TaxTMI 
TaxTMI 
2026 (7) TMI 1553
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....No. 24/2005-Cus dated 01.03.2005. 2. The Applicant is engaged in the import and manufacture of bare Printed Circuit Boards ('PCB') classified under Customs Tariff Item ('CTI') 8534 00 00 covering 'Printed Circuits'. The Applicant is regularly importing the capital goods required for manufacturing of said PCBs by availing duty exemption under the Export Promotion Capital Goods (EPCG) scheme. However, the spare parts of such capital goods ('said spare parts of CGs') for its regular maintenance are imported on payment of applicable Customs duties. 2.2 The process flow for production of PCBs in the manufacturing facility of Applicant is as follows: - Inner Layer (IL) Photo Printing - Inner Layer Automated Optical Inspection (IL AOI) - Pressing - Drilling - Copper plating - Outer Layer (OL) Photo Printing - Outer Layer Automated Optical Inspection (OL AOI) - Solder mask - Screen printing - Surface finish [Hot Air Solder Levelling/Electroless Nickel Immersion Gold(HASL/ENIG)] - Routing - Bare Board Test(BBT)/Blind hole (B hole)/ Warpage ....
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....cise of the powers conferred under sub-section (1) of Section 25 of the Customs Act, the Central Government has exempted certain goods from the levy of BCD vide N. No. 24/2005-Cus. The relevant entries under N. No. 24/2005-Cus are given hereinbelow for ease of reference: Sr. No. Heading, sub-heading or tariff item Description 22 8534 00 00 All goods 39 Any Chapter except Chapter 74 All goods except solar tempered glass or solar tempered (anti-reflective coated) glass for the manufacture of goods covered by S. Nos. 1 to 38 above, provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. 3.2 In terms of SI. No. 22 of N. No. 24/2005-Cus., all goods covered under CTI 8534 00 00 covering 'Printed Circuits' including PCBs. In terms of SI. No. 39 of N. No. 24/2005-Cus., all goods (except for solar tempered (anti-reflective coated) glass) for the manufacture of goods covered by the preceding SI. Nos. subject to the imported following the IGCR procedure, including the goods covered under SI. No. 22, viz., all goods falling under CTI 8534 00 00. It follows from the above that all g....
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....t been used in the same sense. It is also held that the expression `materials required to be imported for the purpose of manufacture of products' cannot be construed as referring only to materials which are actually used in the manufacture of the resultant product but would also include materials which though not used in the manufacture of the resultant product but are required in order to manufacture the resultant product. Accordingly, the Hon'ble Supreme Court has held that the Cyrstar beams which, though not used in the manufacture of H.T. Porcelain Insulators, but are required for producing the insulators in the kilns are eligible to exemption benefit. 3.3.3 The Hon'ble Supreme Court in the case of Commissioner of Customs, Kolkata v. Rupa and Co. Ltd., 2004 (6) SCC 408 has held that the expression 'used for manufacture' cannot be construed as referring only to materials which are used in the manufacture of that product. Such term must be given its natural meaning to also include materials which would be required in order to manufacture the resultant product. It would also include materials which are not directly used in the manufacture of resultant produc....
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....ufacture of mobile handsets and parts or components for the manufacture of battery chargers. The Hon'ble Tribunal held that the phrase used in the entry is 'for the manufacture of' and not 'of' and thus, anything which goes into the manufacture of these items would be eligible to exemption, as the phrase 'for the manufacture of' would cover all the items that are consumed directly or indirectly for the manufacture of these items. 3.3.6 The Hon'ble Bombay High Court in the case of Autolite (India) Ltd. v. Union of India reported at 2003 (157) ELT 13 (Bom) relied on the decision in Oblum Electrical Industries Pvt. Ltd. (supra) and held that die steel imported for the manufacture of moulds, which were used for the manufacture of export goods to be entitled to the benefit of Notification No. 116/88-Cus dated 30.03.1988 which provided the Customs duty exemption to the goods imported against an Advance License "for the purpose of manufacture of products (hereinafter referred to as the resultant products) or replenishment of materials used in the manufacture of the resultant products, or both" and rejected the contention that they were ineligible for ben....
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....nufacture of Smart Meters. Nil Nil 5% 10% 1 and 3 1 and 5 1 and 6 1 and 7 4. Any chapter Inputs or parts or sub-parts for use in manufacture of items mentioned at S. No. 3. Nil 1 and 3 3.4.3 Notification No. 45/2025-Customs dated 24.10.2025 ('N. No. 45/2025-Cus') issued by the Central Government prescribes the effective rates of Customs duty, IGST and compensation cess for good imported into India. The relevant extracts of N. No. 45/2025-Cus is given below for ease of reference: TABLE I S. No. Chapter or heading or sub- heading or tariff item Description of goods Standard rate Integrated Goods and Services Tax Condition No. 228. 84 or any other Chapter Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of off-shore oil exploration or exploitation: Provided that nothing contained in this S.No. shall have effect after the 31st March, 2028 Nil - 27 273. Any Chapter All parts for use in the manufacture of LED lights or fixtures including LED Lamps: Provided that nothing contained in this S.No. shall have effect after the 31st March, 2028 ....
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....Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of off-shore oil exploration or exploitation Nil Nil 30 347C Any Chapter Parts (other than rubber tyres or tubes) of aircraft of heading 8802 Nil - 105 356 Any Chapter Raw materials and parts, or use in the manufacture of goods falling under headings 89.01, 89.02, 89.04, 89.05 (except sub-heading 8905.20) or 89.06, in accordance with the provisions of section 65 of the Customs Act, 1962 (52 of 1962) Nil Nil 73 357 Any Chapter Parts, for repair of dredgers Nil - - The Applicant submits that it is clear from the afore-mentioned examples that wherever the benefits of exemption notifications are intended to be limited, specific limits on the scope of the said exemption is clearly defined to be limited to specific goods, viz., parts, raw- materials, inputs, etc. By contrast, the benefit of the exemption provided under SI. No. 39 N. No, 24/2005- Cus is not limited in scope, but is rather extended to all goods (except solar tempered glass or solar tempered (anti-reflective coated) glass) for the manufacture of goods covered by....
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....e to the Customs Tariff Act, 1975 (51 of 1975) and specified in column (2) of the Table below, the words "following goods of the description as specified in column (3) of the Table below and falling under heading, sub-heading or tariff-item of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as specified in the corresponding entry in column (2) of the said Table when imported into India, from the whole of the duty of customs leviable thereon under the said First Schedule, namely :- Sr. No. Heading, sub- heading or tariff item Description 22 8534 00 00 All goods 39 Any Chapter except Chapter 74 All goods except solar tempered glass or solar tempered (anti- reflective coated) glass for the manufacture of goods covered by S. Nos. 1 to 38 above, provided that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. From the above, it is evident that goods cover under heading 85340000 are eligible for duty exemption. CTH 8534 covers "Printed Circuits", so there is no ambiguity that PCB are eligible for benefit. Now, the question arises that whether spare parts of the capital goods u....
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....ries, and spares used in the manufacturing process, the separate entries relating to such goods would become redundant. Such an interpretation would violate the settled principle of statutory construction that every word and provision in a notification must be given meaning and effect. A harmonious reading of the notification indicates that SI. No. 39 is intended to cover goods having a direct nexus with the manufacture of the specified products, namely consumables, raw materials, components, and other inputs that are consumed in, or incorporated into, the final products covered under SI. Nos. 1 to 38. The phrase "for the manufacture of goods" cannot, in the context of the notification, be construed so broadly as to include every item that may be required for establishing, operating, maintaining, or supporting a manufacturing facility. It is further observed that capital goods required for the manufacture of printed circuit boards (PCBs) are eligible for import under separate duty exemption schemes such as the Export Promotion Capital Goods (EPCG) Scheme, subject to the conditions prescribed therein. Significantly, Notification No. 24/2005-Cus. does not specifically provide e....
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.... the manufacture of goods" and "or for the replenishment of raw materials and components used in the manufacture of the goods". From the above two notification, it is observed that the said two notifications provides two different expression and it is obvious that two expressions cannot be meant for the same sense. Therefore, the Hon'ble Supreme Court held that the expression `materials required to be imported for the purpose of manufacture of products' cannot be construed as referring only to materials which are actually used in the manufacture of the resultant product but would also include materials which though not used in the manufacture of the resultant product but are required in order to manufacture the resultant product. The applicant's reliance on the Oblum Electrical Industries Pvt. Ltd. v. Collector of Customs, Bombay, 1997 (94) ELT 449 (SC) is misplaced as the Supreme Court interpreted Notification No. 116/88-Cus., which contained the expression: 1. "materials required to be imported for the purpose of manufacture of products (hereinafter referred to as the resultant products) or 2. replenishment of materials used in the manufacture ....
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.... and technologically integral to the actual manufacturing process. Therefore, the beams were actively participating in every manufacturing cycle and have direct nexus with the resultant product. In the present case, the goods "spare parts" are being imported as replacement of the old one. They are required for functioning of the capital goods and the imported spare is not itself an indispensable manufacturing input such as crystar beams. A distinction must be drawn between goods that are indispensable to the actual process of manufacture and goods that merely facilitate, support, maintain or improve manufacturing operations. The judgement in the case of Oblum Electrical Industries Pvt. Ltd. cannot be read as obliterating this distinction. The exemption notifications are required to be interpreted on their own terms. The ratio of Oblum Electrical Industries Pvt. Ltd. cannot be employed to enlarge the scope of SI. No. 39 beyond what is reasonably conveyed by its text. 8. The applicant's reliance on the judgment of the Hon'ble Supreme Court in the case of Commissioner of Customs, Kolkata v. Rupa & Co. Ltd., 2004 (6) SCC 408, is misplaced. The said case pertained to th....
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....that notification, observed that since the exemption scheme contemplated the importation of capital goods used in the manufacturing process, spare parts required for such machinery could not be excluded merely because they did not directly participate in the manufacture of the final export product. Thus, the conclusion reached by the Tribunal was significantly influenced by the express inclusion of capital goods within the ambit of the notification itself. In contrast, SI. No. 39 of Notification No. 24/2005-Cus. does not contain any reference to capital goods, machinery, spare parts, components, accessories, maintenance items or consumables used for upkeep of manufacturing facilities. The entry merely extends exemption to "all goods" for the manufacture of the goods specified at SI. Nos. 1 to 38 of the notification. Therefore, the statutory context and scheme which weighed with the Larger Bench in Kudremukh Iron Ore Co. Ltd. are conspicuously absent in the present case. It is also pertinent to note that the preamble to Notification No. 13/81-Cus. specifically provided exemption to goods imported for the purpose of manufacture of articles for export by hundred per cent export-....
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....icability and scope of the judgment in Oblum Electrical Industries Pvt. Ltd. have already been examined in detail in the foregoing paragraphs and it has been found that the said decision was rendered in the context of a differently worded exemption notification and under a distinct statutory framework. Accordingly, for the reasons already recorded hereinabove, the ratio of Oblum Electrical Industries Pvt. Ltd. is not applicable to the interpretation of SI. No. 39 of Notification No. 24/2005-Cus. Since the decision of the Hon'ble Bombay High Court in Autolite India Ltd. substantially derives support from and applies the principles enunciated in Oblum Electrical Industries Pvt. Ltd., the same cannot assist the Applicant in seeking an expanded interpretation of the expression "for the manufacture of goods" occurring in SI. No. 39 of Notification No. 24/2005-Cus. 1. Further, the appellant has relied upon various case laws which I find not applicable here in as much the facts and circumstances of these cases are different. The Hon'ble Supreme Court in the matter of Bhavnagar University v. Palitana Sugar Mills Pvt. Ltd .- 2003(2) SCC 111 has observed that "It is well settle....