Amazon Kindle does not qualify as Dictionary-cannot be exempted from basic customs duty, Delhi HC

The Delhi High Court has held that E-reading devices such as Kindle are not exempted from basic customs duty as they do not qualify as “electrical machines with translation or dictionary functions”..The judgment was passed by a Division Bench comprising Justices Sanjiv Khanna and Chander Shekhar in a writ petition by the Principal Commissioner of Customs, Air Cargo Complex (Import) and Centre..The Principal Commissioner of Customs had sought the setting aside of a May-2015 order of the Authority for Advance Rulings (AAR) holding that Kindle e-reading devices were exempt from basic customs duty..The AAR exempted Kindle, which is imported by Amazon Seller Services Private Limited, by virtue of Exemption Notifications dated March 1, 2005, and December 30, 2006, which provided for an exemption to “electrical machines with translation or dictionary functions” from basic customs duty..The Customs Department disputed AAR’s finding that Kindle qualified as “electrical machines with translation or dictionary functions” on the ground that the primary function of Kindle e-reading devices was not to translate or perform dictionary functions..It argued that the exemption notification should be construed and interpreted strictly and in case of ambiguity and doubt, they must be interpreted in favour of the Revenue, rather than the assessee..Amazon Seller Services, on the other hand, argued that the word “with” indicated that translation or dictionary function need not be the dominant or the primary purpose of the electrical machines and it would be sufficient if the electrical machines could perform and have translation or dictionary function..Neither of the parties disputed that Kindle devices are electrical machines under the residuary clause, i.e., “others” under the residuary Custom Tariff Heading 8543 89/8543 7099..Stating that E-reading devices are designed, purchased and used for reading text and not as a dictionary or translator, the court observed,.“Kindle device is an electronic device designed for use as an electronic book reader. As an electronic book reader, it has several e-books pre-installed in the device and other e-books can be downloaded. The product is developed and designed to function as an e-book reader and is sold and bought as a e-book reader and not as a translator or as a dictionary. .The e-book reader has an inbuilt dictionary feature, which is a secondary or additional feature, useful for the reader. This secondary or additional feature would not make it and qualify the e-reading machine as an “electrical machine with translation or dictionary function.“.The Court concluded:.“Our conclusion is that the exemption notification would apply where the device is an electrical machine covered under tariff item No.8543 89/8543 7099, and its primary and basic function should be to translate or perform dictionary function. E-book readers would be appropriately classified in ―others as distinct from ―electrical machines with translation and dictionary function.”.The order of the AAR was set aside. Nonetheless, Amazon Seller Services was exempted from paying basic customs duty on Kindle for the period between May 15, 2015, till May 11, 2017, i.e., the date on which the impugned order was passed and till the present writ petition was filed..The Customs Department were represented through Standing Counsel Sanjeev Narula..Advocates L Badri Narayanan, Karan Sachdev & Saumya Dubey appeared for the Respondent, Amazon Seller Services..Read the judgement below.