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2025 (3) TMI 695 - AT - CustomsRate of IGST - lithium-ion batteries - whether the rate of IGST payable on the import of lithium-ion batteries is at 12% as per S. No. 203 of Schedule II to Notification No. 01/2017 IT (Rate) or at 18% as per S. No. 376AA of Schedule III to Notification No. 01/2017 IT (Rate) as inserted by Notification No. 19/2018-IT (Rate) dated 26.7.2018 which specifically covered lithium-ion batteries ? - levy of interest or penalty - HELD THAT - The Hon ble Supreme Court in Bengal Immunity Co. Ltd. v. State of Bihar Ors. 1955 (9) TMI 37 - SUPREME COURT stated that a legal enactment must be interpreted in its plain and literal sense as that is the first principle of interpretation. Again in Union of India Vs Hansoli Devi 2002 (9) TMI 799 - SUPREME COURT wherein the Apex Court held that it is a cardinal principle of construction of a statute that when the language of the statute is plain and unambiguous the court must give effect to the words used in the statute. Besides in a taxing Act one has to look merely at what is clearly said and there is no room for any intendment. In a taxing statute nothing is to be read in nothing is to be implied one can only look fairly at the language used. It is found that based on the first principle of interpretation the impugned goods were found covered under a specific heading which conveys only one meaning and were correctly determined to discharge IGST @ 18% as per S. No. 376AA of Schedule III of Notification No. 19/2018-IT (Rate) dated 26.07.2018 during the relevant period by the Original Authority. Due to a lack of ambiguity in the rate notification and in the light of the judgment of the Hon ble Apex Court in Simplex Mills Co. Ltd. 2005 (3) TMI 117 - SUPREME COURT there is no necessity here to examine the claim of the goods at S. No. 203 of Schedule II to N/N. 01/2017 IT (Rate) and muddy the clear water. An aid to interpretation of the terms used in a statute or notification is resorted to only when there is some ambiguity in the words or expression used which is not so the case here. No Interest or Penalty is leviable in the absence of machinery provision - HELD THAT - The Hon ble Bombay High Court in Mahindra Mahindra Ltd. v. Union of India 2022 (10) TMI 212 - BOMBAY HIGH COURT has examined an identical issue regarding interest. It was held that there is no substantive provision in Section 3 of Customs Tariff Act 1975 requiring payment of interest and in the absence of specific provisions for levy of interest same cannot be levied or charged. It is also noticed that Section 3(12) of the Customs Tariff Act has been substituted vide Finance (No 2) Act 2024 which was notified on 16th August 2024 specifically including interest among others measures - The legislature having now incorporated interest into the Customs Tariff Act 1975 the same can be demanded for non-payment of IGST only after the substitution of the said sub-section as above from 16.08.2024 and not on the impugned goods which were imported before that date. The appellants prayer hence succeeds on this issue. Conclusion - i) The demand for IGST on lithium-ion batteries @ 18% as per S. No. 376AA of Schedule III to Notification No. 01/2017 IT (Rate) is upheld. ii) The demand for interest is set aside. Appeal disposed off.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are: a) Whether the rate of Integrated Goods and Services Tax (IGST) payable on the import of lithium-ion batteries is 12% as per Sl. No. 203 of Schedule II to Notification No. 01/2017 - IT (Rate) or 18% as per Sl. No. 376AA of Schedule III to Notification No. 01/2017 - IT (Rate), as inserted by Notification No. 19/2018-IT (Rate) dated 26.7.2018. b) Whether interest is leviable on the appellant for non-payment of IGST in the absence of machinery provisions in the Customs Tariff Act (CTA) to impose such interest. 2. ISSUE-WISE DETAILED ANALYSIS a) Rate of IGST on Lithium-Ion Batteries: - Relevant legal framework and precedents: The legal framework involves the interpretation of Schedule II and Schedule III of Notification No. 01/2017 - IT (Rate) and the subsequent amendment by Notification No. 19/2018-IT (Rate). The appellant argued for a 12% IGST rate under Sl. No. 203, while the department insisted on an 18% rate under Sl. No. 376AA. - Court's interpretation and reasoning: The Tribunal emphasized the importance of classifying goods based on their description and condition at the time of import. It referenced the General Rules of Interpretation, particularly Rule 3(a), which prioritizes specific descriptions over general ones. The Tribunal found that the classification under Sl. No. 376AA, which specifically covers lithium-ion batteries, was appropriate. - Key evidence and findings: The Tribunal noted that the appellant classified the goods under CTH 8507 6000, which was not disputed. It also highlighted that the appellant did not provide evidence to prove that the batteries were parts of cellular phones. - Application of law to facts: The Tribunal applied the principle that a specific entry in a notification should prevail over a general one, leading to the conclusion that the 18% IGST rate under Sl. No. 376AA was applicable. - Treatment of competing arguments: The appellant's argument that the batteries were integral parts of mobile phones was not substantiated with evidence. The Tribunal also dismissed the appellant's reliance on various judgments, stating that the classification of goods involves specific facts and law not previously agitated before the Original Authority. - Conclusions: The Tribunal upheld the 18% IGST rate on lithium-ion batteries as per Sl. No. 376AA. b) Interest on Non-payment of IGST: - Relevant legal framework and precedents: The appellant argued that Section 3(12) of the CTA did not borrow provisions for interest from the Customs Act, and thus interest could not be imposed. The Tribunal referenced the Bombay High Court's decision in Mahindra & Mahindra Ltd. v. Union of India, which held that interest cannot be levied in the absence of specific provisions. - Court's interpretation and reasoning: The Tribunal agreed with the appellant, noting that the absence of a specific provision for interest in Section 3 of the CTA meant that interest could not be imposed. It also noted the recent amendment to the CTA, which now includes provisions for interest, but this was not applicable to the period in question. - Key evidence and findings: The Tribunal found that the legislative intent to impose interest was not evident in the relevant statutory provisions applicable during the period of dispute. - Application of law to facts: The Tribunal applied the principle that interest can only be demanded if explicitly provided for by the legislature, which was not the case here. - Treatment of competing arguments: The Tribunal dismissed the department's argument for interest, citing the lack of statutory basis for such a demand during the relevant period. - Conclusions: The Tribunal set aside the demand for interest on the IGST amount. 3. SIGNIFICANT HOLDINGS - The Tribunal held that the specific entry for lithium-ion batteries under Sl. No. 376AA of Schedule III to Notification No. 01/2017 - IT (Rate) should be applied, resulting in an 18% IGST rate. "In interpreting a taxing statute, equitable considerations are entirely out of place." - The Tribunal confirmed that no interest could be levied in the absence of specific statutory provisions for such interest in the Customs Tariff Act during the relevant period. - The final determinations were: the demand for IGST at 18% was upheld, while the demand for interest was set aside. The appellant was granted consequential relief as per law.
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