TaxTMI 
TaxTMI 
2026 (5) TMI 1043
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....tion fine. 2. The appellant is engaged in the business of manufacturing/assembling mobile phones and for this purpose the appellant imported certain goods from M/s Techno Mobile Ltd., Hong Kong and filed a Bill of Entry dated September 14, 2022 declaring the goods as 'Parts of MFR of Mobile Phones'. Believing that the goods are mobile phones in CKD condition and not parts of mobile phones, an investigation was started. The appellant provided complete details of the goods covered under the said Bill of Entry and explained that the consignment covered under five different invoices were parts of five different models of mobile. The appellant also provided documents in respect of actual descriptions and classification of the impugned goods. Summons dated September 26, 2022 was issued to Dinesh Goyal, authorized representative of the appellant, and his statement was recorded under section 108 of the Customs Act. The appellant also, by a letter dated September 30, 2022, submitted a list of local purchased items for the models imported. The appellant clarified that the material imported was insufficient to manufacture a phone and so the appellant has to procure additional material loca....
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....le phones. Further, under provisions of Section 46(4A) of the Act, ibid, it is the responsibility of the importer to ascertain the accuracy of the information given in the Bill of Entry. 14.2 In view of the above and submission by the importer, it appears that the goods/mobile parts imported vide invoices for the past two years as mentioned in Annexure-A have all the components required for the manufacture of the mobile phone which merit classification under tariff item 85171400 (Applicable BCD @ 20%) instead under different tariff item of mobile parts." [emphasis supplied] 7. The show cause notice, therefore, called upon the appellant to show cause as to why the classification of goods imported through the Bill of Entry dated September 14, 2022 and those detailed in Annexure-A and B should not be rejected and classified under CTI 8517 14 00/CTI 8517 12 19; differential duty should not be demanded and recovered from the appellant under section 28(1) of the Customs Act with interest under section 28AA of the Customs Act; and penalty under section 112(a)(ii) of the Customs Act should not be imposed for improper importation of the goods. 8. The appellant filed a deta....
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....08 of the Customs Act, 1962 has stated that the imported parts and accessories are assembled at company location D 197. D-Block, Sector 63, Noida, Gautam Buddha Nagar, Uttar Pradesh; 12.9 It is further stated by Shri Deepak Kumar in his statement that technically a mobile phone is essentially used for communication between two or more persons. However, with the advancement of technology, several additional functions are also incorporated into a mobile phone such as a camera, music system, Internet surfing, GPS location, Bluetooth etc. This suggests that the goods imported by the notice were complete or finished goods presented in unassembled state and the simple assembly operation undertaken by the noticee takes them within the scope of Rule 2(a) of the Interpretative Rules. 12.10 The noticee, in their defence have referred to the decision of the Hon'ble CESTAT in the case of LG Electronics India Vs. CC(I) - MANU/CM/0049/207 where the benefit of exemption was extended to the mobile phones imported in SKD condition and not individual parts. It was held that the assembly of parts is not simple and involves downloading of software which can be handled only by skilled....
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....y of the mobile phone does not alter the position that the goods imported by the noticee were complete or finished goods at the time of import where these were presented in unassembled state. 14. Confiscation of the impugned goods :- 14.1 The noticee, in this regard have stated that assuming, without admitting that the subject goods could be classified as mobile phones in CKD condition under CTH 85171400, claiming classification is a matter of understanding and belief in the minds of the assessee, which does not constitute an offense under the provisions of the Customs Act, 1962. By making reference to a few judicial pronouncements, it is their contention that the goods are not liable for confiscation under Section 111(m) and the charge is not sustainable. 14.4 ......The importer, while presenting the Bill of Entry, shall at the foot thereof, make and subscribe to a declaration as to the truth of the contents of such a Bill of Entry and shall, in support of such declaration, produce to the proper officer, the invoice reflecting true & correct description and classification, relating to the imported goods. In the present case, the Noticees have mis-d....
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....reme Court Cases 358 and Hewlett Packard India Sales Private Limited (now HP India Sales Private Limited) vs Commissioner of Customs (Import), Nhava Sheva- (2023) 7 Supreme Court Cases 799; (ii) The parts and components of mobile phones imported by the appellant were further supplemented by locally procured parts and thereafter extensive manufacturing process was employed by the appellant, including loading of software. The impugned order, therefore, erroneously concludes that the imported parts were complete mobile phones in view of rule 2(a) of the General Rules for the Interpretation of the Customs Tariff Act, 1975 [GIR]. To support this contention, learned senior counsel placed reliance upon the decision of the Supreme Court in Commissioner of Customs, New Delhi vs Sony India Ltd.- (2008) 13 Supreme Court Cases 145 and the decision of the Tribunal in LG Electronics India Pvt. Ltd. vs Commissioner of Customs (I)- 2006 (204) ELT 450 (Tri.-Mumbai); (iii) The imported parts do not satisfy the essential character of a mobile phone and substantial manufacturing activity is mandatory for manufacture of mobile phones; and (iv) The impugned order h....
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.... submitted a list of 'locally purchased items' for each of the models imported through the Bill of Entry and the list is reproduced below : S. No. Model Local Purchase items 1. IT5626N PCBA MB MA 2810 DI 8M+8M V2.0 CAM STDP FF 8W GC6133i+2160V1.0 Battery 2. ACE 2N PCBA MB DL 19114 4M+4M V01 LCM LENS ACE2 PC .065 BLACK BATTERY 3. 15607 BATTERY 4. IT2175 PCBA MB M1812 B2 4M+4M TCD STDP 1.77 QQCTC GC 9106 V1.0 CAM STDP FF 8M GC61331+2160 V1.0 BATTERY 5. IT2175 PCBA MB M1812 B2 4M+4M LCD STDP 1.77 QQ TN CTC-GC 9106 V1.0 CAM STDP FF 8M GC6133i+2160 V1.0 BATTERY 15. The department availed the services of a Chartered Engineer to ascertain the nature of the goods imported by the appellant. The Chartered Engineer in his report dated November 03, 2022 stated as follows : "EXAMINATION/DESCRIPTION OF INVOICE: Samples from consignment were shown to us. On examination these parts/items are found same as declared in Invoice pertaining to Mobile Phone Model it5607 as declared. Pictures taken are attached as Annexure A. BRIEF OF PRODUCTS: These are parts of Mobile Phon....
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....ed laboratory, it is not possible to arrive at communication functionality of device." [emphasis supplied] 17. It is in the context of the aforesaid, that the contention advanced by learned senior counsel for the appellant regarding applicability of rule 2(a) of the GIR has to be examined. Rule 2(a) and rule 1 of GIR are reproduced below : "The Schedule-Excise Tariff Rules for the Interpretation of the this Schedule 1. The titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the provisions hereinafter contained. 2(a) Any reference in a heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that, the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classified as complete or finished by virtue of this rule), removed unassembled or ....