TaxTMI 
TaxTMI 
2025 (2) TMI 110
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....ee was classifiable under tariff item 85181000 which attracted BCD at 10% which was further increased to 15% w.e.f. 02.02.2018 vide the Notification No.57/2017 dt. 30.06.2017, the Revenue through the Commissioner issued Show Cause Notice dt. 04.05.2019 inter alia proposing to reclassify "Receiver" under CTH 8518, to demand differential duty under Section 28 (1) of the Customs Act, 1962 along with applicable interest under Section 28AA ibid and penalty under Section 112 (a) ibid. It also proposed to confiscate the goods in respect of some of the Bills of Entry under Section 111 (m) and 111 (o) of the Act ibid. 2.1 The assessee appears to have filed a detailed reply justifying its classification and thereby requesting for the dropping of the further proceedings, but however not accepting the reply, the Commissioner of Customs, Chennai VII vide Order-in-Original No.600/2019-AIR dt. 09.10.2019 confirmed the proposals made in the SCN. The consequent demand, interest and penalty have also been confirmed in the said order. It is against this order that Appeal C/40065/2020 has been filed by Assessee-Importer before this forum. 3. When the matter was taken up for hearing Smt. N.....
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....gs 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of heading 8517 and 8525 to 8528 are to be classified in heading 8517; (a)all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 7. Taking cognizance of Note 2 to Section XVI as above, we find that "parts" which are goods included in any of the headings of Chapter 84 or 85 are required to be classified in their respective headings; parts which are suitable for use principally with goods of heading 8517 and 8525 to 8528 are to be classified in Heading 8517. "Receiver" claimed to be specifically coming under CTH 8518 is required to be....
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....uential interest and penalty. Assessee appears to have filed a detailed reply justifying its classification but, however, not satisfied with the reply, the original authority confirmed the proposals made in the SCN and it is against this Order-in-Original No.76/2020 dt. 25.01.2020, the appeal C/40281/2020 has been filed by Assessee-Importer. 10. After having heard both sides, we find that this very Bench in the case of Flextronics Technologies Pvt. Ltd. (supra) has dealt with the classification of "Microphones" very exhaustively and further held that "Microphones" were not eligible for exemption as claimed by the assessee under Sl.No.6(a) of Notification No.57 (supra) as under : MICROPHONES Department's View: 9.0 The following points have been made by Revenue: a) The microphones are complete and distinctly identifiable commodities imported as such. As per Boards Circular 09/2016- Customs dated 11/03/2016 all microphones are classifiable under tariff item 85181000. b) Microphone, receiver etc. are known in trade parlance as distinct commodities and not as parts of PCBAs. c) 'Microphones' are not eligible for concessiona....
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..... 57/2017-Cus. (iv) It cannot be presumed that the amendment dated 06.07.2019 was only clarificatory and retrospective in nature. (v) It had been decided by the Tribunal in Vivo Mobile India - I (supra)that the exemption under Sl.No. 427 of Notification No. 50/2017- Cus. read with List 20 would squarely apply to microphones of mobile phones. 9.2 We find that the classification of the imported goods i.e, 'microphones' is not under challenge. The question which arises for consideration in this appeal relates to the interpretation of exemption notifications and the eligibility of the goods to concessional duty. 9.3 The first dispute relates to whether 'microphones' are eligible for concessional rate of duty under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 as part of PCBA or should be denied exemption as they are not parts of PCBA's and are also specifically covered under S.No. 18 of the same Notification, which specifically denied exemption to microphones of cellular mobile phones. S. No. 6A and 18 of the said Notification are extracted below: S. No. Chapter or Heading or Subheading or tariff item Description of goods St....
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....CBA. They play a crucial role in devices such as cellular phones, headsets, audio recording equipment etc. to capture sound waves and convert them into electrical signals. Just because a microphone is required for functional testing of the PCBA circuitry it does not mean that it is a part of the PCBA. It was also pointed out by Revenue during arguments that while the period of dispute in the case of microphones is from June 2018 to December 2018, PCBA's have been defined in notification no 57/2017-Cus as per insertion made by Notification No.22/2018-Cus Dated 02/02/2018 to read as under: (b) "Printed Circuit Board Assembly (PCBA)" means printed circuit board assembled with electronic components such as resistors, capacitors, diodes, inductors, ICs and v mechanical components such as contact springs or connectors of charger or adapter of cellular mobile phones. They do not include a microphone and the use of the word "means" in the insertion shows that the definition is exhaustive. As has been observed in Feroze N. Doti wala v. P. M. Wadhwani [(2003) 1 SCC 433, 442]: "Generally, when the definition of a word begins with "means" it is indicative of the fact....
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.... Popular sense means that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it." Again in Court in C.I.T. Andhra Pradesh v. M/s. Taj Mahal Hotel Secunderabad, ([1972] 1 SCR 168) stated that in incorporating items in the statutes like Excise, Customs or Sales-tax whose primary object is to raise revenue and for which to classify diverse products, articles and substance resort should be had not to the scientific and technical meaning of substance but to their popular meaning viz., the meaning attached to these expressions by those dealing in them. Further in Ramavatar Budhai prasad v. Assistant Sales Tax Officer [(1962) 1 SCR 279], the Hon'ble Apex Court was concerned with the meaning of the word `vegetable' occurring in C.P. and Berar Sales Tax Act, 1947. It referred to the Excise Tax Actin Planters Nut Chocolate Co. Ltd. v. The King [(1952) 1 Bom. L.R. 385. 389], where the Exchequer Court had observed as follows :- "Now the statute affects nearly everyone, the producer or manufacturer, the importer, wholesaler and retailer, and finally the consumer who, in the last analysis, pays the tax. Parliament would n....
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....atute and the special provision in another, it also finds utility in resolving a conflict between general and special provisions in the same legislative instrument too and observed that: "9. ... The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and Judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect." (emphasis added) In CCE v. Jayant Oil Mills (P) Ltd., (1989) 3 SCC 343 the Apex Court has accepted the aforesaid rule as "the basic rule of construction" that isto say "a more specific item should be preferred to one less so." In this light, the listing of special or declared goods in the very same notification seems to be that as far as cellular phones are concerned the object was to treat microphones which are parts of cellular phones differently as against parts of PCBA. When the Sl no of a notification denies....
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.... the Sl.No. which is more beneficial to him. In the case of M/s Rohit Pulp and Paper Mills Ltd Vs Collector of Central Excise, reported in [1990 (47) ELT 491 (SC)], the Apex Court held that 'in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of, and not in derogation of that purpose'. Further the circumstances under which the amendment was brought in existence and the consequences of the amendment would have to be understood in terms of government policy on cellular phones which is discussed below. 9.8 This being so microphones will not be eligible for exemption under Sl. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017, being part of a cellular mobile phone specifically mentioned under Sl. No. 18 and are also excluded from Sl. No. 6A of the said Notification. The insertion made by Notification No.22/2018-Cus only clarifies this position and would be effective retrospectively. 9.9 Onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee The Appellant has contended th....
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....notification No. 57/2017-Customs., dated 30th June, 2017 refers]. Now all these items have been explicitly excluded from scope of entry at Sr. No. 6A of the Notification No. 57/2017-Cus." (emphasis added) The circular makes it clear that the intention of the amendment was to make explicit what was considered implicit and remove any confusion there may have been in this regard. The TRU's DO reflects the position as discussed above. 9.11 Exemption notification should be interpreted strictly. Further the Appellant has claimed full BCD exemption under of S.No. 427ofNotification No. 50/2017-Cus. dated 30.06.2017. S. No. 427 as it stood during the relevant period is extracted below for ease of reference: S.No. Chapter or Heading or sub-heading or tariff item Description of goods Standard Rate (1) (2) (3) (4) 427 84, 85 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 not exceeding 250 Volts AC or DC 3. Connectors other than those of cell....
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....ative intent in issuing these notifications by looking at the subject of legislation and object of the law, when an ambiguity exists. As held by the Hon'ble Supreme Court in R.K. Garg vs Union of India (supra), laws impacting economic activities must be viewed with greater latitude and deference. We can hence examine the policy of Government with regard to the Phased Manufacturing Programme (PMP) for promoting indigenous manufacturing of Cellular Mobile Handsets, its sub-assemblies and parts/ sub-parts/ inputs of the sub-assemblies relied upon by Revenue in the impugned order and during oral arguments. 9.14 It is seen that PMP was notified with the objective of progressively increasing the domestic value addition for establishment of a robust Cellular mobile handsets manufacturing eco-system in India. The PMP is intended to enable the Cellular mobile handset and related sub- assembly/component industry to plan their investments in the sector. It covers microphones also. The policy is hence a major initiative for promoting indigenous manufacturing of Cellular mobile handsets in India. In matters relating to Information Technology, Board has from time to time issued clarific....
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....the Customs Act, 1962 and are consequently not liable to confiscation. This needs to be differentiated from the Supreme Court judgement in the case of Weston Components Ltd. Vs Commissioner of Customs, New Delhi [2000 (115) ELT 278 (SC)], wherein the Hon'ble Supreme Court, had earlier upheld confiscation of goods and consequently imposition of redemption fine on the goods not physically available but the same (goods) were allowed provision alrelease under Bond. In the present case no bond has been executed by the Appellant for the clearance of goods. The Hon'ble Supreme Court again in Commissioner Vs Finesse Creation Inc. [2010 (255) E.L.T. A120 (S.C.)], dismissed the SLP filed by Commissioner of Customs (Import) against the Judgment of the High Court of Bombay in Commissioner Vs Finesse Creation Inc [2009 (248) E.L.T. 122 (Bom.)]. The High Court had distinguished the Apex Court decision in case of Weston Components Ltd. (supra), while holding that concept of redemption fine arises in the event the goods are available and are to be redeemed, and if goods are not available, there is no question of redemption of goods. In any case the Appellant has not been found committing a blame w....
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....ticles and substance arises, resort should be had not to the scientific and technical meaning of the substance but to their popular meaning viz., the meaning attached to these expressions by those dealing in them. [Ramavatar Budhai prasad v. Assistant Sales Tax Officer [(1962) 1 SCR 279]] (ii) Notification No. 24/2019 Cus dated 06.07.2019 amending Sl. No 6A of Notification No. 57/2017-Cus. by introducing a 'proviso' only seeks to remove the confusion which pertains to two Sl. Nos. of the same notification and is only clarificatory in nature and will hence have retrospective effect. The Appellant in this case agrees that the amendment removes the exemption benefit for the impugned goods, but only prospectively. [Commissioner of Income Tax, Bombay & Ors. v. Podar Cement Pvt. Ltd. & Ors. [AIR 1997 SUPREME COURT 2523 / (1997) 5 SCC 482]] (iii) that there could not be an intention to exempt the same goods differently on the same day. As held by the Apex Court, when the same person gives two directions one covering a large number of matters in general and another to only some of them, his intention is that the latter directions should prevail as regards these while as r....
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.... the appellant in the said cases have not led evidence on facts and important points of law involved so as to prove their eligibility for the exemption. These were not placed before the Coordinate Bench for consideration nor was it independently perceived before arriving at a conclusion on the points of the lis. The Bench thus had decided in favour of the appellant based on the limited issues considered. The decisions are hence felt not to be an authority on the eligibility of microphones for exemption from duty as the decisions came to pass sub silentio. The judgments are hence distinguished." 11. However, this Bench in the aforecited case supra has held that there was no suppression involved since the case involves a genuine interpretative issue for which, extended period could not be invoked. Hence, the demand, if any, is to be confined to the normal period with applicable interest, if any. Following the same, we hold that "Microphone" is not eligible for exemption and the demand is restricted to normal period with applicable interest. The impugned order stands modified to this extent. Appeal C/40281/2020 is partly allowed with consequential benefits, if any, as per law. 1....
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....ted circuit board assembled with electronic components, such as resistance, capacitors, diodes, inductors, IC, and mechanical components such as contact springs, or connectors of charger or adapter of cellular mobile phones. Connectors are distinctly identifiable commodity/parts of mobile phone and were imported as such. The said Notification has specific entries pertaining to mobile parts like connectors, microphone, receiver, etc. and in respect of connectors, the definition explicitly states that only those connectors which will be used to connect power adapter for charging mobile will be considered as part of PCBA. 13.3 Amending Notifications to the original Notification No. 57 Supra dated 30.06.2017 by which Sl. No. 6A was inserted, subsequently came to be modified with another Notification No.37/2018 dated 02.04.2018. In the said Notification, the description of goods is inputs or parts for use in manufacture of PCBA of cellular mobile phones; inputs or sub - parts for use in manufacturer of parts mentioned in the above. 13.4 The same was further modified vide Notification No. 24/2019 dated 06.07.2019 wherein, exception class was added to the effect that „nothing ....
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.... 15. The Department has filed Appeal C/40293/2020 against the very same Order-in-Original No.130/2020 dated 26.02.2020 being aggrieved by the non-imposition of redemption fine under Section 125 ibid since the goods were not physically available by way of its grounds of appeal but, however, since we have held that the classification declared by the assessee was in order, there was no scope for levying or demanding duty and the consequential interest and penalty and hence, the goods are not liable for confiscation. We therefore do not find any infirmity in the non-levy of redemption fine for above reasons. In the result, Department Appeal C/40293/2020 is dismissed. The cross objection filed by Assessee in this appeal stands disposed of. IV) Appeal Nos.C/40252/2020 & C/40294/2020 16. Appeal No.C/40252/2020 is filed by Appellant importer against Order-in-Original No.803/2019-AIR dated 09.12.2019 whereby the Commissioner of Customs, Chennai-VII has rejected the classification adopted for the impugned goods by appellant in the subject Bills of Entry as listed in Annexures A to Z of SCN and ordered reclassification of subject goods under Customs Tariff Item 39209999. Brief facts ....