Strict construction of surcharge exemption denied camera module relief where imported parts did not meet camera specifications.

Camera modules imported for use in cellular mobile phones were held not to qualify for Social Welfare Surcharge exemption under Notification No. 11/2018-Cus because, although classified under tariff item 85258020, they did not satisfy the further requirement of being a "Digital Still Image Video Camera." The modules were only parts of mobile phones at import stage and lacked independent camera features such as internal storage, output terminal, optical viewfinder or LCD. The notification was construed strictly, with the burden on the importer to prove full compliance with all exemption conditions. The demand, confiscation and penalty were therefore sustained.

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Issues: Whether camera modules imported for use in cellular mobile phones were eligible for exemption from Social Welfare Surcharge under Notification No. 11/2018-Cus dated 02.02.2018, and whether the consequent demand of duty, confiscation and penalty were sustainable.

Analysis: The imported goods were classified under tariff item 85258020, satisfying the first condition in the surcharge exemption entry. However, the exemption also required the goods to answer the description of a "Digital Still Image Video Camera". On the facts found, the camera module was only a part of a mobile phone at the stage of import and lacked the features of an independent digital still image video camera, such as internal storage, output terminal, optical viewfinder or LCD. The exemption notification had to be construed strictly, and the burden lay on the importer to establish full satisfaction of the exemption conditions. The later withdrawal of BCD exemption for camera modules by Notification No. 37/2018-Cus did not establish entitlement under Notification No. 11/2018-Cus.

Conclusion: The importer was not entitled to exemption from Social Welfare Surcharge under Notification No. 11/2018-Cus. The demand was upheld, and the confiscation and penalty were also sustained.

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