2009 (5) TMI 212 - AT - Customs

Tribunal affirms duty-free clearance for imported batteries in computers under specific notifications

The Tribunal upheld M/s. Base Corporation Ltd.'s eligibility for exemption under Notification Nos. 79/95 and 203/92 for imported batteries used in ... DEEC licences - Imported Sealed Lead Acid Maintenance Free Batteries (SLAMFB) against transferred Value Based Advance Licences availing exemption from Customs duty extended under Notification No. 79/95-Cus. & No. 203/92-Cus. - We find that the input allowed to be imported for the export product personal computers AT/XT is ‘battery’ as per the Standard Input Output Norms (SION) in force at the material time as recorded in the impugned order. – respondent who imported batteries against advance licences purchased by it after the original importer had fulfilled the export obligation was under no obligation to establish nexus between the batteries and the export product to avail the exemption extended under Notification Nos. 79/95 and 203/92. In the circumstances we find that the appeal filed by the Revenue is devoid of merit. The appeal is rejected. - The consignments were allowed clearance granting exemption against DEEC licences after the importers produced a certificate from the Senior Technical Officer, NIC. As the certificate was to the effect that the batteries could find use in the manufacture of, among others, computers, the authorities consciously allowed the exemption. Therefore, the adjudicating authority rightly held that larger period could not be validly invoked to recover exemption availed by the importer. Issues:1. Eligibility for exemption under Notification Nos. 79/95 and 203/92 for imported batteries.2. Nexus requirement between imported goods and the export product.3. Validity of duty-free clearance based on DEEC licences.4. Requirement of establishing nexus between imported goods and export product for transferees of advance licences.Detailed Analysis:Issue 1:The case involved M/s. Base Corporation Ltd. importing Sealed Lead Acid Maintenance Free Batteries (SLAMFB) against transferred Value Based Advance Licences availing exemption from Customs duty under Notification Nos. 79/95 and 203/92. The authorities initially alleged non-payment of duty and issued a Show Cause Notice. However, the Commissioner of Customs (Exports) Chennai, after investigation, found that the batteries imported were materials required for the export product, personal computers, and thus eligible for the exemption. The Commissioner relied on technical certificates and test reports to support this conclusion, noting that the batteries were capable of being used in the export product.Issue 2:The Revenue appealed the Commissioner's order, arguing that the imported batteries were not capable of use in the export product, personal computers, and lacked nexus with the export product. The Revenue contended that previous imports of similar batteries were cleared on duty payment, indicating a lack of eligibility for exemption. However, the Commissioner's order was based on the correct description of the imported batteries, technical certificates supporting their use in personal computers, and the absence of mis-declaration, ultimately rejecting the Revenue's grounds for appeal.Issue 3:The adjudicating authority rightly held that the DEEC licences used for duty-free clearances were issued to exporters who had fulfilled export obligations, and the transferees of such licences, like the appellant, were entitled to duty-free import without establishing nexus between the imported goods and the export product. Citing precedent cases, the Tribunal emphasized that when goods were imported under valid licences after export obligations were met, there was no requirement to prove nexus between the imported goods and the exported product.Issue 4:The Tribunal further referenced legal precedents to support its decision that transferees of advance licences, like the appellant, were not obligated to establish nexus between the imported goods and the licensed final product. The Tribunal affirmed that the imported batteries, as per Standard Input Output Norms, were undisputedly batteries required for the export product, personal computers, and upheld the exemption under Notification Nos. 79/95 and 203/92 for the appellant, rejecting the Revenue's appeal as lacking merit.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's order and affirming the appellant's eligibility for exemption under the relevant notifications.