Amazon wholesale India judgment on classification

The judgment of Delhi High Court in case of Amazon Wholesale-

The classification is always a litigated subject. In a recent judgement by the Delhi High Court classification of some items of Amazon Wholesale was announced. Let us have a look at this judgment.

Citations

Commissioner of Central Excise Hyderabad v. Sarvotham Care Limited

Sanghvi Movers Ltd v. Commissioner of Customs

Commissioner of Central Excise, Hyderabad vs. Sarvotham Care Limited

Commissioner of Customs, Central Excise and Service Tax, Hyderabad vs. Ashwani Homeo Pharmacy

Commissioner of Central Excise, Delhi vs. Carrier Aircon Ltd

Xerox India Limited vs. Commissioner of Customs, Mumbai

Facts of the case

The principal question which appears 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 and which is 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.

The AAR in terms of the impugned order has held that the principal function of the three Echo 4th generation devices appears to be the reproduction of sound and thus they being liable to be classified as speakers.

Observation

We note that this issue with regard to non-payment of service tax on the reimbursable expenses travelled upto Hon’ble Apex Court wherein it got settled by the decision in the case of Union of India and Anr. v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd.13 The Apex Court has held as per Section 67 (un-amended prior to 1st May, 2006) or after its amendment with effect from 1st May, 2006, the only possible interpretation of the said Section 67 is that for the valuation of taxable services for charging service tax, the gross amount charged for providing such taxable services only has to be taken into consideration. Any other amount which is not for providing such taxable service cannot be the part of the said value. It was clarified that the value of service tax cannot be anything more or less than consideration paid as quid pro quo for rendering such services. Accordingly, it was held that Section 67 of Finance Act, 1994 do not allow inclusion of reimbursable expenses in valuation of service rules.

We, consequently answer the questions of law as framed by holding that the eleven devices are correctly classifiable under CTH 8517 and more particularly under Tariff Entry 8517 62 90. Echo Show 5, Echo Dot 4th Generation and Echo Dot 4th Generation with Clock are 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 is affirmed.