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of <h1>Cellular phone receivers classified under CTH 85177090, not CTH 8518, microphones ineligible for exemption benefits</h1> <h3>M/s. Bharath FIH Ltd. Versus The Commissioner of Customs, Chennai And (Vice-Versa)</h3> M/s. Bharath FIH Ltd. Versus The Commissioner of Customs, Chennai And (Vice-Versa) - TMI ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment involve the classification of imported goods and their eligibility for customs duty exemptions under specific notifications. The main issues include:Whether the imported 'Receiver' should be classified under CTH 85177090 or CTH 85181000, affecting the applicable customs duty rate.Whether 'Microphones' imported for use in mobile phones qualify for duty exemption under Notification No. 57/2017-Cus.Whether 'Connectors' used in mobile phones are eligible for exemption under Notification No. 57/2017-Cus.Whether 'Rear Cover, A Cover, D Cover Assy. B Cover, Front Housing, Rear Housing, Camera Lens, Front Cover ASM and Battery Cover ASM' are correctly classified under CTH 85177090 or should be reclassified under CTH 39209999.Whether the non-imposition of redemption fines is justified when goods are not physically available.ISSUE-WISE DETAILED ANALYSIS1. Classification of 'Receiver'Legal Framework and Precedents: The classification dispute centers around whether the 'Receiver' falls under CTH 85177090 or CTH 85181000. The relevant legal framework includes the Customs Tariff Act, 1975, and related notifications.Court's Interpretation and Reasoning: The Court found that the 'Receiver' is a part of cellular mobile phones and should be classified under CTH 85177090, consistent with the Explanatory Notes to HSN and previous judicial interpretations.Key Evidence and Findings: The Court relied on Section Note 2 to Section XVI of the Customs Tariff Act, 1975, which provides guidelines for classifying parts of machines.Application of Law to Facts: The classification of the 'Receiver' under CTH 85177090 was deemed appropriate as it is a part of the mobile phone, not a standalone item.Treatment of Competing Arguments: The Court rejected the Revenue's classification under CTH 8518, citing lack of merit and support from relevant legal notes.Conclusions: The classification under CTH 85177090 is upheld, allowing the appeal filed by the Assessee-Importer.2. Classification and Exemption of 'Microphones'Legal Framework and Precedents: The issue involves the interpretation of exemption notifications, particularly Notification No. 57/2017-Cus.Court's Interpretation and Reasoning: The Court held that 'Microphones' are not eligible for exemption under S. No. 6A of Notification No. 57/2017-Cus., as they are distinct commodities not considered parts of PCBAs.Key Evidence and Findings: The Court examined the definition of PCBA and relevant Board circulars, concluding that microphones do not form part of PCBAs.Application of Law to Facts: The classification of microphones as distinct commodities led to the denial of the claimed exemption.Treatment of Competing Arguments: The Court addressed the appellant's arguments regarding the classification and exemption of microphones, ultimately siding with the Revenue's interpretation.Conclusions: The appeal is partly allowed, restricting the demand to the normal period with applicable interest.3. Classification and Exemption of 'Connectors'Legal Framework and Precedents: The classification of connectors involves Notification No. 57/2017-Cus. and subsequent amendments.Court's Interpretation and Reasoning: The Court found that connectors are essential parts of mobile phones and eligible for exemption under the relevant notifications.Key Evidence and Findings: The Court considered the role of connectors in mobile phone assembly and their classification under specific tariff headings.Application of Law to Facts: The Court upheld the classification under CTH 85177090, granting exemption benefits.Treatment of Competing Arguments: The Court rejected the Revenue's reclassification of connectors, emphasizing their integral role in mobile phones.Conclusions: The appeal is allowed, granting exemption benefits to the Assessee.4. Classification of Plastic Covers and Related PartsLegal Framework and Precedents: The classification dispute involves whether certain mobile phone parts should be classified under CTH 85177090 or CTH 39209999.Court's Interpretation and Reasoning: The Court held that the parts in question are components of cellular phones and should be classified under CTH 85177090.Key Evidence and Findings: The Court relied on previous decisions and the applicability of Notification No. 50/2017.Application of Law to Facts: The classification under CTH 85177090 was deemed appropriate, granting exemption benefits.Treatment of Competing Arguments: The Court rejected the Revenue's reclassification, citing lack of evidence to support the charge.Conclusions: The appeal is allowed, upholding the classification under CTH 85177090.SIGNIFICANT HOLDINGSCore Principles Established: The judgment emphasizes the importance of proper classification based on the nature and use of the imported goods, as well as the interpretation of exemption notifications in line with legislative intent and commercial parlance.Final Determinations on Each Issue: The Court allowed the appeals concerning the classification of 'Receiver,' 'Connectors,' and plastic parts, granting exemption benefits. The appeal concerning 'Microphones' was partly allowed, with the demand restricted to the normal period.Verbatim Quotes of Crucial Legal Reasoning: The Court stated, 'The classification sought to be made by the Revenue under CTH 8518 lacks any merit and hence, we set aside the impugned order.'
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