Echo family device classification as communication machines under tariff entry, with select models eligible for exemption

Classification of imported electronic devices focuses on whether devices are goods for reception, conversion and transmission of voice or data rather than mere speakers. Courts reiterated that nomenclature alone is not decisive and the dominant function/principal function, common parlance and primary versus incidental purpose tests must be cumulatively applied; on those grounds the devices were characterised as communication machines performing reception, conversion and transmission of data and hence classifiable under tariff entry for such machines, with specific models held eligible for notification-based exemption.

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Issues Involved:

1. Correct classification of the 11 Echo Family Devices under the Customs Tariff Heading (CTH).
2. Eligibility for exemption under Notification No. 57/2017-Cus dated 30.6.2017 for specific devices.

Summary of Judgment:

Issue 1: Classification of Devices

1. Principal Question: Whether the subject devices should be classified under CTH 8517, which includes apparatus for transmission or reception of voice, images, or other data, or under CTH 8518 (microphones, loudspeakers) or CTH 8528 (monitors and projectors).

2. AAR's Decision:
- Echo 4th Generation Devices: Classified as speakers under CTH 8518 due to their principal function of sound reproduction.
- Echo Show Devices: Classified under CTH 8528 as monitors/displays.
- Echo Flex: Classified under CTH 8517 as a communication device.
- Echo Studio: Classified as a smart speaker under CTH 8518.
- Echo Link and Echo Link Amp: Classified under CTH 8517 due to their primary function of reception, conversion, and transmission of voice or other data.

3. Appellant's Argument: The devices should be classified under CTH 8517 as they are essentially communication devices designed for the transmission, reception, and conversion of data, and not merely as speakers or monitors.

4. Court's Analysis:
- Principal Function Test: Emphasized that the principal function of the devices should be the determining factor for classification.
- Versatility of Devices: Recognized the multifunctional nature of the devices, which include capabilities such as controlling smart home appliances, browsing the internet, and acting as a calling and messaging platform.
- Legal Precedents: Referred to the Supreme Court's decisions in similar cases, emphasizing the importance of the principal function over the nomenclature of the product.
- Global Classification Practices: Considered international practices and the Harmonized System of Nomenclature (HSN) for consistency in classification.

5. Court's Conclusion: The seven devices (Echo 4th Generation, Echo Dot 4th Generation, Echo Dot 4th Generation with Clock, Echo Show 5, Echo Show 8, Echo Show 10, and Echo Studio) should be classified under CTH 8517, specifically under Tariff Entry 8517 62 90, as their principal function is the transmission and reception of data.

Issue 2: Eligibility for Exemption

1. AAR's Decision on Exemption: Denied exemption benefits to Echo Show 5, Echo Dot 4th Generation, and Echo Dot 4th Generation with Clock, as they were not classified under CTH 8517.

2. Court's Conclusion: Since the devices are now classified under CTH 8517, they are eligible for exemption under Notification No. 57/2017-Cus dated 30.6.2017, as amended.

Final Judgment:
- The order of the AAR dated 20 July 2021 is set aside to the extent it denied classification under CTH 8517 and exemption benefits.
- The eleven devices are correctly classifiable under CTH 8517, specifically under Tariff Entry 8517 62 90.
- Echo Show 5, Echo Dot 4th Generation, and Echo Dot 4th Generation with Clock are eligible for exemption in accordance with the relevant notification.

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