2019 (2) TMI 1298 - AT - Central Excise

Import of batteries to be used for manufacture of mobile handsets and similar phones - actual user condition - benefit of N/N. 21/2005 dated 1.3.2005 superseded by Notification No.23/2010 dated 27.2.2010 denied - entire case of the Revenue is that the batteries imported by the appellants were not used in the process of manufacture of the finished goods viz., mobile phones or other phones, hence cannot be treated as the parts and accessories of the said mobile phones or other phones - Held that - This Tribunal has consistently held in its various decisions that when mobile/other phones cannot work without batteries, they are to be considered as parts of the mobile phones - reliance placed in the case of CC (Imports) Chennai vs. Vuppalamrita Magnetic Components Ltd. 2016 (5) TMI 989 - CESTAT CHENNAI - thus, the imported batteries are essentially parts and accessories of the mobile phones and the benefit of exemption under Notification 21/2005 dated 1.3.2005 is admissible to them - decided in favor of appellant. Denial of benefit alos on the ground that while filing the Bill of Entry, appellants have shown the address of the premises which was not the same as the premises in respect of which the Bond was executed - Held that - N/N. 21/2005 itself is admissible on the basis of the certificate given by the jurisdictional officer and in terms of Bond executed before him. When the certificate was issued for a particular premises and a Bill of entry filed indicating some wrong address of the same person, the error in mentioning address cannot be anything but a clerical error - Because the certificate indicating the correct address was part of the assessment documents. The error in address subsequently been rectified also. It is not the case of the Department that the goods were not received in the premises where they were meant for. It is also not the case that goods have not been duly accounted for. In his order the Asst. Commissioner has only stated that records for accountal and assessments were not produced before him. If such records were required, Asst. Commissioner could have called for a report on verification of receipt and usage of the said goods and thereafter, adjudicated the matter - adjudicating authority should afford an opportunity to the appellants to produce the documents with records to receipt and accountal of the said goods in the premises where the Bond have been executed and thereafter, take a final view with regards to the admissibility of benefit of exemption Notification. The matter remanded back to the adjudicating authority for consideration of the documents with regards to receipt and usage of the goods at the premises for which the Bond was executed - appeal allowed by way of remand.

Summary

Issues Involved:
1. Jurisdiction of the Central Excise officer to issue the show-cause notice.
2. Whether the imported batteries qualify as parts and accessories of mobile phones for concessional customs duty.
3. Whether the goods were received and used in the premises specified in the Bond.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Central Excise Officer:
The appellants argued that the Central Excise officer was not the notified officer for the purpose of Section 28 of the Customs Act, rendering the proceedings initiated by the show-cause notice without jurisdiction. They cited several case laws to support this argument. However, the High Court had already considered this issue and remanded the matter back to the Tribunal for a decision on merits, effectively holding the jurisdiction issue in favor of the Revenue.

2. Qualification of Imported Batteries as Parts and Accessories:
The core of the dispute was whether the imported batteries used in mobile handsets and similar phones could be considered parts and accessories eligible for concessional customs duty under Notification No.21/2005. The appellants contended that the batteries were essential parts of mobile phones, as the phones could not function without them. They cited various decisions where batteries were considered integral to mobile phones. Conversely, the Revenue argued that batteries were not used in the manufacturing process of mobile handsets but were added post-manufacture, thus not qualifying for the exemption. The Tribunal noted that previous decisions consistently held that batteries, being essential for the functioning of mobile phones, are considered parts and accessories. Hence, the Tribunal concluded that the imported batteries were indeed parts and accessories of mobile phones, making the appellants eligible for the concessional rate of duty.

3. Receipt and Usage of Goods in Specified Premises:
The show-cause notice also alleged that the imported batteries were not received in the premises where the Bond was executed, which was a condition for availing the exemption. The appellants admitted to a clerical error in the address mentioned in the Bill of Entry but argued that the goods were indeed received and used in the correct premises. The Tribunal found that the error in the address was clerical and had been rectified. It was not contested by the Revenue that the goods were received in the intended premises. The Tribunal emphasized that if the adjudicating authority had doubts regarding the records, they should have called for a verification report. Therefore, the Tribunal remanded the matter back to the adjudicating authority to allow the appellants to produce documentation proving the receipt and usage of the goods in the specified premises. If satisfied with the documentation, the adjudicating authority should drop the demand.

Conclusion:
The appeal was allowed by remanding the matter back to the adjudicating authority to verify the receipt and usage of the goods in the premises for which the Bond was executed. The adjudicating authority was directed to take a final view based on the documentation provided by the appellants. The Tribunal's decision was pronounced in open court on 21/02/2019.