TaxTMI 
TaxTMI 
2024 (10) TMI 297
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....GCR Rules 2017) as prescribed vide Notification No. 68/2017-Cus dated 30.06.2017, as amended. 2. Department observed that the Importer has imported various goods namely Housing Plastic, USB Cables, Lithium-ion Cell etc. after availing the benefit of S. No. 512 of the Notification No. 50/2017-Cus dated 30.06.2017, as amended, during the period of the year 2017-2019. The Importer-appellant has used all the imported items as mentioned above in manufacturing of Power Bank and thus violated the terms of the exemption Notification No. 50/2017-Cus dated 30.06.2017,entry at Sr.no. 512, as amended. Department observed that as per the aforesaid Notification, the exemption benefit is available for the parts, components and accessories except 'populated printed circuit boards' for use in manufacture of lithium-ion batteries other than batteries of mobile handsets including cellular phones falling under tariff item 8507 60 00. 3. It is alleged that the Importer-appellant has manufactured Power banks, which is a portable device comprising of rechargeable cells in a special circuit to control power having USB port/s etc. As per details submitted by the im....
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....0.06.2022 following was proposed: (a) The benefit of the concessional rate of duty under sr.no. 512 of the notification No. 50/2017-Cus dated 30.06.2017, as amended, on the goods imported by the Importer and used in manufacturing of Power Bank should be denied to them. (b) Differential Customs duty of Rs. 8,12,95,799/- (Rs. Eight Crore Twleve Lakh Ninty Five Thousand Seven Hundred Ninty Nine only) forgone on the goods imported at the concessional rate of duty by availing benefit under sr.no. 512 of the Notification No. 50/2017-Cus. Dated 30.06.2017, as amended, should be demanded/recovered from them under rule 8 of IGCR Rules, 2017 as defined under Notification No. 68/2017-Cus (N.T.) dated 30.06.2017, under Section 28(4) of the Customs Act, 1962 read with Section 143 (3) of the Customs Act, 1962 and in terms of clauses of Bond executed by them. (c) Interest as applicable, on the duty demanded above, should be charged and recovered from them under rule 8 of IGCR Rules, 2017 as defined under Notification No. 68/2017-Cus (N.T.) dated 30.06.2017, read with Section 28AA of the Customs Act, 1962, and condition of Bonds execut....
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.... out from said Lithium Ion Battery with populated printed circuit board assembly i.e PCBA, however, being caged in the same protective casing where the Lithium Ion Battery o had already been placed. It is impressed upon that the product still is Lithium Ion Battery Pack/ power bank. Hence the allegation of department that appellants have not manufacture Lithium Ion Battery is incorrect. 10. Ld. Counsel further submitted that for availing the exemption/ benefit of concessional rate of customs duty under under Notification No. 50/2017 dated 30.06.2017, the importer- appellant has followed and complied with following: a) All requisite Provisions including the Provisions of the Customs Act, 1962 and that of CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY) RULES-2017 ( herein after referred as IGCR Rules) as required under condition no. 9 mentioned in the said notification. b) Appellants have duly reported compliances to the satisfaction of the Jurisdictional Divisional Assistant Commissioner of Central Excise, Janak Puri, Delhi and also to the satisfaction of The Assistant/Deputy Commissioner of Customs of the (Port of Import) under whose jurisdiction t....
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....n manufacture of 'LITHIUM ION BATTERY' (LITHIUM ION BATTERY PACK).Rather the Assistant Commissioner of Customs (Port of Import), on receipt of Communication/Recommendation from the Assistant Commissioner of Customs (Preventive) and on being satisfied about the potential use of respective Part, Components, Accessories under import in the manufacture of LITHIUM ION BATTERIES (LITHIUM ION BATTERY PACK), as required under Notification No. 50/2017 CUS dated 30.06.2017, had been ordering 'out of charge' under Section 46 of the Customs Act, 1962. The Bills of Entry filed from time to time by the appellant have regularly been assessed by the concerned officers without raising any such objection as has been raised in the impunged Show Cause Notice(SCN). 12. It is further mentioned that after receipt & utilization of the Stocks in their Factory and after observing the complete compliance on part of appellant, the Assistant Commissioner of Customs, used to cancel the Continuity Bonds filed by the appellant from time-to-time. Such Continuity Bonds were ordered to be cancelled under Section 143(2) of the Customs Act, 1962 by the....
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.... bank" was mentioned for the first time. Hence during the period in dispute there was nothing called as Powerbank. To HSN also it was only accumulators as good as battery were known. 15. Finally it is submitted that the show cause notice has wrongly invoked the extended period of limitation. The department has information since the time of import, as appellant was complying IGCR Rules properly, as mentioned above. The concerned officers were supervising the procedure and were certifying the compliance of the conditions of the impunged notification by cancelling the Continuity bond, as already mentioned above. Hence suppression is wrongly alleged. SCN therefore is barred by limitation. The demand confirmed vide the impunged order is liable to be set aside on this ground as well. With these submissions the Order under challenge is prayed to be set aside and appeal is prayed to be allowed. 16. While rebutting these submissions learned Departmental Representative has submitted on behalf of the department that the demand of Rs 8.13 Cr. has been raised and affirmed along with the interest and penalty of Rs.8.13 Cr. by revoking bonds as were submitted at the time of import of ....
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....missioner that they have been manufacturing Lithium Ion Battery Pack and by never intimating that they have been manufacturing power banks. Hence the submission of the appellant-importer that as per TRU letter dated 26.04.2017 both the items merit classification under CTH 8507 and both are one and the same is without any application of mind. It is impressed upon that since the notification is specific about parts and components of lithium Ion Battery the TRU letter is misinterpreted by the appellant. It is mentioned that this Tribunal in the case of S B Industries (Supra) has already set aside the said clarification of TRU. The violation of terms and conditions of the bond/undertaking is submitted as the sufficient ground to hold appellant liable to pay the duty forgone as in the undertaking it has wrongly been mentioned that the imported parts and components have been used for manufacture of Lithium Ion Battery. Learned Departmental Representative has relied upon the decision of this Tribunal, Mumbai Bench, in the case of Patel Engineering Ltd vs Commissioner of Customs (Import), Mumbai reported as 2013 (295) ELT 243. With these submission....
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....anufacture of items mentioned at (a) above. Nil - 9 22. The perusal makes it clear that exemption to the imported parts, components and accessories under the Notification No. 50/2017-CUS dated 30.06.2017 issued under Section 25 of the Customs Act, 1962 is based on post-importation conditions:- a) Use and utilization of such goods. b) There has to be 'manufacture' of specified type of Lithium Ion Battery by use of such components as specified, in accordance with IGCR Rules, 2017 issued under Section 156 of the Customs Act, 1962 read with Notification No 68/2017-CUS (NT) dated 30.06.2017 23. We observe that there is no denial about use and utilisation of all the imported parts and components by the appellant for manufacturing its product that too in compliance of the condition no. 9 of the notification, the benefit where under, appellant has claimed. The controversy is about what is being manufactured; the Lithium Ion Battery as claimed by appellants or the powerbank as alleged by the department. Said condition no. 9 reads as follows: "If the importer follows the procedure set out in the Customs (Import of Goods at Concess....
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..... While following Novopan India Ltd. Vs. Collector of C. Ex. and Customs, Hyderabad reported as 1994 (73) ELT 769 (SC) it was held "the principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, would have no application to construction of an exemption notification, as in such case it is for the SSC to show that he comes within the purview of the exemption." This view has recently been again affirmed by the Honourable Apex Court itself in the case of L.R. Brothers Indo Flora Ltd. Vs. Commissioner of Central Excise reported as 2020 (373) ELT 721 (SC)while summarizing it is mentioned that the appellant has wrongly obtained the benefit of exemption by basic customs duty while wrongly claiming the benefit under Notification No. 50/2017. 26. Thus it stands clear that the benefit of exemption to components, parts and accessories to be imported at concessional rate of duty since is based on observance and compliance of IGCR Rules, 2017, therefore the term manufacture appearing in Notification No. 50/2017 dated 30.06.2017 in its entry at S.No. 512 has to be interpreted by taking into consideration the pro....
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....ctro lights used in the cell. The cell is either wet or dry. Whereas battery is either a primary battery or a secondary battery i.e. a chargeable or nonchargeable battery. Cell is a single unit and battery is a combination of those single units. This physical/scientific explanation about the meaning of cell and battery is sufficient for us to hold that the appellant has imported cells as single units with various other components and combined the single unit cells with the help of the other imported components to be converted into a battery. The above discussion is sufficient for us to hold that the term manufacture of Rule 3(e) IGCR, 2017 gets satisfied at the time of emergence of battery as distinct from its component i.e. individual lithiumcell and others. From the case law as quoted above about interpretation of a notification, it is clear that definition of 'Manufacture' as given in IGCR Rules, 2017, the scope thereof cannot be enlarged from the stage of emergence of new product to the stage of manufacture of final product which is Power Bank in the present case. 30. Coming back to Entry No. 512, we observe that the exemption is available....
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....equences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the Legislature. In Kanal Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907, it was held that if the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. ii) 20. in applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose (Assistant Commissioner, Gadag Sub-Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355). Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provisi....
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....ific intentions or understandings of the text's authors or ratifiers, and no more. Also termed (in senses 1 & 2) strict construction, literal interpretation; literal construction; restricted interpretation; interpretatiostricta; interpretatio restricta; interpretatio verbalis. 3. The philosophy underlying strict interpretation of statutes. Also termed as close interpretation; interpretation restrictive. vi) See strict constructionism under constructionism. Cg. Large interpretation; liberal interpretation (2). 31. As already observed above the exemption entry has simply talked about manufacture out of imported parts and components that to in compliance of IGCR Rules, 2017 which defined term manufacture also and the entry is silent for such manufacture to be of the final product of the importer of parts and components. We hold that there is no ambiguity in the notification. Department has wrongly interpreted the manufacture to mean as manufacture of end product. It is held that since the appellant has used the imported parts and components in manufacture of Lithium Ion Battery which irrespective the battery has been captively used t....
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....er lead-acid accumulators 8507.30 - Nickel-cadmium 8507.40 - Nickel-iron 8507.50 - Nickel-metal hydride 8507.60 - Lithium-ion 8507.80 - Other accumulators 8507.90 - Parts 35. The notes to this chapter clarifies that electric accumulators are nothing but the storage batteries or secondary batteries which are characterized by the fact that the electro chemical action is reversible so that the accumulator may be recharged which are used just like battery to store the electricity and to supply it when required. A direct current is passed through the accumulator producing certain chemical changes (charging): when the terminals of the accumulator are subsequently connected to an external circuit these chemical changes reverse and produce a direct current in the external circuit (discharging). This cycle of operations, charging and discharging, can be repeated for the life of the accumulator. Accumulators consist essentially of a container holding the electrolyte in which are immensed two electrodes fitted with terminals for connection to an external circuit. In many cases the container may be subdivide....
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....ged, will remain as Secondary Battery or Storage Battery of Chapter Heading 85.07. It is also an undisputed fact that the appellant has sold its product as Lithium Ion Battery Pack only, the product was never sold as power bank. 40. From the entire above discussion it is clear that the power bank performs the same function of storing and transfering electrical energy, it being a Lithium Ion Battery that is a combination of Lithium Ion Cells, however, connected to a printed circuit board which is meant for converting the 3.7 volt stored energy to 5 volt energy as is required by the gadget to be charged through the said power bank working on Lithium Ion Battery. It also stands established that it is only the printed circuit board(PCBA) which distinguishes a generic Lithium Ion Battery from power bank. Appellant is admittedly paying Customs Duty on the import of said PCBA. 41. The captive use of the manufactured 'Lithium Ion Battery' by the appellants to be used as 'Power Bank' by connecting said battery to a PCBA, to our opinion, is irrelevant for denying the benefit of notification 50/2017 to the appellant for the reason as below; i) The notifi....
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....them to manufacture Lithium Ion Battery (Accumulator) which has been captively used by them to manufacture 'Power Bank'. Hence it is held that appellants have rightly claimed the exemption. 44. Now coming to the decision of this Tribunal in S B Industries (supra), it is observed that in the instant case battery used in 'Power Bank' is manufactured from Lithium ion Cells imported by the appellant. The finding of this Hon'ble Tribunal in SB Industries (supra) also provides details of process carried out for bringing into existence of Lithium ion Battery from Lithium ion Cells. Appellant herein also carries out the same process for manufacture of Lithium ion Battery from Lithium ion Cells (imported under Rules, 2017). Since Lithium ion Battery has been manufactured by use of imported lithium ion Cells, utilization of the same in the 'Power Bank', cannot be the basis for denying the benefit of exemption granted to the imported Parts and components so used under Notification No. 50/2017-Cus. dated 30.06.2017. 45. Though the Final Order No. 50039/2019 dated 14.01.2019 of this Hon'ble Tribunal in the case of S B Industries (supra) has been challenged by....
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....t, at the rate fixed by notification issued under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay. (3) The Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service, shall forward one copy of information received from the importer to the Deputy Commissioner of Customs, or as the case may be, Assistant Commissioner of Customs at the Custom Station of Importation. (4) On receipt of the copy of the information under clause (b) of sub-rule (1), the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs at the Custom Station of importation shall allow the benefit of the exemption notification to the importer who intends to avail the benefit of exemption notification. 47. As per this Rule 5 IGCR Rules, 2017 utilization of such components through step by step process has ....