Setting an order by Authority of Advanced Ruling aside, the Delhi High Court said that Amazon Kindle is a reading device and not a dictionary, making it liable for customs duty. The Authority of Advanced Ruling had earlier said that the Kindle is exempted from excise duty. "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," the Delhi HC observed.
The court also said that the product is built to function as an e-reader and bought and sold as an e-reader and not as a dictionary or translator. "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 observed.
Tax experts say that companies will have to be careful in applying exemption notification. Experts also say that usage of specific words should be viewed at a product level.
The Delhi HC also mentioned that it is aware that it should not interfere in pronouncements and decisions by the AAR and that the scope of judicial review is narrow and limited. Additionally, it said that it believes that the language of the description under the heading 'description of goods' has been erroneously rejected, highlighting the Kindle's secondary feature as dictionary and translator as its main feature.
The Amazon Kindle is an electronic device used specifically as a book reader. It has multiple e-books pre-installed and more can be added by the user. The device also helps users look up meanings of words while reading.
(Edited by Anwesha Madhukalya)