2021 (12) TMI 1471 - AAR - Customs

HDMI Digital Media Receiver with Alexa Voice Remote classified as kits under 85176290 using GRI Rule 3(b)

In Re : Amazon Seller Services Pvt. Ltd.

AAR Mumbai classified HDMI Digital Media Receiver with Alexa Voice Remote as kits under sub-heading 85176290, applying General Rules for Interpretation ... Classification of imported goods - HDMI Digital Media Receiver with Alexa Voice Remote Lite as a kit - HDMI Digital Media Receiver with All-new Alexa Voice Remote as a kit - Alexa Voice Remote Lite for HDMI Digital Media Receiver - HELD THAT:- The HDMI digital receiver has a 1.7 Ghz quadcore processor and 8GB of storage. It has dual band 2x2 802.11 AC Wi-Fi with support for 5GHz networks, allowing streaming at up to 1080p at 60fps. The receiver provides HD/HDR support on compatible televisions. The HDMI digital media receiver is described by the applicant as network appliance and entertainment device for streaming digital audio/video content from the internet to television. A user sends instruction either by way of speech 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 - The applicant has categorically stated that the digital media receiver is not capable of receiving signals from satellite/cable/terrestrial source and convert them in a suitable form for display on televisions. The device in question also does not support cellular services. It requires internet to perform. The Alexa Voice Remote Lite (lst Gen.) receives audio signals from the user, converts them into radio signals and transmits securely and wirelessly to the digital media receiver for further demodulation/processing of such radio signals. The second type of wireless remote essentially performs the same functions as described above. From the features and functions described here-in-before, it is clear that the HDMI digital media receiver receives signals from Alexa Voice remote (lite 1st Gen./2nd Gen.) via Bluetooth. Such instructions are to select the content that the user wants to watch on his television. The digital media receiver receives instructions of the user, converts them into RF signals and transmits them to the cloud for processing by AVS. AVS converts the signals into a readable format, extracts the requested content from the Amazon cloud and transmits the same to the media receiver, which on receipt of the output, re-transmits the same for display on the user's television. Thus, HDMI digital media receiver 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 - the Customs Authority for Advance Rulings, New Delhi, for the identical device, considered and rejected the sub-heading 85287100 and held that digital media receiver discussed here is rightly classifiable under sub-heading 85176290. Classification of wireless remotes - HELD THAT:- Te proper classification entry for Wireless Remote (for HDM1 Digital Media Receiver) Model No. L5B83H and Alexa Voice Remote Lite (1st Gen., Model No. H69A73), when imported separately, would be the sub-heading 85269200 and not 85176290, as originally contended by the applicant. However, when these wireless remotes are imported along with HDMI digital media receiver (Model No. S3L46N) as a kit, applying rule 3(b) of the General Rules for Interpretation of Customs Tariff, the classification of the entire kit would be sub-heading 8517620, on the ground that the digital media receiver, and not the wireless remote, gives the goods its essential character. Benefit of exemption under serial no. 20 of the Notification No. 57/2017-Cus., dated 30-6-2017, as amended by the Notification No. 2/2019-Cus., dated 29-1-2019 - HELD THAT:- The latest amendment to the said exemption was vide Notification No. 3/2021-Cus., dated 1-2-2021, and also that the said notification provides a concessional rate of duty to all goods falling under sub-headings 85176290 and 85176990, except the following, (a) wrist wearable devices, commonly known as smart watches; (b) optical transport equipment; (c) combination of one or more of packet optical transport product or switch; (d) optical transport network products; (e) IP radios; (f) soft switches and voice over internet protocol equipment or VoIP phones, media gateways, gateway controllers and session border controllers; (g) carrier ethernet switch, packet transport node products, multiprotocol label switching transport profile products; (h) multiple input/multiple output and long term evolution products. Since, Fire TV Sticks do not appear to fall under any of the above exclusions, benefit of serial number 20 of the Notification No. 57/2017-Cus., dated 30-6-2017, as amended would be available to them. Thus, HDMI Digital Media Receiver with Alexa Voice Remote Lite as a kit, HDMI Digital Media Receiver with All-new Alexa Voice Remote as a kit, are classifiable under sub-heading 85176290 of the first schedule to the Customs Tariff Act, 1975 - Alexa Voice Remote Lite and All-new Alexa Voice Remote, when imported separately, would be classified under sub-heading 85269200 - While the Fire TV Sticks of both the lst and 3rd generations would be eligible for the benefit of serial number 20 of Notification No. 57/2017-Cus., dated 30-6-2017, as amended; the wireless remote devices, when imported separately, wouldn't be eligible for the said notification benefit. 1. ISSUES PRESENTED and CONSIDERED- Whether the Wireless Remote (Model No. L5B83H) for HDMI Digital Media Receiver and the HDMI Digital Media Receiver (Model No. S3L46N) with respective Alexa Voice Remotes (1st Gen. Model No. H69A73 and 2nd Gen. Model No. L5B83H) should be classified under specific tariff sub-headings under the Customs Tariff Act, 1975.- Whether the classification of these devices as kits or as separate items affects their tariff classification.- Whether the advance ruling application is maintainable given the pendency of a show cause notice on an earlier Fire TV Stick model and related litigation.- Whether the devices qualify for exemption under serial number 20 of Notification No. 57/2017-Cus., dated 30-6-2017, as amended.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Maintainability of the Advance Ruling Application in Light of Pending LitigationRelevant Legal Framework: Section 28-1(2) of the Customs Act, 1962 provides grounds for rejection of advance ruling applications if the question is pending before any customs officer, tribunal, or court or has already been decided by a tribunal or court.Court's Interpretation and Reasoning: The Authority noted that the pending show cause notice relates to an earlier Fire TV Stick model, distinct from the new generation devices under consideration. The proviso (a) to Section 28-1(2) requires that the question raised in the application be the same as that pending before the customs officer or court for the advance ruling to be rejected. Since the questions differ, the Authority held that the pending litigation does not bar the maintainability of the current applications. The Authority emphasized that restricting advance rulings on the basis of similar but not identical disputes would defeat the purpose of advance rulings.Application of Law to Facts: The Authority distinguished the current devices from those subject to the show cause notice and litigation, permitting the advance ruling process to proceed. The Authority also clarified that advance rulings can be sought for ongoing import activities, provided no dispute exists on the same activity and ruling applies prospectively.Conclusion: The advance ruling applications are maintainable despite the pending litigation on earlier models.Issue 2: Classification of the HDMI Digital Media Receiver (Model No. S3L46N)Relevant Legal Framework: The Customs Tariff Act, 1975, particularly sub-headings 85176290 (apparatus for transmission or reception of voice, images or other data) and 85255030 (television cameras, digital cameras and video camera recorders) and 85287100 (reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus).Precedents: The Customs Authority for Advance Rulings (CAAR), New Delhi had previously classified identical devices under sub-heading 85176290, rejecting classification under 85287100.Court's Interpretation and Reasoning: The Authority analyzed the device's functionality in detail. The HDMI digital media receiver is a network appliance designed to stream digital audio/video content from the internet to televisions via HDMI. It receives instructions wirelessly from the Alexa Voice Remote, transmits these to Amazon servers for processing, and receives the requested content for display on the television. It does not receive satellite, cable, or terrestrial broadcast signals and does not support cellular services.The Authority rejected the suggestion by the Commissioner of Customs (Import), Chennai sea port, to classify the device under 85255030, as the device does not broadcast or transmit signals but only receives and processes internet-based content. Similarly, classification under 85287100 was found unsuitable as it primarily covers receivers of television broadcast signals, which the device does not handle.Application of Law to Facts: Given the device's function to receive, convert, and transmit digital audio/video data from the internet, the Authority held that sub-heading 85176290 is the correct classification.Conclusion: HDMI Digital Media Receiver (Model No. S3L46N) is classifiable under sub-heading 85176290.Issue 3: Classification of Wireless Remotes (Model Nos. L5B83H and H69A73) Separately and as Part of KitsRelevant Legal Framework: Customs Tariff Act, 1975, sub-heading 85269200 (radio remote control apparatus) and 85176290; General Rules for Interpretation of Customs Tariff, Rule 3(b) regarding classification of kits.Court's Interpretation and Reasoning: The wireless remotes function by accepting user commands (voice or button presses), converting them into radio frequency signals, and transmitting these securely to the HDMI digital media receiver for processing. Functionally, they qualify as apparatus for transmission of voice or data. However, the CAAR, New Delhi had ruled that wireless remotes fall under the specific tariff entry 85269200 for radio remote control apparatus, which is a more specific classification than 85176290.Applying Rule 3(b) of the General Rules for Interpretation of Customs Tariff, when the wireless remotes are imported together with the HDMI digital media receiver as kits, the classification of the kit is determined by the component imparting the essential character, which is the digital media receiver. Therefore, the kits are classified under 85176290.Application of Law to Facts: The Authority accepted the CAAR, New Delhi's classification for wireless remotes imported separately as 85269200, and for kits including the digital media receiver and remotes as 85176290.Conclusion: Wireless remotes imported separately are classifiable under 85269200; when imported as kits with the HDMI digital media receiver, the kits are classifiable under 85176290.Issue 4: Eligibility for Exemption under Notification No. 57/2017-Cus., Serial No. 20Relevant Legal Framework: Notification No. 57/2017-Cus., dated 30-6-2017, as amended by Notification No. 2/2019-Cus. and further by Notification No. 3/2021-Cus., dated 1-2-2021, provides concessional duty rates for goods under sub-headings 85176290 and 85176990, except certain excluded categories.Court's Interpretation and Reasoning: The Authority examined whether the Fire TV Sticks fall within the exclusions listed in the latest amendment, which include smart watches, optical transport equipment, IP radios, VoIP equipment, and other specified telecommunications devices. The Fire TV Sticks do not fall under any of these exclusions.Application of Law to Facts: Therefore, the Fire TV Sticks (both 1st and 3rd generation) are eligible for the exemption benefit under serial number 20 of the Notification. However, the wireless remotes imported separately do not qualify for this exemption.Conclusion: Fire TV Sticks as kits qualify for exemption under the relevant notification; wireless remotes imported separately do not.3. SIGNIFICANT HOLDINGS'The Authority shall not allow the application where the question raised is already pending before any officer of customs, the Appellate Tribunal or any Court, or the same as in a matter already decided by the Appellate Tribunal or any Court. However, since the question raised in the present application is not the same as that pending in the earlier litigation, the scope of advance ruling is not excluded.''The HDMI digital media receiver 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. The device merits classification under six-digit tariff entry 851762.''Wireless remotes, when imported separately, fall under the specific tariff entry 85269200 for radio remote control apparatus. When imported as a kit with the HDMI digital media receiver, the classification of the kit is under sub-heading 85176290 as the digital media receiver imparts the essential character.''Fire TV Sticks do not fall under any of the exclusions in Notification No. 57/2017-Cus., and hence are eligible for exemption under serial number 20. Wireless remotes imported separately are not eligible for such exemption.'