TaxTMI 
TaxTMI 
2025 (1) TMI 1680
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.... of the Customs (Import of goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules 2016 read with Notification No. 12/2012-Cus dated 17.03,2012 as amended,; (ii) I also confirm the demand interest on the Customs Duty amount as above; as per applicable rate under Section-28AA of the Customs Act 1962; (iii) I also impose a penalty amounting to Rs.13,65,474.00 (Rupees Thirteen Lakhs Sixty Pive Thousand Four Hundred Seventy Four only)in terms of Section 114A of the Customs Act, 1962 for contravening the provisions of Customs (lmport of goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules 2016 read with Notification No, 12/2012-Cus dated 17.03,2012 as amended. The dues adjudged shall be paid forthwith. 2.1 Appellant is engaged in the manufacture of Remote Control (85299090), Wiring Harness (85446020), LCD/ LED Cover & frames (85299090), Plastic Parts of Mobile, Telephone Sets (85171290) including telephones for cellular networks or for other wireless network; Other apparatus for the transmission (85171290), Routers/Modem; Apparatus for communication (85176930), Lithium-Ion Batteries (85076000), insulated ( Including en....
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.... Ltd. [2022 (379) 418 (SC)] ⮚ Benefit of exemption notification No 12/2012-CE and 12/2012-Cus would be admissible to be the party as has been held by ADG while dropping the demand, placing reliance on the following decisions: o Star Paper Mills [1989 (43) ELT 178 (SC)] o Saraswati Sugar Mills [2011 (270) ELT 465 (SC)] o Khoday Distillieries (P) Ltd [1991 (82) STC 251 (Kar)] o Ferro Alloys Corpn Ltd [1997 (90) ELT 405 (T)] o Jindal Strips Ltd [1997 (94) ELT 234 (T-LB)] o Meridian Industries Ltd. [2015 (325) ELT 417 (SC)] o Vanasthali Textiles Industries Ltd. [2007 (218) ELT 3 (SC)] ⮚ Alternatively the benefit of Notification No 24/2005-Cus should be admissible. ⮚ The benefit of exemption could have been claimed subsequently even if the same is not claimed at the time of importation. Reliance placed on o Indosolar Ltd. [2019 (367) ELT 679 (T-All)] o Share Medical Care [2007 (209) ELT 321 (SC)] o HCL Ltd. [2001 (130) ELT 405 (SC)] o CIPLA Ltd. [2007 (218) ELT 547 (T-Chennai)] o Indian Petro Chemicals [1997 (92) ELT 13 (SC)] ....
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.... be resolved. A component includes an accessory or attachment." ACCESSORIES:- The Apex Court in case of PRAGATI SILICONS PVT. LTD Versus COMMISSIONER OF C. EX., DELHI (Civil Appeal No. 5345 of 2001, decided on 26-42007) have referred to page 13 of the Black's Law Dictionary, Fifth Edition, wherein the term "accessories" has been defined as "anything which is joined to another thing as an ornament, or to render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it, adjunct or accompaniment, a thing of subordinate importance. Aiding or contributing in secondary way of assisting n or contributing to as a subordinate". Further the Apex Court held that "correct test would be whether the article or articles in question would be an adjunct or an accompaniment or an addition for the convenient use of another part of the vehicle or adds to the beauty, elegance or comfort for the use of the motor vehicle or a supplementary or secondary to the main or primary The word accessories have been defined in McGraw Hill Dictionary, Vth Edition as "A part sub-assembly, or assembly that contributes....
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....'. Thus, basic constituents/ingredients/raw-materials without taking a definitive shape/ design/ size and compatibility to a specific product and to designed play a specific role in manufacturing and functioning of that product, cannot be described as 'Parts'/ Components'/ 'Accessories"" 5.5. The party has alleged that adjudicating authority has travelled beyond the scope of Show Cause Notice vide para 5.5 and 5.6 of the impugned order where it is stated that use of imported resins and PC Resins in the manufacture of router and Lithium-ion-batteries could not be distinctly identified as no such ligation was made in the show cause notice. In this regard 1 agree with the findings of the adjudicating authority hat the party, apart from Routers and Lithium-Ion Batteries, is also engaged in the manufacture of different products in the same premises itself and in most of which, plastic parts are essential for manufacturing of product; and impugned items Resin and PC Resin' definitely are the main constituents/raw-materials to some of them. In this situation the use/ consumption of 'Resins & PC Resin' imported duty free having availed Customs duty ....
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....f the view that the appellant have mis-declared their goods 'Resins & PC Resin' as 'Parts, components and accessories' and to the `Sub- parts' for use in manufacture of items (i.e. Parts, components and accessories) of the both the items i.e. for use in manufacture of routers and of lithium-ion batteries and thereby contravened the provision of Rule 8 of the Customs (Import of goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules 2016, and rendered themselves liable for penal provisions under Section 114A of the Customs Act, 1962." 4.3 Basic issue involved in the matter is whether the benefit of Notification No 12/2012-Cus (S No 431F & 431K) can be extended to the respondent. 4.4 The said entries of the notifications are for sake of convenience a reproduced below: Sl No Chapter or Heading or sub- heading or tariff item Description of goods Standard rate Additional duty rate Condition No 431F 85 or any other chapter (a) Parts, components and accessories for use in manufacture of routers falling under tariff item 8517 69 30; (b) Sub-parts for use in manufacture of items mentioned at (a) above. Nil ....
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....or appliances used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final products; (b) components, spare parts and accessories of the aforesaid machines, machinery, plant, equipment, apparatus, tools or appliances used for aforesaid purpose; and (c) moulds and dies, generating sets and weigh-bridges used in the factory of the manufacturer. (1) ...... (2) ........" 3. The Tribunal by the impugned judgment and order dated 13th April, 1999, considered various items which were involved in different appeals and by a common judgment and order decided the controversy in favour of the manufacturers rejecting the stand of the revenue that those are not 'Capital goods' within the meaning of Explanation (1)(a) defining 'Capital goods'. Some of the items considered by the Tribunal are : power cables and capacitors in case of Jawahar Mills Ltd.; control panels, cables distribution boards, switches and starters and air compressors in the case of Indian Refrigeration Co. Ltd.; electric wires and cables in the case of Kothari Sugar and Vijay Chemicals. The Tribunal on consideration of the....
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....cess of the manufacture of urea. Relying upon the phraseology used in the exemption notification, it was held that there was no good reason why the exemption should be limited to the raw naphtha used for producing urea that is utilized directly in the urea plant since the notification only required that the ammonia should be used in the manufacture of fertilizers and not that it should be used directly in the manufacture of fertilizers. The Court said that : "The exemption notification must be so construed as to give due weight to the liberal language it uses. The ammonia used in the water treatment, steam generation and inert gas generation plants, which are a necessary part of the process of manufacturing urea, must, therefore, be held to be used in the manufacture of ammonia and the raw naphtha used for the manufacture thereof is entitled to the duty exemption." 6. The contention of learned Additional Solicitor General that the aforesaid decision and other decisions referred by the Tribunal in the impugned order were cases involving sales tax and income tax and, therefore, the Tribunal should not have relied on those decisions is without any substance because t....
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....dients or commodities used in the process or those directly and actually needed for turning out or the creation of the goods. 4.7 The way in which the revenue has sought to interpret the expression used in the notification can be only by way of replacing the word "for" used in the notification by the word "of". We refer to explanation in this regard available on web-page "https://english.stackexchange.com/questions/528337/definition-of-vs definition for#:~:text=According%20to% 20Seth %20Lindstromberg%20in,purpose%20of%20defining%20this%2 0word)" assessed on 22.01.2025. "According to Seth Lindstromberg in English Prepositions Explained, while "of" expresses referential possession (the word has a definition) or a verb-object relationship (the word is defined), "for" expresses purpose (I want a definition for the purpose of defining this word)." 4.8 In view of the above we find that the controversy sought to be raised in the present case as to whether these goods qualify as "component" part or accessory, etc., is totally irrelevant for determining the issue of admissibility of these notifications. The benefit of this notifications will be available in respect of all goo....
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.... of the duty of customs leviable thereon which is specified in the First Schedule as is in excess of 40% ad valorem. Notification No. 77/90 was issued in the same terms. This notification also exempted another item 'soft ferrite' under Chapter Heading 69.09 from duty in excess of 55% ad valorem. The exemption in regard to auxiliary duty of customs was provided in Notification 112/87. Item 28 of the Table took in "Refractory Bricks of special shape or quality for use as component parts of industrial furnaces" of Chapter 69 of the Customs Tariff Act, 1975. 12. "Part" is defined in Black's Law Dictionary Sixth Edition at page 1117 as under :- "An integral portion, something essential belonging to a larger whole; that which together with another or others makes up a whole ........ a portion, share or purpart". In Chambers 20th Century Dictionary the meaning given for "component" is as under :- "one of the parts or elements of which anything is made up, or into which it may be resolved". In Oxford Dictionary the meaning of "component" is :- "Contributing the composition of whole" In Webster's Dictionary the meaning given is ....
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....l not be a spare part and no owner of vehicle would keep a body of motor vehicle as spare part and, therefore, it cannot be regarded as a spare part. In Bajoria Halwasiya Service Stn. v. The State of Uttar Pradesh - 1970 (26) STC 108 (All. HC) a similar question arose under the provisions of the U.P. Sales Tax Act and a notification issued thereunder. It was held that body of a motor vehicle is not a spare part, though it is a component since a spare part means a part kept in readiness for use in emergency and no owner of vehicle will keep body of a vehicle in readiness for use in emergency. It was held that every component part need not be a spare part while every spare part will necessarily be a component part. 14. In Paul Lazar v. State of Kerala - 1977(40) STC 437 (Kerala HC) it was held that copper wire used in manufacture of transformers is not a component part thereof. It was indicated that component part has to be an identifiable object and copper wire used in the manufacture of transformer is not an identifiable object. 15. In Ghaziabad Engg. Co. (P) Ltd. v. Commr. of Sales Tax - 1991 (80) STC 243 (Delhi HC) under the provisions of the Bengal Finance (Sal....
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....hat it must be a part in the initial constitution of the manufactured product. This suggestion is merely based on a priori assumption. "Constituent", according to Chambers 20th Century Dictionary means :- "constituting or forming; essential; elemental; component; electing; constitution-making - n. an essential or elemental part; one of those who elect a representative, esp. in parliament; an inhabitant of one's constituency." Thus, "constituent" only means an essential part or component. Use of the words "component parts" or "constituent parts" is an example of tautology. "Constituent" and "component" essentially mean the same thing, that is, an essential part of which anything is made of or into which it may be resolved. When parts are put together to create an end product, they are regarded as component parts. When an assembled product is dismantled, it gives rise to component parts. Whatever be the stage, that is, before assembling, after assembling and after dismantling, such essential are [integral] part is a component, when a component part is damaged or is worn out and therefore requires replacement and is replaced, the replacing part does not cease to be a....
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.... 82/60 Component parts of any machinery ...... required for the purpose of initial setting up of that machinery or for its assembly or manufacture 80/70 Imported as replacement for defective component parts or peripherals 117/70 Spare parts required for the purpose of manufacture 74/85 Components are imported for the purpose of providing warranty coverage or after sales service by the manufacturer to his customers 77/85 -Do- 503/86 -Do- 155/86 Parts required for the purpose of initial setting up or assembly or manufacture 158/86 Components required for the manufacture of goods 66/88 Component parts of goods covered by Notification No. 65/88 imported into India for the manufacture of the said goods 269/88 Components required for the manufacture of forklift trucks 97/89 Parts required for the manufacture of specified goods when imported into India by a manufacturer of such goods 106/92 Components and parts when imported into India for repair of dredges. In the above Notifications, wherev....
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....an inference that word "component part" will necessarily exclude from its scope "spare parts" also. 19. It has been urged on behalf of the department that since the subject Notifications refer to "Refractory Bricks for use as component parts of.....", that is an indication that the Bricks must be intended for use in the manufacture of furnace and not for use as spares. We have indicated that the word "component" cannot be understood in such a restricted manner. "Component" indicates that it must be an integral part. "Spare" is a component used for replacement. In other words, the word "component" indicates the nature of the article and not the user of the article while the word "spare" indicates the use to which the article is put and not the nature of the article. The nature of the spare is that it is a component and its use is as replacement. "Component" means an essential or integral part of the whole. Its user is in different contexts, in the initial manufacture or as spare. As already indicated, "component" is the genus and spare is a species. The word "component" without any qualifying or restrictive words must be allowed free play and must comprehend components used....
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....s used in the manufacture of soap. The oil has to be purified before use in the soap manufacturing process. Purification and manufacture were attended to by the assessee in two different factories. The court rejected the contention of the department that the Notifications were not attracted since the oil was not directly used in the manufacture of soap. Hydrogenated Rice bran oil did not cease to be rice bran oil. The court observed as follows:- ".....an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the language of the exemption. But, in trying to understand the language used by an exemption notification, one should keep in mind two important aspects : (a) the object and purposes of the exemption and (b) the nature of the actual process involved in the manufacture of the commodity in relation to which exemption is granted....... so far as (a) is concerned, the object of the notification - even as the Tribunal finds - is to grant a concession to a manufacturer of soap who manufactures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture. If these two aspects....
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....ed intention to maintain old level of effective duty by issuing appropriate exemption notifications. It was with this object that Notification No. 242/76 was issued exempting Refractory Bricks of special shape or quality for use as component part of Industrial Furnaces falling under Heading 69.02 from so much of the portion of the duty as is in excess of 40% ad valorem. Notification No. 77/90 continued this state of affairs. There is nothing in this background or the terms of the Notifications to indicate any intention to maintain the level of duty only in regard to Refractory Bricks used in initial assembly or manufacture of Furnaces and not to maintain the level of effective rate of duty in respect of Refractory Bricks used as spares. The language used in the Notification is clear, unambiguous and of wide import. Considering the process involved and the broad object, import and language of the Notifications, the absence of any words of restriction or qualification, any restrictive interpretation will lead to frustration of the underlying object and cannot be adopted. On a reasonable interpretation, it is clear that application of the Notification is not restricted to cases of int....
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....ue is squarely covered by the decision of Ahmedabad bench in the case of Salora Components Pvt Ltd. [2019 (370) ELT 925 (T-Ahmd)] holding as follows: "4. ....... As regard the entitlement of the exemption notification Nos. 25/1999-Cus., dated 28-2-1999 and 25/2002-Cus., dated 1-3-2002, we find that the lower authorities have denied this exemption only on the ground that the appellant have not followed the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996. In this regard we find that in the peculiar facts of the present case, initially when the goods were imported, the same were received in the factory of the appellant who was 100% EOU and admittedly used within the 100% EOU. The exemption is claimed only at the time of debonding of 100% EOU. The procedure provided under Customs Rules, 1996 is mainly for the purpose of movement of goods from port of Custom up to the factory and use thereof. In the present case, since the goods were imported by 100% EOU which were cleared under notification 52/2003-Cus., dated 31-32003. Even as per this notification, the goods are cleared on the presentation of the exemption certif....
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....manufacturer to follow the procedure set out in the Central Excise (Removal of Goods at Concessional rate of Duty for Manufacture of Excisable Goods) Rules, 2001. The DTA manufacturers of mobile phones are thus entitled to import/ indigenously procure parts, components and accessories of mobile handsets including cellular phones free of duty under the aforesaid notifications whereas EOU units are being denied the benefit of these notifications. 3. Such parts, components and accessories imported procured indigenously by an EOU are used for manufacture of mobile hand sets including cellular phones in their licensed premises under Section 58& 65 of Customs Act, 1962. It follows the provisions of Manufacture & Other Operations in Warehouse Regulations, 1966 and executes a bondB-17 binding itself in respect of endues of the imported/ indigenous goods, to maintain records of receipt, consumption and balance in stock and to pay duty on inputs in case they are not used in connection with production within a period of three years along with interest. Further, EOU follows procedure of procurement certificate/ CT-3 certificate for import/ indigenous procurement, gives information of ....