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2018 (9) TMI 272 - HC - CustomsClassification of an item - Kindle e-reading devices - whether Kindle e-reading devices were “electrical machines with translation and dictionary function”? - Exemption Notification No. 25/2005-CUS dated 1st March, 2005 as amended by notification No. 133/2006-CUSTOMS dated 30th December, 2006. Held that:- 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 word ‘with’ can have diverse and varied meaning depending upon the context in which it is used. A restricted meaning to the word “with” is in consonance with the judgments of the Supreme Court on strict construction of exemption notification. In the context of the present notification, we observe and hold that the words ‘translation’ and ‘dictionary’ functions qualifies the words ‘electrical machines’ with the mandate that translation or dictionary function should be the primary and relevant function of the said machine for which they are purchased and used. The exemption is restricted to machines which translate or perform dictionary functions and not to other machines that primarily perform some other function. The word “with” is equally capable of referring to the dominant or the main purpose and not the ancillary or the secondary function - the restrictive interpretation would be appropriate and inconsonance with principles of interpretation applicable to tariff items. Broad and wide ambit propounded by the respondent unintelligibly articulates a rather far-fetched interpretation. 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. Primary function of kindle device is to enable the user to read e-books. It is an e-book reading device and not a translator, and is not procured or purchased to perform dictionary function. No one purchases a kindle device because it is a translator or device “with” a dictionary function. E-book readers are purchased because a person wants to read e-books which are pre-loaded or can be downloaded from internet. Dictionary in a Kindle device enables the reader to make use of the dictionary while reading the e-book. E-book reader as such is not a dictionary or translator device. E-book readers would be appropriately classified in “others” as distinct from “electrical machines with translation and dictionary function”. Kindle devices are not covered under the exemption notification as they were/are not “electrical machines with translation or dictionary functions”. Whether our judgment should be made applicable with effect from the date on which the writ petition was filed or should have retrospective effect i.e. from the date of filing of the application by the Respondent before the AAR? - Held that:- There has been considerable delay and laches on the part of the Union of India in challenging the order of the AAR dated 15th May, 2015, as the present writ petition was filed only on 11th May, 2017. The order dated 15th May, 2015 had its consequences. The respondent could have verily believed that the government had accepted the order. As noticed above, e-book readers were granted specific exemption from basic excise duty vide Budget of 2014, but subsequently by Budget of 2016-17 the exemption was withdrawn with the e-readers attracting basic customs duty of 7.5%. The respondent had filed their application before the AAR on 8th June, 2012 and the pronouncement was by way of order the dated 15th May, 2015, when the e-book readers were themselves not attracting any basic customs duty - the respondent would not be entitled to benefit of exemption notification on e-book readers till 15th May, 2015 for this was a risk which the respondent had knowingly taken. In view of the delay and laches on the part of the petitioner in approaching the Court, hold that the respondent would not be liable to pay basic customs duty re-introduced by the Budget of 2016-17 for the period post-Budget 2016-17 till the filing of the present writ petition on 11th May, 2017. Petition allowed.
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