The Delhi High Court, in its order dated August 28, 2018, 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”.
A writ petition was filed by the Principal Commissioner of Customs, Air Cargo Complex (Import) and the Union of India, through Ministry of Finance.
The judgment was passed by a Division Bench comprising Justices Sanjiv Khanna and Chander Shekhar.
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.
By virtue of Exemption Notifications dated March 1, 2005 and December 30, 2006, the AAR exempted Kindle, which is imported by Amazon Seller Services Private Limited, from basic customs duty.
The Customs Department disputed AAR’s finding that Kindle qualified as “electronic machines with translation or dictionary functions”. It was further argued that the primary function of Kindle e-reading devices was not to translate or perform dictionary functions.
Amazon Seller Services, on the other hand, argued that the word “with” indicated that translation or dictionary features need not be the primary features/purpose of the electronic machines and it would be sufficient if electronic machines could perform translation and/or dictionary functions.
The Delhi High Court concluded that the exemption notification would apply where the primary feature of the electronic machine is to perform translation and dictionary functions. The Court further stated that e-books would be appropriately classified in “others” category and not in “electronic machines with translation and dictionary functions”.
The order of the AAR was set aside.
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