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2018 (7) TMI 1419 - AAR - GSTClassification of goods - Battery for Mobile Handset - Under which of the chapter headings of the Customs Tariff Act, 1985, the said product battery for mobile handsets , which is lithium-ion battery would be covered? - Held that - Sub-heading 85076000, meant for lithium-ion battery, is more specific classification for the product under consideration and heading 85177090 is a general heading for parts of mobile phone. Hence, mobile phone batteries are covered under chapter heading 8507 - lithium-ion battery is classifiable under heading 8507, Whether it is included in the description parts for manufacture of telephones for cellular networks or for other wireless networks ? - Held that - Mobile phones are classifiable under heading 8517 and the parts of mobile phones are also classifiable under chapter heading 8517. However, it does not imply that any other goods, which are not covered by chapter heading 8517, would cease to be parts of mobile phones - a mobile phone cannot function, cannot be operated without a battery, whether the same is detachable/separable or not. Hence, mobile phone batteries qualify as part of mobile phone. Whether battery for mobile handset can qualify- for GST under S.No.203 of Schedule II of the Notifications? - Held that - Sr.No.203 covers all the goods falling under chapter 85, which are parts for manufacture of telephones for cellular telephones for cellular networks or for other wireless networks. Battery of mobile handsets are indeed covered under chapter 85 and they are parts of mobile phones - Accordingly, when they are used tor manufacture of mobile phone handsets, they qualify to be covered vide S.No.203 schedule II. Advance Ruling - The product Battery - for Mobile Handset whether it be separable or non-separable i.e.. whether it be detachable or non-detachable, when sold to the mobile handset manufacturers who uses the same to make it form part of the mobile handset will, qualify to be classified under heading-85 attracting GST Rate of 12% (CGST rate 6%, SGST rate 6%, IGST rate 12%). The product Battery for Mobile Handset , when sold to the customers other than mobile handset manufacturers who does not use the same in manufacture of mobile handset, will qualify to be classified under heading-8507 having description Electric accumulators, including separators thereof, whether or not rectangular (including square) , attracting GST Rate of 28% (CGST rate 14%, SGST rate 14%) and IGST rate 28%.
Issues Involved:
1. Classification of "Battery for Mobile Handset" when sold to mobile handset manufacturers. 2. Classification of "Battery for Mobile Handset" when sold to customers other than mobile handset manufacturers. Issue-wise Detailed Analysis: 1. Classification of "Battery for Mobile Handset" when sold to mobile handset manufacturers: The applicant, a manufacturer of batteries for mobile phones, sought an advance ruling on whether the batteries, when sold to mobile handset manufacturers, qualify to be classified under heading 85 with the description "Parts for manufacture of Telephones for cellular networks or for other wireless networks," attracting a GST rate of 12%. The applicant argued that the batteries, whether detachable or non-detachable, should be classified under heading 85, attracting a GST rate of 12% as per Serial No. 203 of Schedule II of the relevant notifications under the CGST Act, Haryana GST Act, and IGST Act. They supported their contention with a judgment from the Hon'ble Tribunal in the case of Commissioner of Cus. Bangalore v. Nl Micro Technologies Pvt. Ltd., which held that a cellular phone cannot function without a battery, thus considering the battery as an accessory or part/component of the cellular phone. The Authority for Advance Ruling examined the classification under the Customs Tariff Act, 1985, and concluded that lithium-ion mobile phone batteries are covered under chapter heading 8507, which is more specific than heading 8517. The Authority noted that while mobile phones and their parts are classifiable under heading 8517, it does not imply that other goods not covered by heading 8517 would cease to be parts of mobile phones. The Authority cited the CBEC circular and the Supreme Court ruling in the case of State of Punjab v. Nokia India Pvt. Ltd. to support that a mobile phone cannot operate without a battery, thus qualifying it as a part of the mobile phone. The Authority ruled that the batteries, when sold to mobile handset manufacturers, qualify to be classified under heading 85 with the description "Parts for manufacture of Telephones for cellular networks or for other wireless networks," attracting a GST rate of 12%. 2. Classification of "Battery for Mobile Handset" when sold to customers other than mobile handset manufacturers: The applicant also sought a ruling on the classification of batteries when sold to customers other than mobile handset manufacturers. They contended that in such cases, the batteries should be classified under heading 8507 with the description "Electric accumulators, including separators therefor, whether or not rectangular (including square)," attracting a GST rate of 28%. The Proper Officer, Rewari, in his comments, stated that the rate of tax on the manufacturer of lithium-ion batteries, whether sold to mobile handset manufacturers or otherwise, would be covered under heading 8507, attracting a GST rate of 28%. The Authority for Advance Ruling agreed with this classification, noting that when the batteries are sold to customers who do not use them in the manufacture of mobile handsets, they qualify to be classified under heading 8507 with the description "Electric accumulators, including separators therefor, whether or not rectangular (including square)," attracting a GST rate of 28%. Advance Ruling: 5.A. The product "Battery for Mobile Handset," whether separable or non-separable, when sold to mobile handset manufacturers, will qualify to be classified under heading 85 with the description "Parts for manufacture of Telephones for cellular networks or for other wireless networks," attracting a GST rate of 12% (CGST rate 6%, SGST rate 6%, IGST rate 12%). 5.B. The product "Battery for Mobile Handset," when sold to customers other than mobile handset manufacturers, will qualify to be classified under heading 8507 with the description "Electric accumulators, including separators therefor, whether or not rectangular (including square)," attracting a GST rate of 28% (CGST rate 14%, SGST rate 14%, IGST rate 28%).
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