AAR Mumbai defers Echo device classification ruling citing conflicting advance rulings and pending Delhi HC appeals

The AAR Mumbai deferred ruling on classification of Echo family devices (Echo 4th Gen., Echo Dot 4th Gen., Echo Dot with Clock, Echo Studio) under tariff headings 85176290 or 8518. The authority noted conflicting advance rulings between Mumbai and Delhi AARs on similar devices, with appeals already pending before Delhi HC. Citing judicial propriety principles from Titanor Components and subsequent CESTAT decisions, the AAR held it improper to create further discordance on sub-judice matters. The ruling was postponed pending Delhi HC's decision on Amazon's appeals, except for one non-Echo wireless speaker device which would be decided separately.

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Issues Involved:
1. Classification of various Echo devices.
2. Eligibility for exemption under Notification No. 57/2017-Cus.
3. Maintainability of applications in light of pending appeals.
4. Comparison with rulings on similar devices (Apple HomePod).

Detailed Analysis:

1. Classification of Various Echo Devices:
The applicant sought advance rulings on the classification of multiple Echo devices. The devices in question include Echo Portable Smart Speaker, Echo Show 10, Echo (4th Gen.), Echo Dot (4th Gen.), Echo Dot (4th Gen.) with Clock, Echo Studio, Echo Dot (3rd Gen.) with Clock, Echo (3rd Gen.), Echo Show 8, Echo Spot, and Echo Show 5. The applicant argued that these devices should be classified under sub-heading 85176290, asserting that these are communication devices with multiple functionalities involving voice commands and Alexa technology.

The Customs Authority for Advance Rulings (CAAR), New Delhi, had previously ruled that several of these devices belong under headings 8518 and 8528, classifying them as sound reproducing speakers or viewing screens. The applicant has challenged these rulings before the Hon’ble High Court of Delhi.

2. Eligibility for Exemption Under Notification No. 57/2017-Cus:
The applicant also sought rulings on the eligibility for exemption under Sr. No. 20 of Notification No. 57/2017-Cus for the Echo devices. Different customs authorities provided varied opinions on the classification and eligibility for exemption. For instance, Chennai Sea Port suggested classification under sub-heading 85198990 for Echo Portable Smart Speaker, while Air Cargo Complex, Mumbai, suggested sub-heading 85176290 but denied the benefit of the exemption notification.

3. Maintainability of Applications in Light of Pending Appeals:
The applicant contended that the applications before CAAR, Mumbai, should be maintainable despite pending appeals in the Hon’ble Delhi High Court. They argued that the applicant in the previous rulings (Amazon Wholesale India Pvt. Ltd.) and the current applicant (Amazon Seller Services Pvt. Ltd.) are distinct legal entities. This distinction means the proviso (a) to section 28-I(2) of the Customs Act, which bars applications if the issue is pending in the applicant's case, does not apply. This argument was supported by the Gujarat High Court's judgment in GSPL India Transco Limited, which held that different legal entities should not be conflated for the purpose of pending issues.

4. Comparison with Rulings on Similar Devices (Apple HomePod):
The applicant drew parallels between the Echo devices and Apple HomePods, classified under sub-heading 85176290 by CAAR, Mumbai. Both types of devices feature digital assistants (Alexa and Siri, respectively) and perform similar functions, such as streaming music, providing real-time information, and controlling smart devices. The applicant emphasized that the Echo devices should similarly be classified under sub-heading 85176290, arguing that the speakers and monitors are not central to the devices' primary function of processing and transmitting voice commands.

Conclusion:
The CAAR, Mumbai, acknowledged the similarity between Echo devices and Apple HomePods but decided to await the decision of the Hon’ble Delhi High Court on the appeals filed by Amazon Wholesale India Pvt. Ltd. regarding the classification of Echo devices. The ruling for the Wireless Speaker Device, Model No. P5B83L, which is not an Echo family device, will be rendered without awaiting the High Court's decision. The secretariat is directed to monitor the progress of the appeals and revisit the 10 applications once the High Court decides the matter.

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