2025 (4) TMI 1294 - AT - Customs

Rectification of the mistake - typographical errors - errors occurred due to incorporation of the facts of another appeal on the similar controversy about manufacture of lithium ion battery or Power Bank and the exemption available under Notification No. 50/2017 dated 30.06.2017 Entry No. 512 - HELD THAT - It is observed to to be an acknowledgement that the facts in the present final order are similar to the facts of some other appeal which probably would have been decided at the similar point of time. Hence the record of the orders pronounced and that of hearing got checked. It came to notice that another appeal titled as XOR Technologies LLP Vs. Principal Commissioner of Customs (Preventive) New Delhi 2024 (10) TMI 297 - CESTAT NEW DELHI . It involved the same issue of benefit of Notification No. 50/2017 dated 30.06.2017 and whether the product manufactured by the appellant is Lithium Ion Battery Pack or Power Bank. Except that in present case it is Lithium Ion Battery instead of Lithium Ion Battery Pack. The present appeal was heard on 25.06.2024 and the impugned final order is dated 18.10.2024. The perusal of final order dated 30.09.2024 in said the appeal shows that the appellant therein were also availing the benefit of Notification No. 50/2017 dated 30th June 2017 entry at Sr. No. 512 being importing raw material for manufacture of Lithium-ion battery Packs - keeping in view that the defects pointed out are nothing but the typographical errors which have occurred due to overlapping of facts of two appeals heard simultaneously with respect to the same subject matter. Conclusion - The identified errors are typographical and their rectification ordered as per the appellant s submissions and the factual matrix. With incorporations of such typographical correction in respective paragraphs of the final order as mentioned the application seeking rectification of typographical errors in the said final order stands allowed.

Summary

The core legal questions considered in this matter pertain to the rectification of typographical errors in a final appellate order involving classification and exemption benefits under the Customs Tariff and related notifications. Specifically, the issues include:

1. Whether the errors identified in the final order relate to material facts or are merely typographical in nature arising from overlapping facts of a contemporaneous appeal involving similar subject matter.

2. The correct classification of the goods manufactured by the appellant-whether they are Lithium-ion batteries, power banks, or Lithium-ion battery packs-and the impact of such classification on the applicability of exemption under Notification No. 50/2017-Cus., Entry No. 512.

3. The correctness of recorded facts regarding the appellant's premises shift, service of notices, and opportunity to defend before the adjudicating authority.

4. The accuracy of financial figures mentioned in the order, including the amount of demand, penalty imposition, and status of continuity bonds.

5. The applicability and invocation of Section 28(4) of the Customs Act, 1962, and penalties under Section 114 in light of the appellant's conduct.

Issue-wise Detailed Analysis

1. Nature and Extent of Errors in the Final Order

The legal framework governing rectification of orders includes the principle that typographical or clerical errors apparent on the record may be corrected to reflect the true intention and facts without altering the substantive decision. The Court examined the impugned final order dated 18.10.2024 and identified multiple instances where facts from a contemporaneous appeal involving similar issues were erroneously incorporated. This included misstatements about the product manufactured, the raw materials imported, amounts of demand and penalty, dates, and procedural details such as service of notices and status of bonds.

The Court's reasoning emphasized that these errors did not affect the core adjudicatory findings but were inadvertent overlaps due to simultaneous hearings of appeals with similar facts. The appellant's submissions and the departmental acknowledgment confirmed the typographical nature of these errors. The Court applied the principle that such errors are rectifiable to ensure the order accurately reflects the facts of the present appeal.

Key evidence included the comparison of the impugned order with the final order in the other appeal (XOR Technologies LLP), hearing dates, and the appellant's correspondence intimating the shift of premises and product details. The Court treated competing arguments from the department, which objected to findings but accepted the typographical errors, by distinguishing between substantive findings and clerical mistakes.

Conclusion: The Court held that the identified errors are typographical and ordered their rectification as per the appellant's submissions and the factual matrix.

2. Classification of Manufactured Goods and Applicability of Exemption

The relevant legal framework includes Notification No. 50/2017-Cus. dated 30.06.2017, particularly Entry No. 512, which grants exemption to parts/components/accessories used in the manufacture of Lithium-ion batteries, subject to compliance with Customs (Import of Goods at concessional Rate of Duty) Rules, 2017 (IGCR Rules).

The Court analyzed the appellant's claim that their manufactured goods are Lithium-ion batteries/power banks, not Lithium-ion battery packs as incorrectly recorded in the order. The Court noted the appellant's compliance with the requisite intimation procedure under Condition No. 9 of the IGCR Rules and the departmental acknowledgment of the product classification as accumulators under Customs Tariff Heading 8507, which includes batteries and power banks.

The Court referred to the TRU letter dated 26.04.2017 and HSN explanatory notes clarifying that accumulators and batteries are synonymous, reinforcing the appellant's classification. The Court rejected the erroneous recording that the appellant failed to inform the department about manufacturing power banks, as the appellant had duly informed the authorities.

Key findings included the appellant's submission, documentary proof of intimation, and the absence of any departmental objection to the classification during the proceedings.

Competing arguments from the department were addressed by clarifying that the misclassification was a typographical overlap and not a substantive dispute.

Conclusion: The Court affirmed that the appellant's goods are Lithium-ion batteries/power banks and that the exemption under Notification No. 50/2017-Cus. is rightly applicable.

3. Procedural Aspects: Service of Notices and Opportunity to Defend

The Court examined the procedural history concerning the appellant's change of jurisdiction and premises, including the appellant's letter dated 01.07.2019 intimating the department, which was acknowledged. Despite this, notices of personal hearing were served at the old address, resulting in the appellant not receiving them and the order being passed ex parte.

The Court found that the impugned order incorrectly stated that the appellant's reply to the show cause notice was discussed, which was factually inaccurate. The Court rectified this by omitting the incorrect lines and clarifying that the appellant was denied opportunity to defend due to non-receipt of notices.

The appellant subsequently filed a writ petition, which was disposed of on the ground of availability of appeal remedy, allowing the appellant to raise all grounds before the Tribunal.

This procedural clarification was critical to ensure the appellant's right to be heard was preserved and reflected accurately in the order.

4. Financial Figures and Status of Bonds

The Court noted discrepancies in the amount of demand recorded (Rs. 8.13 crore instead of Rs. 6,66,86,244/-), omission of penalty amount (Rs. 4,90,000/- fine confirmed), and incorrect mention of continuity bonds being revoked or cancelled when they were never revoked.

After review of the record and show cause notice, the Court ordered correction of these figures and terminology to accurately reflect the financial and procedural status.

The Court rejected the appellant's contention for change in para 31 regarding confiscation, as the show cause notice did not propose confiscation, and the order correctly recorded this fact.

5. Invocation of Section 28(4) of the Customs Act and Penalties

The Court analyzed the impugned order's finding that there was no scope to invoke Section 28(4) of the Customs Act, 1962, which deals with misstatement or suppression of facts to evade duty, and consequently no penalty under Section 114 was sustainable.

The Court observed that paragraphs 36 and 37 of the impugned order adequately explained the reasons for non-invocation of Section 28(4), but paragraph 38 lacked explicit reasoning. The Court amended paragraph 38 to clearly state:

"Thus, it stands clear to our opinion that there is no evidence of alleged deliberate and willful misstatement of facts by the appellant that too for evading the payment of tax/duty. Hence there is no scope to invoke Section 28(4) of the Customs Act, 1962 and to impose penalty under Section 114 of the Act. The show cause notice is held to have wrongly invoked the said provision. The adjudicating authority has wrongly imposed the penalty."

This clarified the Tribunal's stance that the appellant acted in good faith and complied with procedural requirements, negating the basis for penalty.

Significant Holdings

"The defects pointed out are nothing but the typographical errors which have occurred due to overlapping of facts of two appeals heard simultaneously with respect to the same subject matter."

"The appellant herein has not imported USB cables but the same is found mentioned in para 6 of the present final order. Hence, the word USB cables being an error of typographical overlapping of facts of the another appeal is to be deleted."

"It stands clear to our opinion that there is no evidence of alleged deliberate and willful misstatement of facts by the appellant that too for evading the payment of tax/duty. Hence there is no scope to invoke Section 28(4) of the Customs Act, 1962 and to impose penalty under Section 114 of the Act."

Core principles established include the recognition that typographical errors that do not affect substantive adjudication can and should be rectified to reflect true facts; that classification of goods must be based on accurate and consistent information; and that penalty provisions require clear evidence of willful misstatement, which was absent here.

Final determinations on each issue were that the typographical errors identified in various paragraphs of the final order were to be corrected as per the appellant's submissions; the appellant's manufactured goods are Lithium-ion batteries/power banks entitled to exemption under Notification No. 50/2017-Cus.; procedural irregularities regarding notice service were acknowledged and corrected; financial figures and bond status were corrected; and no penalty under Section 28(4) and Section 114 was sustainable.