparative chart for Fire TV Cube, Fire TV Stick 4K, Fire TV Stick, Fire TV Stick (3rd Gen) and Fire TV Stick Lite, which support the argument that Fire TV Cube is an advance version of Fire TV Stick. The comparison highlights the aspect that Fire TV Cube comes “hands-free with Alexa” and is best for “hands-free voice control of entertainment”. It is observed that Fire TV Cube can perform multiple functions: it acts as a communication device for communicating with Amazon cloud/Alexa Voice Service (AVS) for performing voice enabled services; it acts as a media streaming device, which allows the user to watch videos, listen to music, play games, etc.; it acts as a speaker for the audio function; it acts as a controlling device which controls the satellite box and smart devices (e.g. lights, fan, doors, etc.) even when the TV is off; etc. Therefore, Fire TV Cube is a multi-function machine which is sold in the market highlighting it as a streaming device. In this regard, I note that this Authority in its Ruling No. CAAR/Del/Amazon/15/2021 dated 05.07.2021 has ruled that Fire TV Stick (3rd Gen), a device similar to but not as advanced as Fire TV Cube, merits classification under heading 8517, and more specifically under sub-heading 8517 62 90.

13. I find that Section Note 3 to Section XVI of the Customs Tariff Act provides guidance for the classification of ‘composite machines’/’multifunction machines’, which states that “Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.”.

14. In view of the above, it is seen that communicating with the AVS Amazon cloud with the Lise • Alexa to deliver audio/video streaming content is the principal function of the device in question: i: means that it receives voice/remote siznals, converts the same into RF signals that are transmitted to the cloud, where processing takes place, after processing, processed signals. i.e. data’ media requested by the user, are received by the device, which again undergoes conversion to be played through the speaker or be displayed on the compatible television. Thus, transmission or reception of voice. images or other data being the principal function of the device, sub-heading 8517 62 90 appears to be the most appropriate classification for Fire TV Cube.

15. The other item whose classification is to be decided is IR (infra-red) Extender Cable. As per the application, the extender cable allows Fire TV Cube to control devices that are hidden, out of sight or are far from the range of Fire TV Cube; the user can connect it by plugging the IR Extender Cable into Fire TV Cube and place the other end of it close to the device that the user wishes to control. The Amazon website describes the item as: (t)his replacement IR extender cable for Fire TV Cube and Fire TV Blaster lets you control devices in hard-to-reach locations such as behind closed doors, in a cabinet or closet; when connected to Fire TV Cube or Fire TV Blaster, experience Alexa far-field voice control over your entertainment devices even if they are out of sight; and is easy to use — simply plug it into the IR port on Fire TV Cube or Fire TV Blaster, no additional set-up required.

15.1    In the light of the submissions and product description available on the Amazon website, the device appears to act as an accessory of Fire TV Cube, which is in the form of a cable with connector jack at one end and IR blaster at the other end. The cable carries IR codes in the form of electrical signals to the IR blaster where IR signals are generated and transmitted to entertainment devices to be controlled. In the light of the foregoing, I am of the view that in case this extender cable is presented along with the main device Fire TV Cube, then it also merits classification under heading 8517 62 90.

15.2    However, in the event that IR Extender Cable is imported independently of the Fire TV Cube, it would need to be considered as a machine having independent function. Given the functions performed by the Extender Cable, it could have been considered for classification under heading 8537. However, in view of Chapter Note 8, which provides that “Heading 8537 does not include cordless infrared devices for the remote control of television receivers or other electrical equipment (heading 8543)”, I turn to heading 8543, which covers Electrical machines and apparatus having individual functions, not specified or including elsewhere in this Chapter, and more specifically residual sub-heading 8543 70 99.

16. In view of the above, I rule as following:

16.1 Fire TV Cube merits classification under sub-heading 8517 62 90.

16.2 IR Extender. Cable if presented along with Fire TV Cube will also merit classification under sub-heading 8517 62 90.

16.3 However, if IR Extender Coble is presented independent of Fire TV Cube, in that event it will merit classification under sub-hcading 8543 70 99,

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