9911796707
TMI Blog2024 (10) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... its periphery - the benefit of exemption to components, parts and accessories to be imported at concessional rate of duty since is based on observance and compliance of IGCR Rules, 2017, therefore the term manufacture appearing in Notification No. 50/2017 dated 30.06.2017 in its entry at S.No. 512 has to be interpreted by taking into consideration the provision of Rule 3 (e) of IGCR Rules, 2017. It is evident that w.e.f. 29.01.2019, lithium-ion cells were taken out of the scope of Serial No. 512 of Notification No. 50/2017-Cus and placed in a separate entry 17B of Notification No. 02/2019 where those were made chargeable to duty at the rate of 5%. Conversely, Lithiym-ion cells were squarely covered within the ambit of Sr. No. 512 prior to 29.01.2019 and were eligible for exemption. Hence, the amendment made vide Notification Nos. 02/2019-Cus and 03/2019Cus both dated 29.01.2019 clearly manifest that before the amendment, subject goods were exempted vide Notification No. 50/2017-Cus. Post the above amendment, the subject goods have been withdrawn from exemption notification and have been placed under the duty rate of 5%. The power bank performs the same function of storing and trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 (IGCR Rules 2017) as prescribed vide Notification No. 68/2017-Cus dated 30.06.2017, as amended. 2. Department observed that the Importer has imported various goods namely Housing Plastic, USB Cables, Lithium-ion Cell etc. after availing the benefit of S. No. 512 of the Notification No. 50/2017-Cus dated 30.06.2017, as amended, during the period of the year 2017-2019. The Importer-appellant has used all the imported items as mentioned above in manufacturing of Power Bank and thus violated the terms of the exemption Notification No. 50/2017-Cus dated 30.06.2017,entry at Sr.no. 512, as amended. Department observed that as per the aforesaid Notification, the exemption benefit is available for the parts, components and accessories except populated printed circuit boards for use in manufacture of lithium-ion batteries other than batteries of mobile handsets including cellular phones falling under tariff item 8507 60 00. 3. It is alleged that the Importer-appellant has manufactured Power banks, which is a portable device comprising of rechargeable cells in a special circuit to control power having USB port/s etc. As per details submitted by the importer-appellant, the amount of tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notification No. 50/2017-Cus dated 30.06.2017, as amended, on the goods imported by the Importer and used in manufacturing of Power Bank should be denied to them. (b) Differential Customs duty of Rs. 8,12,95,799/- (Rs. Eight Crore Twleve Lakh Ninty Five Thousand Seven Hundred Ninty Nine only) forgone on the goods imported at the concessional rate of duty by availing benefit under sr.no. 512 of the Notification No. 50/2017-Cus. Dated 30.06.2017, as amended, should be demanded/recovered from them under rule 8 of IGCR Rules, 2017 as defined under Notification No. 68/2017-Cus (N.T.) dated 30.06.2017, under Section 28(4) of the Customs Act, 1962 read with Section 143 (3) of the Customs Act, 1962 and in terms of clauses of Bond executed by them. (c) Interest as applicable, on the duty demanded above, should be charged and recovered from them under rule 8 of IGCR Rules, 2017 as defined under Notification No. 68/2017-Cus (N.T.) dated 30.06.2017, read with Section 28AA of the Customs Act, 1962, and condition of Bonds executed by them. (d) Penalty should be imposed upon them under Section 114A of the Customs Act 1962. (e) The Bonds and Bank guarantees/sureties furnished by them at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithium Ion Battery Pack/ power bank. Hence the allegation of department that appellants have not manufacture Lithium Ion Battery is incorrect. 10. Ld. Counsel further submitted that for availing the exemption/ benefit of concessional rate of customs duty under under Notification No. 50/2017 dated 30.06.2017, the importer- appellant has followed and complied with following: a) All requisite Provisions including the Provisions of the Customs Act, 1962 and that of CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY) RULES-2017 ( herein after referred as IGCR Rules) as required under condition no. 9 mentioned in the said notification. b) Appellants have duly reported compliances to the satisfaction of the Jurisdictional Divisional Assistant Commissioner of Central Excise, Janak Puri, Delhi and also to the satisfaction of The Assistant/Deputy Commissioner of Customs of the (Port of Import) under whose jurisdiction the parts components/goods, in question were imported in the manner laid down therein. c) The reporting was made to the changed authority too when the jurisdiction of the Divisional/Assistant Commissioner of Central Excise, Janak Puri, Delhi switched over to the Jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K), as required under Notification No. 50/2017 CUS dated 30.06.2017, had been ordering 'out of charge' under Section 46 of the Customs Act, 1962. The Bills of Entry filed from time to time by the appellant have regularly been assessed by the concerned officers without raising any such objection as has been raised in the impunged Show Cause Notice(SCN). 12. It is further mentioned that after receipt utilization of the Stocks in their Factory and after observing the complete compliance on part of appellant, the Assistant Commissioner of Customs, used to cancel the Continuity Bonds filed by the appellant from time-to-time. Such Continuity Bonds were ordered to be cancelled under Section 143(2) of the Customs Act, 1962 by the jurisdictional Assistant Commissioner. Such orders can be passed only after being satisfied about the Stocks of the Parts, Components and Accessories which have been imported at Concessional Rate of Duty against respective Bill of Entry that those have successfully been used in manufacture of Lithium Ion Batteries that too in due compliance of the requisite conditions of IGCR Rules. Such orders based on observations that the conditions of notification no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the compliance of the conditions of the impunged notification by cancelling the Continuity bond, as already mentioned above. Hence suppression is wrongly alleged. SCN therefore is barred by limitation. The demand confirmed vide the impunged order is liable to be set aside on this ground as well. With these submissions the Order under challenge is prayed to be set aside and appeal is prayed to be allowed. 16. While rebutting these submissions learned Departmental Representative has submitted on behalf of the department that the demand of Rs 8.13 Cr. has been raised and affirmed along with the interest and penalty of Rs.8.13 Cr. by revoking bonds as were submitted at the time of import of the impugned goods ( parts and components) which actually are the parts and components for manufacture of power bank. The appellants has availed the benefit of concessional customs duty by wrongly mentioning that imported parts and components have been used in manufacture of Lithium Ion Battery. Hence the benefit of availing nil rate of duty on those parts and components by invoking Notification No. 50/17 dated 30.6.2017 is nothing but an act of suppressing the important facts before the customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already set aside the said clarification of TRU. The violation of terms and conditions of the bond/undertaking is submitted as the sufficient ground to hold appellant liable to pay the duty forgone as in the undertaking it has wrongly been mentioned that the imported parts and components have been used for manufacture of Lithium Ion Battery. Learned Departmental Representative has relied upon the decision of this Tribunal, Mumbai Bench, in the case of Patel Engineering Ltd vs Commissioner of Customs (Import), Mumbai reported as 2013 (295) ELT 243. With these submissions it is mentioned that the demand of duty fore gone has rightly been confirmed. Impressing upon no infirmity in the order under challenge, the appeal is prayed to be dismissed. 19. Having heard the rival contentions, perusing the entire records of the present appeal, we observe that the moot question to be adjudicated in the present case is as follows: Whether the appellant is eligible for duty exemption benefit given under Entry No. 512 of Notification No. 50/2017 dated 30.06.2017 while importing parts/components for the manufacture of Lithium Ion Battery or the benefit of said notification has rightly been denie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t too in compliance of the condition no. 9 of the notification, the benefit where under, appellant has claimed. The controversy is about what is being manufactured; the Lithium Ion Battery as claimed by appellants or the powerbank as alleged by the department. Said condition no. 9 reads as follows: If the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules, 2017) These Rules specifically define term Manufacture and term Information . 24. The term 'Manufacture', as appearing under the referred notification, thus, has necessarily and mandatorily to be interpreted and given effect, as laid down under the provision of IGCR Rules, 2017. The same is extracted here under: Rule 3- Definition- in these rules unless the context otherwise requires- Rule 3(e) - MANUFACTURE means the processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term manufacturer shall be construed accordingly Rule 3(c) INFORMATION - means the information provided by the manufacturer who intends to avail the benefit of an exemption notification Rule 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts and accessories to be imported at concessional rate of duty since is based on observance and compliance of IGCR Rules, 2017, therefore the term manufacture appearing in Notification No. 50/2017 dated 30.06.2017 in its entry at S.No. 512 has to be interpreted by taking into consideration the provision of Rule 3 (e) of IGCR Rules, 2017, as quoted above. Further we observe that the parts and components imported by the appellant, admitedly, are: (i) Lithium Ion Cells (ii) Cables (iii) Nickle/stainless steel strips (iv) Heat resistant tapes, silicone, hardware, stickers, form tapes, glues, screws, insulation tapes etc. (v) Shell/housing/protective casing 27. The appellants have been submitting to the Concerned officers as Information the block diagram of Lithium Ion Battery Pack. Admittedly no objection earlier was ever raised about the process of manufacture shown in those diagrams nor about the claim that Lithium Ion Battery is being manufactured by the appellants. Thus it stands admitted procedure that imported Lithium Ion Cells are connected with other such cells by use of imported nickel strips/stainless strips (imported parts) by means of electrical welding both manually as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product to the stage of manufacture of final product which is Power Bank in the present case. 30. Coming back to Entry No. 512, we observe that the exemption is available when the imported parts and components are used in manufacture of lithium batteries. The notification is nowhere requiring the Lithium Ion Battery to be manufactured as the final product of the importer. This observation and definition of manufacture under IGCR Rules, 2017 a joint reading, is sufficient for us to hold that the Entry No. 512, the term manufacture therein, has not to be understood/interpreted in terms of the definition of manufacture given under Excise Act, 1944. Otherwise also the period in question is subsequent to coming into effect of Goods and Service Tax Act, 2017 repealing most of the provisions of Excise Act, 1944. Above all the language of notification has to be strictly interpreted as has also been impressed upon by the department. In the case of Dilip Kumar Co. (supra) the Hon ble Supreme Court though has held that ambiguity in exemption notification the benefit thereof cannot be claimed by the assessee and has to be interpreted in favour of Revenue. However, it has simultaneously held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. iii) 21. in construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution (265. Taxes not to be imposed save by authority of law - No tax shall be levied or collected except by authority of law.) prohibits the State from extracting tax from the citizens without authority of law, It is axiomatic that taxation statute has to be interpreted strictly because State cannot at their whims and fancies burden the citizens without authority of law. In other words, when competent Legislature. mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the Legislature. iv) 22. At the outset, we mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from Lithium Ion Battery despite having the same function as that of Lithium Ion Battery, we hold appellant entitle for the benefit of exemption of Entry No. 512 of Notification 50/2017 dated 30.06.2017. 32. Department s yet another submission is that the Central Government simultaneously issued another Notification No.02/2019-Cus dated 29.01.2019 (sr. no. 17B) for the Lithiumion cells w.e.f. 30.01.2019, the relevant portion of which reads as under: S.No. Chapter or Heading or sub- Heading or tariff item Description of goods Rate Condition No. 17A 8507 60 00 Lithium ion cell for use in the manufacture of battery pack of cellular mobile phone. 5% 1 17B 8507 60 00 Lithium ion cell for use in the manufacture of power bank of Lithium ion 5% 1 33. From the perusal of the above, it is evident that w.e.f. 29.01.2019, lithium-ion cells were taken out of the scope of Serial No. 512 of Notification No. 50/2017-Cus and placed in a separate entry 17B of Notification No. 02/2019 where those were made chargeable to duty at the rate of 5%. Conversely, Lithiym-ion cells were squarely covered within the ambit of Sr. No. 512 prior to 29.01.2019 and were eligible for exemption. Hence, the amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently and admittedly there was nothing in HSN code nor even under Tariff Act during the period in question, which can specifically be known as power banks. It was in the Notification No. 02/2019 dated 29.01.2019 that the word power bank of Lithium Ion was for the first time found mentioned. 37. The HSN further clarifies about the character and potential usage of Secondary Battery or Storage Battery, which for the purpose of Heading 85.07 should be covered under 'Electric Accumulators'. It even provides the manner by which functioning of Storage Battery or Secondary Battery has to take place. In brief, it states relating to include the product, which can be recharged on receiving of direct current and further such product should store Electrical Energy and supply the same, when required. The product covered herein should have Terminals, which can be connected to such External Circuit, wherein chemical changes reverse and produce a direct current in the External Circuit (Discharging). Thus the BATTERY OF CHAPTER HEADING 85.07 AS PER HSN is one: a) Where the cells are connected in series is called a Battery b) The Accumulators containing one or more cells and the circuitry to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known to trade nor to HSN during the relevant time. As brought to notice, there was a TRU circular dated 26.04.2017 wherein it was clarified that the power banks merits classification as an accumulator under Heading 8507 of the Customs Tariff Act and the chapter heading 8507 covers Lithium Ion Accumulator. TRU clarifications have a binding character vis-a-vis department. We draw our support from the decision of Constitution Bench of Hon ble Apex Court in the case of Collector of Central Excise, Vadodara Vs. Dhiren Chemical Industries reported as 2002 (139) ELT 3 (SC) and the subsequent decision of Hon ble Apex Court in the case of Collector of Central Excise, Meerut Vs. Maruti Form Pvt Ltd reported as 2004 (164) ELT 394 (SC). it becomes clear that the appellant had bona fide relied upon the said circular which was prevalent during the period in question and apparently it has not been withdrawn till date. 43. Department s another submission is that in the year 2017 itself, a Notification No. 01/2017 dated 28.06.2017-IT vide entries 376 AA and entries 376AAA had distinguished lithium Ion Batteries (376AA) from Lithium Ion Accumulators including Power bank(376AAA), based upon which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the issue of invocation of extended period of limitation: We observe that the IGCR Rules, as are mandatorily required to be observed for availing the benefit of notification no.50/2017, came into force on 1st July 2017 by virtue of Notification No. 68/2017 dated 30.06.2017. Rule 5 thereof prescribes the procedure to be followed by the importer who intends to avail the benefit of exemption notification requiring such importer to provide the following information to the concerned officer: (a) in duplicate, to the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service, the estimated quantity and value of the goods to be imported, particulars of the exemption notification applicable on such import and the port of import in respect of a particular consignment for a period not exceeding one year, and (b) in one set, to the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs at the Custom Station of importation. (2) The importer who intends to avail the benefit of an exemption no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paper formality under IGCR Rules 2017, but requires intervention and control of such Authority on appellants' working. Execution of Continuity Bond by the importer/ manufacturer to the satisfaction of the jurisdictional Assistant Commissioner of Customs followed by cancellation of such Bond by such Assistant Commissioner on being satisfied of the importer/ manufacturer's compliance cast involvement and a very heavy responsibility on the jurisdictional Assistant Commissioner of Customs for proper check on the importer's/manufacturer's ongoing activities with the components. In fact, the jurisdictional Assistant Commissioner of Customs, being the proper officer under IGCR Rules 2017, has to regularly discharge his official Powers for the units working under IGCR Rules 2017. The said rules, by itself, have been so framed to involve the jurisdictional Assistant Commissioner of Customs for watching of actual working of importer in its factory. 48. All the documents as placed on record by the appellant prove the step by step compliance of the above mentioned provisions of IGCR Rules, 2017. It is also an undisputed fact that the Continuity Bonds submitted by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
