TaxTMI 
TaxTMI 
2025 (11) TMI 877
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....2018-Customs dated 02.02.2018 [amendment Notification dated 02.02.2018] and then amended by Notification No. 37/2018-Customs dated 02.04.2018 [amendment Notification dated 02.04.2018] and Notification No. 24/2019-Cus dated 06.07.2019 [amendment Notification dated 06.07.2019]. 3. The Exemption Notification dated 30.06.2017 provides that the Central Government in exercise of the powers conferred by section 25(1) of the Customs Act, 1962 [the Customs Act] exempts the goods of the description specified in column (3) of the Table as are specified in the corresponding entry in column (2) of the said Table when imported into India, from so much of the duty of customs as is in excess of the amount calculated at the standard rate as specified in the corresponding entry in column (4) of the said Table subject to any of the conditions mentioned in the corresponding entry in column (5). The relevant portion of the said Exemption Notification dated 30.06.2017 is reproduced below: GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 57/2017-Customs New Delhi, the 30th June, 2017 G.S.R. (E). - In exercise of the powers conferred by sub-section (....
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....S. No. 1, for the entry in column (4), the entry "15%" shall be substituted; (ii) S. Nos. 2 and 3 and the entries relating thereto shall be omitted; (iii) against S. No. 7, in column (3), item (i) shall be omitted; (iv) after S. No. 7 and the entries relating thereto, the following S. Nos. and entries shall be inserted, namely:- ******** (1) (2) (3) (4) (5) ***** ***** ***** ***** ***** 18. 8518 All goods other than the following parts of cellular mobile phones, namely:- (i) Microphone (ii) Wired Headset (iii) Receiver Nil 1 (vi) after the Table, the following Explanation shall be inserted, namely:- 'Explanation.- For the purposes of this notification,- (a) "Moulded Plastics" means moulded plastic housing component with or without integrated AC pins that acts as enclosure to the printed circuit board used in a charger or adapter of cellular mobile phones; (b) "Printed Circuit Board Assembly (PCBA)" means printed circuit board assembled with electronic components such as resistors, capacitors, diodes, inductors, ICs and mechanical components such as con....
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....6A, in column (3), after item (b), the following proviso shall be inserted, namely:- "Provided that nothing contained in the entries mentioned at items (a) and (b) shall apply to the following goods, namely:- (i) connectors; (ii) microphones; (iii) receivers; (iv) speaker; (v) SIM socket" (emphasis supplied) 7. The appellant is engaged in the business of manufacture of cellular mobile phones and smartphones. The appellant has been importing, among other mobile parts, microphones and receivers for use in the manufacture of PCBA which is used in the manufacture of mobile phones and availed exemption from payment of duty under Serial No. 6 of the Exemption Notification dated 30.06.2017 and Serial No. 6A of the amendment Notification dated 02.04.2018. 8. A show cause notice dated 27.12.2019 was issued to the appellant demanding customs duty of Rs. 2,50,54,790/- (including social welfare surcharge and IGST) for the period from 02.02.2018 to 06.07.2019 on the microphones and receivers imported by the appellant for the following reasons: (i) Microphones and receivers are specifically mentioned at Serial....
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....ctively. 13. Shri Mihir Ranjan, learned special counsel appearing for the department, however, supported the impugned order and submitted that in terms of the amendment Notifications dated 02.02.2018, 02.04.2018 and 06.07.2019 (which learned special counsel contented was retrospective in nature), the appellant was not entitled to claim exemption of duty. Learned special counsel also placed reliance upon the "Phased Manufacturing Policy" of the Ministry of Electronics and Information Technology as exemption to parts of mobile phones would put the domestic industry to considerable hardship. Learned special counsel also placed reliance upon a decision of the Chennai Bench of the Tribunal in M/s. Flextronics Technologies Pvt. Ltd. vs. Commissioner of Customs, Chennai [Customs Appeal No. 40392 of 2020 decided on 28.02.2024 (Chennai)]. 14. The submissions advanced by the learned consultant for the appellant and the learned special counsel appearing for the department have been considered. 15. The appellant manufactures cellular mobile phones and for this purpose imported parts like microphones and receivers, which the appellant claims were used in the manufacture of PCBA, which ....
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....rder has placed reliance upon Explanation (b) which was added by the amendment Notification dated 02.02.2018. This defines PCBA. As is clear, the definition is in the context of PCBA of charger or adapter of cellular mobile phones and not PCBA of the mobile phones. 21. Thus, the amendment Notification dated 02.02.2018 does not alter Serial No. 6 of the Exemption Notification dated 30.06.2017. 22. The next amendment Notification is dated 02.04.2018. It seeks to omit items (i), (ii) and (iii) of Serial No. 6 of the Exemption Notification dated 30.06.2017. At the same time it adds Serial 6A, 6B and 6C. At Serial No. 6A, the goods that are described at (a) are "Inputs or parts for use in the manufacture of PCBA of cellular mobile phones" and at (b) "Inputs or subparts for use in manufacture of parts mentioned at (a) above" PCBA. Thus, what was described at Serial No. 6(a)(i) and (b) of Exemption Notification dated 30.06.2017, is what is now contained at Serial 6A of the amendment Notification dated 02.04.2018. There is, therefore, no change so far as this part of Serial No. 6 of the Exemption Notification dated 30.06.2017 is concerned. 23. What is also important to notice is t....
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.... to investigating authority and was conveyed to the department by 7.1.2019 in reply to show cause notice dated 22.1.2020. Also it was clarified that microphone imported by the appellant since have to be soldered onto PCBA, those are the parts of such PCBA. We find that the expert opinion in this respect was sought by the department itself, it finds no mention in the entire Show Cause Notice. 18. The Adjudicating Authority ignored this technical opinion obtained during the course of investigation. Instead, he has relied on the information collected from the internet. The same definitely amount to extraneous consideration and reliance upon non admissible documents/ data. The expert report being departments' own documents is very much admissible in evidence. Perusal of the report shows that the impugned goods are the parts of PCBA. There is otherwise no evidence to record to prove that imported microphone are not the part of PCBA. *****" (emphasis supplied) 27. It needs to be noted that the aforesaid decision, granted benefit of exemption from payment of duty under Entry No. 427 of the Notification No. 57/2017-Cus dated 30.06.2017. 28. It is also pertinent to n....
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....ued by the Tax Research Unit in the Ministry of Finance in connection with Customs Notification No's 18/2019 to 27/2019 dated 06.07.2019. It mentions that important changes in respect of the customs duty rates are contained in Annexure A which gives details of Chapter wise changes in basic customs duty. In respect of Chapter No. 84 and 85 at Serial No. 16, the following has been stated: "(16) Microphones, receivers and SIM sockets of mobile phones attracts 15% BCD by tariff rate. Further, in general speakers attracts 15% BCD by tariff rate. Also, connectors for use in cellular mobile phones attracts concessional 10% BCD [S.No. 5B of the notification No. 57/2017-Customs, dated 30th June, 2017 refers]. Now, all these items are being explicitly excluded from scope of entry at Sr. No. 6A of the notification No. 57/2017-Customs, dated 30th June, 2017 as amended vide notification No 24/2019-Customs dated 6th July, 2019 refers." (emphasis supplied) 32. The sentence "Now, all these items are being explicitly excluded from scope of entry at Serial No. 6A of the notification No. 57/2017Customs, dated 30th June, 2017 as amended vide notification No. 24/2019-Customs dated ....
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....ects the position as discussed above." 38. Serial No. 16 actually provided that "Now, all these items are being explicitly excluded", which leaves no manner of doubt that the Notification is prospective in nature. The conclusion, therefore, that has been drawn on the basis of a mistake in the reproduction of the Circular is not borne out from Serial No. 16 of the TRU letter dated 05.07.2019. 39. This apart, the Division Bench failed to examine section 25(4) of the Customs Act which specifically provides that every Notification issued under section 25(1) of the Customs Act shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. This aspect was also examined by the earlier Division Bench of the Tribunal in Vivo Mobile. Non-consideration of a statutory provision having a direct bearing on the issue has rendered the decision of the Tribunal in Flextronics Technologies per incuriam. 40. Whether a Notification is prospective in nature or retrospective in nature in the context of section 25(4) of the Customs Act was also examined by a Division Bench of this Tribunal in InterGlobe Aviation Limite....
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....ature and given a retrospective effect from the inception of the original provision. The provision sought to added cannot be presumed to be clarificatory merely because the provision attached to Notification bears the nomenclature such as 'it is clarified' or 'for the removal of doubts'. It has to be determined, in each case, whether the provision is clarificatory, basis the test laid down by the Courts. 36. In the present case, the Exemption Notification, before its amendment on 19.07.2019, provided for payment of 'duty of customs' on the repair value of the re-imported goods. The Tribunal, in the decision rendered on 02.11.2020 in Inter Globe Aviation, held in very clear terms that the phrase 'duty of customs' referred to in the condition against serial number 2 would not include integrated tax. By the Amendment Notification dated 19.07.2021, the phrase 'duty of customs' has been substituted with the phrase 'Said duty, tax or cess'. The effect of the amendment would be that basic customs duty, integrated tax and cess would be required to be paid on the repair value of the re-imported goods as a condition of grant of exemption. It is, therefore, cl....