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TMI Blog2024 (6) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the capability of Lithium Ion Battery was duly produced and considered in the case of K S Enterprises also. It is found that DFIA scheme requires broad catogerisation are same and then as capable being used in electrical vehicle . There are merits in the impugned order and the appeal of the Department is liable to be dismissed with consequential relief to the party. - HON BLE Mr. SOMESH ARORA , MEMBER ( JUDICIAL ) And HON BLE Mr. A. K. JYOTISHI , MEMBER ( TECHNICAL ) Shri Sandeep Kumar Payal , Authorised Representative for the Appellant Shri J. C. Patel , Advocate for the Respondent ORDER [ ORDER PER : SOMESH ARORA ] In the instant case, the dispute is whether Lithium Ion Battery imported by the Respondent is covered by the description of import item Automative Battery so as to allow to them under Transferrable DFIA License purchased by the Respondent which was issued under SION C-969 against export of Agriculture Tractor and consequently entitled to duty exemption under Notification No. 25/2023-CUS dated 01.04.2023. 2. Learned Advocate points out that neither the item nor the issue is such that needs detailed deliberations at this point of time and including of Lithium Ion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. (v) Technical Opinion of IIT, Karagpur on EV battery dated 31.03.2023 has opined that EV Batteries (EV) are Automotive Batteries used in Buses/Cars are also capable of being used in Agricultural Tractors after suitable technical Modification. 2.8 It is submitted that the product description mentioned in the DFIA under Serial No.2 is Automotive Battery is a specific term and therefore the provision of Para 4.12(i) has no application. Similarly it is submitted that against the relevant product description of Automotive Battery a single quantity is mentioned in all the DFIA s in question. Therefore Para 4.12 (ii) of FTP is totally inapplicable in the present case. 2.9 It is submitted that Lithium Ion Cell are covered by the description of Automotive Battery . The import documents viz., Invoice copy, Packing List 17 C/10601/2023-DB and Bill of Lading clearly mentions that Lithium ion cells are used as EV application battery. It is settled law that the term used Materials required for manufacture of export products would also cover such entities which are not only directly used or usable as such in the manufacturing process but also which could be used with some processing inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No. 19 of 2015, the appellant is only required to satisfy the description, value and quantity mentioned in the DFIA. The imported goods are covered within the description, value and quantity of the DFIA. Therefore the submission that the appellant has not satisfied with the conditions of Notification is not correct. There is no such condition either in the policy or in the procedure or in the Notification No. 19 of 2015 which stipulates that ITC (HS) No. is a criteria for claiming DFIA benefits as held by this Tribunal in the case of USMS Saffron Co. Inc. v. Commissioner of Customs, ACC, Mumbai vide Final Order No. A/3627/15/CB, dated 30-9-2015 [2016 (331) E.L.T. 155 (Tri. - Mum.)]. . 2.15 It is further submitted that the Automotive Battery being not a sensitive item specified under Para 4.30 of FTP., it is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The Central Board of Excise Customs vide Circular No. 46 of 2007 and DGFT Policy Circular No./ 50 of 2008 has clarified the above position of law. 2.16 It is submitted that the vide DGFT Policy Circular No. 72 dated 24.03.2009, flexibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply in those cases where the imported goods are used in the resultant product. In the present case, the inputs used are domestically procured for manufacturing resultant product which is exported. Therefore it is not necessary for a Transferee importer to import only those inputs which are actually used in exported goods. 2.20 There is no Actual user condition mentioned against any of the inputs mentioned in the aforementioned DFIA s. It is submitted that as per provision of Para 4.27 (iv) of FTP- 2015-2020 it is inter alia stipulated that no DFIA shall be issued for an input which is subjected to pre-import condition or where SION specifies AU condition. 2.21 As long as the imported goods are covered under the description, quantity and within the CIF value of the DFIA, there is no restriction to claim DFIA benefits under Notification No. 19 of 2015. 2.22 In view of the above and following the ratio of judgements which are identical to the present case, the imported goods EV Ion cells and/or EV Batteries are covered by the description of Automotive Battery mentioned in the DFIA and are eligible from claiming Exemption from payment of Customs Duty under Notification No. 19 of 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same. The department was initially of the view that Lithium Ion battery has not been shown to have been used in exported tractors and that party not having done so was disentitled from the benefit of exemption notification which are construable strictly. We find that generally exemption notification is to be construed strictly but exemption notification dealing with export benefit schemes are liable to be liberally construed. Further a notification at threshold while deciding applicability is required to be liberally construed, same after the applicability threshold is passed, is liable to be construed strictly as a matter of interpretation. 3.2 We find that the decision of M/s. Dilip Kumar Company sought to be relied upon by the department can be pressed into use only when there is ambiguity in the language of the notification. In the instant case no such ambiguity has been brought on record by the department, which can be interpreted in their favour. Therefore, the reliance on M/s. Dilip Kumar Company by the department is rather mis -placed. To the contrary after having discussed various case law cited by the appellant, Commissioner (Appeals) has denied benefit only on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as capable of use and there stipulation in Notification 19/2015 that material should be actually used in export product did not exist. During course of its decision, the bench relied upon the decision of Commissioner of Customs Calcutta Vs. G.C Jain as reported in 2011 (269) ELT 307 (S.C) to hold that the term used as material required for manufacture of export products would encompass such items also which are not only directly used or but are usable as such in the manufacturing process of the industry. In 2019 (367) ELT 335 (Bom.) in the matter of M/s. Shah Nanji Nagsi Exports Pvt Ltd Vs. U.O.I, also held that DFIA Scheme being export promotion Scheme, the permitted pop corn to be imported against exported product Maize Starch Powder and that import of Popcorn Maize was not excluded from scope of term Maize on the ground that popcorn was not used for manufacture of export product i.e Maize Starch Powder. The Hon ble High Court of Bombay held that so long as export goods and import items correspond to description given in SION, it could not be held to be invalid by adding something else which is not in policy. The materials and technical opinion produced by the party in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered view, such an approach cannot be sustained. Learned Authorized Representative has argued that the expert opinion by Government Chemist cannot be brushed aside. We agree. However, if the expert opinion is contrary to some other technical literature and when the assessee seeks a crossexamination of the expert it must be provided before the expert's report can be relied upon. On crossexamination, perhaps, there would be better clarity as to how the expert held a view contrary to other technical literature. Therefore, we find the reliance on the expert opinion of CRCL not correct in this factual matrix. 23. We also find that prior to the issue of show cause notice there was an order of the Tribunal holding that Melamine qualifies as Syntan. The Additional Director of DRI and the adjudicating authority effectively said that the Tribunal was not correct. If it be their opinion, it was open for them to assail the order of the Tribunal before a higher judicial forum. Instead, the Additional Director DRI and the Assistant Commissioner have arrogated to themselves the role of a superior authority over the Tribunal and ignored the judicial precedent which is not only highly irregul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Tribunal in the case of Balaji Action Buildwell. We find that before the Tribunal in that case was only the expert opinion of CLRI, Chennai which stated as follows Melamine cannot be used, as such, in leather processing as Syntan . It does not appear from the order that any of the technical literature contrary to this opinion of CLRI were produced in that case by appellants before the Tribunal. It is not recorded that Melamine can be used directly, as such, on leather as a Syntan as has been the assertion of the appellant in this case from the very beginning itself. 28. We further find that in that the judgment of the Supreme Court in the case of G.C. Jain holding that the materials need not be used directly, but can be used after some processing and will still qualify for exemption under licence was not brought to the attention of the Tribunal. Thus, both on the substantial question of law, which was laid down by the Supreme Court in G.C. Jain and the technical literature were not placed before the Tribunal in that case. In this context that the Tribunal had passed the order. 29. The present case is distinguishable inasmuch technical literature has been provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority keeping in mind that the DFIA Scheme unlike some other export scheme in the past which required some kind of a correlation in Tariff Heading does not require so as per various judicial pronouncements as well as by the application of the relevant notification. While the legislative purpose and intent of policy makers is not required to be looked into for interpreting any notification, it can be broadly analysed that if at any stage policy makers want to encourage innovation and advent of new technologies including usage of new materials, then such broad based imports within an industry and within same SION may be require to be encouraged, rather than persisting with old technologies and materials which can only restrict innovation. 3. Learned AR on the other hand defends the grounds taken in the Departmental appeal and prays that impugned order be set aside. 4. Learned Advocate in rejoinder points out that imported consignment has now been registered with the DGFT office as well as the Lithium Battery is one type of automotive battery, the other being the conventional battery and the import of one against the other cannot be permitted as have been decided by the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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