Apple has offered to refund Australian customers who felt misled about the 4G capabilities of the new iPad, which can access the ultra-fast wireless network only in North America.
Australia was the first country where Apple's new iPad went on sale earlier this month, with hundreds of the devices being sold on the first day.
The offer comes after Australia's consumer watchdog took Apple to court for false advertising because the tablet computer does not work on Australia's 4G network, according to the BBC.
Australia's Competition and Consumer Commission (ACCC) lodged a complaint with the Federal Court in Melbourne after finding that Apple's promotion of the new iPad was misleading "because it represents to Australian consumers that the product can, with a SIM card, connect to a 4G mobile data network in Australia, when this is not the case".
At a preliminary hearing, Apple lawyer Paul Anastassiou said Apple had never claimed the device would work fully on the current 4G network in Australia operated by Telstra.
He said although the company did not accept that its promotion of the new iPad was misleading, Apple is willing to publish a clarification and refund any customers who felt misled.
But Anastassiou said Apple was not prepared to put corrective stickers on iPad boxes, as sought by the ACCC. Instead, he said the company would e-mail customers to clarify that the device was not compatible with local carrier Telstra's 4G network.
If the matter goes to full trial, the ACCC will seek an injunction on sales, as well as a financial penalty against Apple, corrective advertising and refunds to consumers.