TaxTMI 
TaxTMI 
2022 (10) TMI 331
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....epartment formed an opinion that as per Customs Tariff Act, 1975, 'Microphone for Cellular Mobile Phone' attract Basic Customs duty @ 15% SWS @10% and IGST @18%, totaling of 37.470% duty. It was accordingly alleged that appellants have short paid duty. Differential duty was demanded vide letter bearing No. DLCUSADT /35/Circle-I/2019 dated 01.02.2019 for the period 2.2.2018 to 20.12.2018. The appellants have deposited the same but under protest and continued contesting that 'Microphone for Cellular Mobile Phone' are the part of Printed Circuit Board Assembly (PCBA) and as such was exempted from BCD levy in terms of S.No. 6A of the Notification No. 57/2017 dated 30.6.2017 as amended by Notification No. 37/2018-Cus dated 02.04.2018. The product was also impressed upon to be exempted from the Customs duty by virtue of Entry of S.No. 427 of Notification No. 50/2017 dated 30.6.2017. 2. Denying the claim of payment / nil rate of BCD as claimed under 6A and 18A of Notification No.57A/2017 and as claimed under Entry No. 427 of Notification No. 50/2017 dated 30.6.2017 the show cause notice bearing No.8097 dated 23.10.19 was served upon the appellant proposing the duty demand of Rs.1,26,09....
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....It was also explained in those replies and was also been demonstrated before the Investigating Authorities that without the impugned microphones being soldered to the PCBA, the later fails the sensitivity test. Further the department did not mention about the said report in the show cause notice. The copy thereof was also not given to the appellant. The suppression of such a vital opinion obtained by the Department itself reflects clear premeditated mind against the appellant. The Original Adjudicating Authority has totally disregarded the said opinion of a Competent authority holding the same to be irregular instead, has relied upon the some information collected from the internet. Confirmation of demand is therefore, alleged to be based on extraneous consideration and is beyond the scope of allegations raised in the show cause notice. 6. Learned Counsel has relied upon the decision in the case of CC, Mumbai vs. Toyo Engineering, reported as [2006 (201) ELT 513 (SC)] wherein it was held that Show Cause Notice is foundation of the case of Revenue Authorities and any adjudication order which confirms demand beyond allegations raised in Show Cause Notice, is unsustainable. The rej....
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....n the said definition. Hence, the benefit of entry No. 6A has wrongly been availed by the appellant. 8. It is further submitted that the benefit of duty exemption was available to the appellant under Notification No. 50/2017 dated 30.6.2017 at entry No. 427. But said benefit was not claimed by the appellant at the time of filing of the Bill of Entry but at a belated stage. The said benefit cannot be extended at a belated stage and hence, there is no infirmity in the order under challenge while arriving at this finding. The appellant has partly availed the benefit of 6A of Notification No. 57 since the microphones are not covered under the definition of PCBA. It is impressed upon that microphones infact are not the part of PCBA and are parts of cellular mobile phones. (A part is an essential component of the whole without which the whole cannot function. The installation of various components on a PCBA depends upon the final product for which said installation is being done, say for instance in the case of a modem, the PCBA does not need to be fitted with any microphone but it requires to be fitted with a communication module as it is an integral component for the functioning of ....
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....Entry No. 6A of Notification No. 57/2017 dated 30.06.2017 as amended by 06.07.2019;; 2) The benefit of duty exemption was also available to the appellant under Notification No.50/2017 dated 30.06.2017 as amended upto 10.4.2018.; 3) Technical expert opinion was called from Indian Institute of Technology, Delhi (IIT) who vide report dated 18.3.2019 has given the recommendations / the opinion, so as to treat all components that require soldering on PCBA as PCBA components and all other components that are mechanically attached to PCBA without soldering as the cell phone parts. 12. We further observe that the demand in question has been confirmed on following two counts:- 1) Benefit of Notification No. 50/2017 though available, is not given because it was claimed by the appellant at a belated stage; 2) The microphones imported by the appellant are the Microphone for Cellular Mobile Phone and accordingly, are the goods covered under entry at S.No.18 of Notification No. 57/2017 dated 30.6.2017. As such, these goods are not available to the benefit of duty exemption. 13. From the above observations, the moot controversies for adjudication appears ....
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.... the goods of the description as specified in Column 3 of the table thereunder as are specified in the corresponding entry into column 2 of the said table when imported into India, from so much of duty of Customs leviable thereto in the said first schedule which is in excess of amount collected at the standard rate as specified in the corresponding entry in column 4 of the said table. Subject to any of the conditions as specified in the annexure to the said notification. Condition number 1 which is mentioned in the corresponding entry in column 5 of the said table is:. "With respect to the imported goods it is observed that nil rate of duty is applicable to such inputs or parts, as are used in manufacture of PCBA provided the importer follows the procedure set out in Customs Imports of Goods at Concessional Rate of Duty Rules, 2017." 15. As per entry No. 18 of the said Notification, 10% of duty has to be paid with respect to all goods except three parts of cellular mobile phones, viz., microphones of cellular mobile phones, wired Headset, Receiver of cellular mobile phones. The exemption is not subject to any conditions. There is nothing on record to show that what rate....
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....t unless microphones is soldered and pasted on the PCBA, the same was not functional. Otherwise also, use of word 'such as' in the Explanation B and use of word 'and mechanical components' while naming few electrical components, it becomes clear that components mentioned in the Explanation are merely indicative instead of being confined to four parts i.e. microphones, wired Headset, Receiver of cellular mobile phones and thus may include microphones also if those make the PCBA functional after being assembled with microphones. Thus, the impugned goods are eligible for duty exemption under entry No. 6A of Notification No. 57/2017. 19. We further observe that another Notification No. 50/2017 dated 30.6.2017, exempts microphones by Entry No. 427. It reads as follows:- S.No. Chapter or Heading or sub headings or tariff items Description of goods Standard Rate Condition No. 1 2 3 4 5 427 8485 or 90 The goods specified in List 20 Nil - "List 20 (See S. No. 427 of the Table) 1. Ferrite parts including memory cores and ferrite magnets 2. Switches with contact rating less than 5 amperes at voltage....
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....horities as well as Tribunal (in that case ) that the assessee ought to have claimed the benefit of Notification at the time of filing of Classification list and not at a subsequent stage was set aside. The Authorities and Tribunal were held by Hon'ble Apex Court to be wrong while forming such an opinion. In another case of Kerala State Cooperative Marketing Federation Ltd. & Ors. v. Commissioner of Income Tax, reported as [(1998) 5 SCC 48], the following observations were made by Hon'ble Apex Court :- "We may notice that the provision is introduced with a view to encouraging and promoting growth of co-operative sector in the economic life of the country and in pursuance of the declared policy of the Government. The correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a cooperative society is exempt from tax what has to be seen is whether income fell within any of the several heads of exemption. If it fell within any one head of exemption, it would be free from tax notwithstanding that the conditi....