CUSTOMSAUTHORITYFORADVANCERULINGS 001 l\ew Customs flouse, Ballard Estate, Mumbai - 400

The 10th of June,2021 Ruling No. CAAR/Mum/ARC I 1 412A21 In Application No. CAAR/Mum/ARC I L 4 17021

M/s. Apple India Private Limited, 191r Floor' Concordi-Tower C, UB City, No' 24, Vittal Mallya Road, Bangalore, Karnataka

Commissioner of Customs' Air Cargo Commissioner concerned 1. The (Import), New Customs House, Near I'G'I' Airport, New Delhi- 110037.

2. The Pr. Commissioner of Customs' Air Cargo Complex & Airport, Air India SATS Air Freight Station Terminal, Devanahalli, Bengaluru - 560300

3. The Pr. Commissioner of Customs, Chenlai I (Airport), New Custom House, GST Road, Meenambakkam, Chenaai - 60A021.

4. The Pr. Commissioner of Customs, Chenuai VII (Air Cargo Commissionerate), New Custom House, Air Cargo Complex, Meenambakkam, Chennai - 600016.

5. The Pr. Commissioner of Customs (III), (Impod), Air Cargo Complex, Sahar, Andheri (East), Mumbai - 400099.

6. The Principal Commissioner of Custorns, (Airport &. Administration), 15/1 Strand Road, Custom House, 2nd Floor, Kolkata-700001

Present for the application Sri Kanchun Kaushal, CA; Sh. Ravi Sharma, Advocate; Sh. Manmohan Mundhra; Ms. Shruti Khimta; Ms. Shubhangi Arora;

Present for the Depafiment Sh. M. K. Sarargi, Additional Commissioner, ACC, Sahar, Andheri (East), Mumbai; Sh. Balakrishnan, Addditional; Commissioner, ACC&A, AIMST, Dsvanahalli, Bongaluru; Sh. John Elango, Joint Commissioner, ACC, Meenambakkam, Chennai ;

Page 1 of 8 .; Sh. Venkatesh Jadhav, Deputy Commissioner, ACC, Sahar, Andheri (East), Mumbai;

Rulins

an advance ruling on IVIls. Apple tndia pr,t. Ltd. vide their application dated 22.12.2017 sought ,Whether Customs Tariff Heading the question, the import of Apple HomePod will be classified under AtrthoriS for (CTFD 8517.62.9A? The application was received in the secretariat of the erstwhile applicatiorr was admitted Advance Rulings, Central Excise, Customs & Service Taxo*26'12'\Afi 'The given. Thereafter, on on 25.05.2018 and was heard on 29.06.2018. However, no ruling has been provisions of section appoinhnent of the Customs Authority for Advance Rulings, Mumbai under the the said application 2gEA of the Customs Act,196T;the secretariat of the erstwhile AAR transferred to the CAAR, Mumbai' it 2. On scrutiny by the Secretary to the Customs Authority for Advance Rulings, Mumbai, 3 as mandated under appeared tliat the application has lapsed since no ruling was given within months law and purely as a sub-section 6 of section 2g-l of the Act. However, on constructive interpretation of the application if they trade facilitation measure, the applicant was given an opportunity to re-submit the continued to be desirous of obtaining an advance ruling as sought originally. Accordingly, application has been submitted on 01.04-2021 '

3. I1 their original application, the applicant indicated that they wish to import HomePods through in their the airports lair cargo complexes of New Delhi, chennai, Bangalore, Mumbai, and Kolkata. fresh application dated 01.04.2021also, the applicant has expressed the same inteation. The applicant has also quoted decisions of the erstwhile AAR in the cases of BMW lndia Pvt. Ltd., Agilent Technologies India P!1. Ltd., and Xerox India Ltd. in support of their application.

4. In respect of the application for advance ruling filed originally, the Chennai Air Cargo Commissionerate was of the view that Apple HomePods merit classification under sub-heading 85182900 of the tariff. However, the Commissioner of Customs of Bangalore Airport and Air Cargo Complex was of the view that the product merits classification under sub-heading 85176290,concuring with the view of the applicant. The same view was also reiterated by the Delhi and Mumbai Air Cargo Commissioners. No comments were received from Kolkata Commissioner. The comments from the commissionerates were conveyed to the applicant and their rebuttal in respect of the comments from Chennai is also on record. Subsequently, the Commissioner, Chennai VII has reconsidered their earlier stand and concurred with the applicant's as well as views of the concerned Principal CommissionerslCommissioners of New Delhi, Mumbai and Bangalore that Apple HomePods merit classification under sub-heading 87176290 of the tariff. After the filing of the application dated 01.04.2A21, all the aforementioned commissioners of customs were requested to cotnmunicate their comments or re-affirm their earlier position, as may be convetient. Replies have been received from New Delhi and Mumbai, reiterating the earlier position. Mumbai Air Cargo, in addition, as also enclosed a copy of the Bill of Entry No. 9504350, dated 03.01.2019 vide which HomePod Model A16 has been imported by classifying the same under sub-heading 87176290 of the customs tariff.

5. The application was listed for admission on 19.05.202\. Ort the issue of whether an advance ruling can be given in respect of goods ilready imported, Sri Kanchun Kaushal, appearing on behalf of the applicant, argued that they had filed the application in 2017 and its mere transfer to the present authority doesn't make it a new application. The learned counsel emphasised the provisions of sub- section 2 afi 3 of section 28F in support of their line of reasoning. Additional time of one week has

Page 2 of W &e made fuither submissions also been sought for submission of additional written brief. The applicant has has quoted the vide their communication dated Zl.{J5.2021.In the said submissions, the applicant application was relevant portions of the law as it pertained to advance rulings in customs when their filed forthe first time in December,2017 as well as the 1aw as it stands now. Tlre applicant has reiterated receive an advance that they qualifii as an applicant as per the provisions oflaw and also have a right to ruling. The main tlyust of the arguments of the applicant is that their application filed afresh on date of filing on 26 01 .04.2021 cannot be treated as a fresh application and that their original '12'2417 present authority, the would stand and since the original application has sirnply been transferred to the The applicant also present proceedings would be deemed to be a continuation of the past proceedings- had resorted urgo", that silce they had filed an application for advance ruling and only thereafter, they to import, their right to receive an advance ruling wouldn't be adversely affected. The decision of (28a) 121 is Hon,ble Delhi High Court in the case of Mls. Hyosung Corporation reported at2016 CTR (3) cited in support of this contention. During the oral arguments, the provisions of sub-section of legitimate section 2gF of the Act was emphasized again. The applicant has also cited the doctrine of that expectation in sgpport of their argument to receive an advance ruling. The applicant also states promissory since their original application stood admitted by the erstwhile authority, the doctrine of case laws estoppel would require a continuation of proceedings rather than a fresh proceeding. Several have been cited in support ofthis contention.

6. I have gone through the case records, and written as well as oral submissions. An application for advance ruling was filed before the erstwhile AAR on 26.12.2017. At the relevant time, the time limit prescribed in the statute was ninety days. This time period was amended to three months w.e'f' 29.$.2A1g by virtue of the section 68 of the Finance Act. 2018. Now, the question that arises is that if an advance ruling is not rendered within the time limit prescribed in the statute, what would be the re- result? One possible answer to that is that the application lapses, and therefore, would require to be submitted or revalidated. The other possibitity, the one favoured by the applicant, is that the application rvould continue to exist until an advance ruling is rendered. The scheme of advance rulings in customs was introduced by virtue of section 103 of the Finance Act, 1999.It is contained in the chapter VB of the Customs Act, 1962. Major amendmentsideletions/substitutions were carried out to the scheme of advance rulings in the Finance Acts of 2017 and 2018. Prior to such changes, advance rulings were given by the AAR which comprised of a chairperson, who was to be a retired judge of the Supreme Court, an officer of the Indian Customs and Central Excise Service who is qualified to be a Member of the Board, and an officer of the Indian Legal Service who is, or is qualifled to be, an Additional Secretary to the Government of India. However, by virfue of section 28EA, inserted in the Act w.e.f. 28.03.20i8, provision was made for appointment of an officer of the rank of Principal Commissioner of Customs or Commissioner of Customs as the CAAR to render advance rulings and at the same time the erstwhile AAR was converted into an appellate body. However, during the transition period, the proviso to section 28EA(1) made provision for filing of advance ruling applications with the erstwhile AAR, while making provision of transfer of pending cases to the newly created CAARs under sub- sections (2) and (3) of the section 28F of the Act. In this case the applicant filed an application for advancerulings on26.l2.20lTundertheprovisotothesub-section(1)ofsection28EAoftheAct'This application has, however, not been disposed of by the erstwhile authority. Thereafter, on the appointment of CAAR, Mumbai and notification of the relevant regulations w.e.f.04.01.2021, this application has been transferred to CAAR, Mumbai under the provisions of sub-section (3) of section 28F. The said provision states that, 'On and from the date of appointment of the Customs Authority for Advance Rulings, every application and proceeding pending before the erstwhile Authority for Advanoo Rulings shall stand transfemed to the Authority from the stage at which such application or proceeding stood as on the date of such appointment.' In the advance ruling no. CAAR/MumlAPiCl4l2021, dated

Page 3 of 8 W advance rulings were not given by the erstwhile 21 .04.2021,1have taken a view that applications where lapsed at the end of the AAR would be considered as lapsed and an application which had already careful reconsideration, I have erstwhile AAR, would remain so at the time of transfer to CAAR. On interpretatior of law' lt is reached the conclusion that it is perhaps not desirable to adopt a restrictive unattended' Therefore, they shouldn't true that the applicant was not at fault that their application went present proceedings would be deemed be penalised as there was no failure on their part. Therefore, the as was initially interpreted to be a continuation of the earlier proceedings and not a fresh application, that the applicant would remain by the secretariat. The significance of this line of reasoning would be which have been imported after filing eligible for receiving advance rulings in respect ofthose products as per clause (b) of the section 288 the advance ruling application. The definition of 'advance ruling' ,lt to in section 28H raised by of the Act is that, is a written decision on any of the questions referred or exportation'' the applicant in his application in respect of any goods prior to its impoftation one to the conclusion that if an Therefore, a reasonable interpretation of the definition would lead renderilg a decision' as has application for advance ruling has been filed, and there is a delay in application would not take happened in this very instance, impofts made after filing the advance ruling away the right of the applicant to receive a ruling'

as five entry ports for the import 7. In the present application, the appticant has indicated as many ( 1 28-I of the Act of Homepods for which an advance ruling has been sought. Sub-section ) of section .On to be forwarded to the states that, receipt of an application, the Authority shall cause a copy thereof to principal Commissioner of Customs or Commissioner of Customs and, if necessary, call upon him flrnish the relevant records:

provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Principal Commissioner of Customs or Commissioner of Customs.'

Further, clause (c) to the sub-section (1) of section 28J of the Act lays down that an advance ruling pronounced under sectionZS-lwould be binding, among others, on the Principal Commissioner of Customs or Commissioner of Customs, and the customs authorities subordinate to him, in respect of the applicant.

Fufther, section 28KA read with regulation 9 mandates that the Principal Commissioner or the Commissioner is authorised to file an appeal against an advance ruling.

The import of reading all the legal provisions cited above together leads one to the inescapable conclusion that the scheme of advance rulings in customs, as contained in the Chapter VB of the Act, envisages that an applicant would indicate only one portipoint of entry for their proposed activity. The use of definite article 'the' in all these legal provisions also point to the intention of the legislature to define a specific individual and not indulge in a generic description where a singular can be read as plural and vice versa. The statutory mandate to give a ruling within 3 months of filing an application would also be difficult to comply with if applicants cite multiple portsipoints of imporVexpofr as corresponding with multiple Principal Commissioners/Commissioners and conveying their comments to the applicant and take in to account the rebuttals/rejoinders of the applicant would be time consuming and would make it difficult to render advance rulings within the time prescribed in the statute. In my view, applicants should avoid such tactics which would only result in delay. Howevet, in the present proceedings, considering the fact that this is a transferred application and also that comments of four of the flve Principal Commissioners/Commissioners aro or rscord, I am not pursuing this issuo any further.

Page 4 of 8 %ffi de the applicant g. The matter was listed for final hearing on 08.06.2021. Before the hearing, their entire application with respect submitted additional written submissions in which they summarised for import, emphasised the fact to the functionality and technical specifications of the product intended with their stand' that four Principal Commissioners/Commissioners of Customs have concurred relevant portions of the HSN reproduced the relevant portions of the tariff, made reference to the and also referred to Explanatory Notes, drew attention to the relevant rule for interpretation oftariff, Super Tooth and Sonos Play' on united States customs' tariff rulings on two similar products, namely, HornePods under sub-heading the basis of the same, they requested that a ruling be given classifuing their g;l762g0.During the hearilg, Sri Kanchun Kaushal, representing the applicant took me through representing the concerned submissions in great detail. The Additional/Joint{Deputy commissioners, reiterated their principal CommissionerslCommissioners of Mumbai, Chennai and Bangalore also earlier comments supporting classifi cati on under sub-heading 85 1 7 6294. the subject matter g. According to the appticant, an Apple HomePod, the classification of which is device allowing the user to of the present proceedings, is stated to be essentially a home entertainment from the internet without connect wirelessly to internet via Wi-Fi or Bluetooth and stream music directly music store for gaining the need for any accornpanying device. It requires the user to subscribe to Apple of functionality access to the database. The device is stated to follow a general trend of conYergenae from another otherwise known as the "lnternet of Things". The device can also stream music directly Apple's Apple device with Airplay 2 functionality. Another key differentiator of HomePods from existing product range is that the device can provide news, weather, traffic and sports updates. It can through also provide translations, set timers and tells the time all via voice commands/requests received a digital assistant (Siri) which is built into the device. The device converts the voice commaads/requests into audio text in order to search the internet for the information, and once found, it regenerates the information back to the user in the form of speech from the device's speaker. The device also has the ability to control a wide range of accessories via a hardware ceftification platform and database system that allows to iategrate, configure, and comrnunicate between a wide variety of home products like Iocks, lights, security equipment, and other home automation products, from air conditioners to garage doors to security cameras all connected to the same wireless network. Thus, the device enables controlling of various home applications via Siri through voice commands by adding an accessory to the Home app installed on iPhone, iPad, Apple Watch, Apple Mac Computer, etc. The key functionality of the device is to provide an interactive intetface by receiving, converting and regenerating voice data that is used to operate and control smart devices set up inside one's house. The device can recognise the user's voice commands and help in carrying out functions like lowering the thermostat of the air conditioner, lowering one's garage door, operate live camera streaming, turrr onloff lights at home, etc- ln nutshell, HornePod is a device which has multiple usages with primary feature designed to receive data in the form of voice command/request, convert this into audio text in order to retrieve data from the interlet and regenerate the data back to a user in form of a speech. The applicant has summarised the key characteristics of the product are as follows:

. It can only function in a wireless network either via Wi-Fi or Bluetooth connection,

. It can stream music from intemet,

. Has Apple A8 microprocessor chip,

. Controls for pausing or skipping music and volume control,

. Provides multi-room speaker support with AirPlay 2,

. High-excursion woofer with custom amplifier,

Page 5 of 8 )* de ",%r})----WSthonly6o.Adance . Amay of seven horn-loaded tweeters, each with its ow custom amplifier,

. Six-mictophone array for far-field Siri and room sensing,

. Internal low-frequency calibration microphone for automatic bass correction,

. Direct and ambient audio beamfotming,

. Transparent studio-level dynamic processing.

10. As alreadymentioned, the applicant is ofthe viewthatthe Apple HomePod merits classification under sub-heading 85116290. Four Prilcipal Commissioners/Commissioners, at the Air Cargo Complexes at New Delhi, Mumbai, Chemai, and Bangalore also share the same view. The relevant portions of the heading 8517 of the first schedule to the Customs TariffAct reads as below: -

8517 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 communicatiol 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

- Telephone sets, including telephones for cellular networks or for other wireless networks:

- Other apparatus for transmission or reception of voice, images or other data, including apparatus for comrnunication in a wired or wireless network (such as local or wide area networt):

8517 .62 -- Maohines for reoeption, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus:

8517.62.10 --- PLCC EquiPment

8517 .62.20 --- Voice frequency telegraphy

8511 .62.30 --- Modems (modulators-demodulators)

8517.62.40 --- High bit rate digital subscriber line system (HDSL)

8517.62.50 --- Digital loop carrier system (DLC)

851,7.62.60 --- Synchronous digital hierarchy system (SDH)

8517 .62.7A --- Multiplexers, statistical multiplexers

8517.62.9A --- Others

11. Considering the attributes of the device in question, which is capable of receiving voice commands, covert such voice commands into text to perform multiple tasks, e.g., stream music from the internet or another Apple device, retrieve information available in the net like weather, traffic, news, sports updates etc., regenerate such information back to the user in the form of music/speech, and also act as ahome automation device to control reconditioners, locks, lights etc., it is clear that the product in question has multiple facets, and therefore, its classifrcation would depend upon identiffing the essential characler of the device. The product consists of an Apple designed A8 chip, a six-microphone affay, a Seven-t\yeetgr array, and a high exoursion woofer enclosed in a seamless mesh fabric' The device woiks wirelessly through Wi-Fi or Bluetooth and as already noted it can play music directly from the internet or from another Apple device through AirPlay 2. Through its digital assistant, Siri, a

Page 6 of 8 d-e user san give voice commands not only for obtaining the preferred music, but also information like, weather, news etc. Therefore, unlike a mere speaker, which only reproduces sound, the HomePod is a convergence device which is capable of receiving voice commands and processing such commands internally to receive the desired end result, be it music or information, and regenerate such music or information back to the user via the speakers. The primary mode of interacting with the device is voice commands, though it is possible to play, pause and raise volume by tapping the top of the device. The home automation functions of the device to control a wide range of accessories is carried out via a hardware certification platform and a database system that makes possible integrate, configure, and communicate between a wide variety of products. The control of such devices is also done through Siri via voice commands. Considering the various functions that the device is capable of and taking into account the existing tariff classiflcation system, I am of the considered opinion that the product in question answers to the description of six-digit entry 851762 which is meant for'Machines for reception, conversion and transmission or regeneration of voice, images, other data, including switching and routing apparatus' and more specifically under the residuary sub-heading 85176290-

In view of my aforesaid discussions, I rule that Apple HomePods merit classification under sub-heading 8517629A of the first schedule to the Customs TariffAct,1975. ,{) ,'._1i. { V,, ;fl"i**l (M.R.MOHANTY) Customs Authorif for Advance Rulings, Mumbai

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erh>:--Wtffiontyra6/rd*anca de Dated: 10'06'2021 C.No. CAARJMum/ AIICI 1 4 I 702'l to: - copy of the ruling and is sent This copy is certified to be a true C, IrB CitY, No. 24, Yittal 19th Floor, Concorde Tower l. IWs. APPIe lndia Private Limited' Mallya Road, Bangalore, Karnataka ; &shune1hlg69@!pple'cs:r ; Email: rag!rut-hl$69@Eplc4@ House, Near r.G-r. z. ;il"'["ffi G" G-*rt), New customs Airport, New Delhi - 110037' gmuil gqgllryaceimp-c-qsdelr'Q'ric'in : Air India SATS Air a Air Cargo Complex J. The Pr. Commission"' oiC"io*s' -t lopo*' 560300 a."trfr, Station Terminal, Devanahalli' Bengaluru - Emai I : camm$gac'c- cuihk@n]c'18 4. ThePr'CommissionerofCustoms,Chenrrail(Airport),NewCustomHouse,GSTRoad, Meenambakkam, Chennai- 60A027 ' p* 01x1xl@l:[email protected] Email : New Custom Chennai vII (Air cargo Commissionerate)" 5. The pr. commissioner of Customs, Chennai 600016' House, Air Cargo Complex, Meenambakkam' - Email: pqonxtr7acc-cuschn@gov' in (lmport), Air Cargo complex, sahar' Andheri (East)' 6. The Pr. Commissioner of customs (II!, Mumbai - 400099. Email : rigp-sd.&s$l&csvJg 1511 Strand Road' The Principal commissioner of customs, (Airport & Administration), Custom House, 2"d Floor, Kolkata-700001 Email: @, kolcus-ai:?ort(8gov"in 8. The Customs Authority for Advance Rulings, New Delhi' Email : css-adYIqlagq da&Agsi;:1 customs zone-L, Ballard Estate' 9. The Principal chief commissioner of customs, Mumbai Mumbai -400001. Ernail : sg!_lilEg1i}[email protected] (CESTAT), 10. The Chief Commissioner(AR), Customs Excise & Service Ta-x Appellate Tribunal West Block-2,Witg-2, R.K. Puram, New Delhi - 110066' Email: qdryCstat-1 23 @gmail'{?qn1, {rSer.agilst-dslh@CQvAl 1 1. The Member (L & J), CBIC, New Delhi. Email: mem.ii-cl:ic@nic. ilr 12. Guard file.

Customs Authority for Advance Rulings, Murnbai

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