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TMI Blog2024 (10) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... ry is a group of such cells. Depending upon the type of electro lights used in the cell. The cell is either wet or dry. Whereas battery is either a primary battery or a secondary battery i.e. a chargeable or nonchargeable battery. Cell is a single unit and battery is a combination of those single units - the term manufacture of Rule 3(e) IGCR, 2017 gets satisfied at the time of emergence of battery as distinct from its component i.e. individual lithiumcell and others. From the case law as quoted above about interpretation of a notification, it is clear that definition of Manufacture as given in IGCR Rules, 2017, the scope thereof cannot be enlarged from the stage of emergence of new product to the stage of manufacture of final product which is Power Bank in the present case. Coming back to Entry No. 512, it is observed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50/2017 dated 30.06.2017 has been utilised by them to manufacture Lithium Ion Battery (Accumulator) which has been captively used by them to manufacture Power Bank . Hence it is held that appellants have rightly claimed the exemption. The appellant since has duly complied with the condition no. 9 of the Notification No. 50/2017, the appellant is entitled for the benefit of exemption of the said Notification No. 50/2017 dated 30.06.2017. Though Notification No. 02/2019 dated 29.01.2019 distinguished Lithium ion Battery from Power Bank but the first time in January 2019 i.e. after the period in question duty demand is not sustainable, as notification cannot be given retrospective effect. The impugned show cause notice is also held being barred by limitation. The said demand is also liable to be set aside on this ground as well. The order under challenge is hereby set aside - Appeal allowed. - HON BLE DR. RACHNA GUPTA , MEMBER ( JUDICIAL ) And HON BLE MR. P. V. SUBBA RAO , MEMBER ( TECHNICAL ) Shri Rajesh Rawal , Advocate for the Appellant Shri Ajay Jain , Special counsel and Shri Girijesh Kumar , Authorized Representative for the Respondent ORDER DR. RACHNA GUPTA The appellants are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted in such a way that Lithium-ion battery gets manufactured, the appellant has rightly availed exemption benefit of Entry No. 512 of Notification No. 50/2017-Cus dated 30.06.2017. According to which exemption is available to the parts/components/accessories for use in manufacture of Lithium-ion battery subject to compliance of condition no. 9 i.e. the procedure set out in Customs (Import of Goods at concessional Rate of Duty) Rules, 2017 (IGCR Rules) notified vide Notification No. 68/2017- Cus dated 30.06.2017 were to be followed by the importer. Learned counsel submitted that in compliance of the said condition the appellant, from time to time, had submitted applications in terms of Rule 2 read with Rule 4 and Rule 5 of Customs (Import of Goods at concessional Rate of Duty) Rules, 2017, to the jurisdictional Deputy/Assistant Commissioner of Customs indicating the intention of availing the benefit of aforesaid entry no. 512 for import of parts to manufacture Lithium-ion batteries/power banks. The department after receiving the said applications had regularly been conducting necessary scrutiny on all aspects. The Assistant Commissioner, Export Promotional Circle, Rohtak (the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly considered its manufactured goods as an accumulator/Lithium-ion battery/power bank. 3.4 Learned counsel further impressed upon that the appellant had clearly indicated, in all the documents, that appellant is importing the subject goods for manufacturing of Lithum-ion batteries/power bank. Even at the time of submitting applications in compliance of condition no. 9 of IGCR Rules, it was clearly intimated to the authorities about intention of the appellant to avail duty exemption on the import of subject goods for being used in manufacture of Lithium-ion batteries/power banks. Even the continuity bonds indicated that the expected subject goods imported into India will be used in manufacture of Lithium-ion batteries/power bank. It is after execution of those bonds that the appellant got cleared the subject goods to manufacture the finished goods. After laying emphasis upon the separate entries as were carved out under Sl. No. 17 B vide Notification No. 03/2019-Cus dated 29.01.2019 and the another Notification No. 02/2019-Cus dated 29.01.2019. It is submitted that power bank was considered as one and the same thing as that of Lithium-ion battery. The department has wrongly created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts and components) as the parts and components are actually meant 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 from the customs authority. Thus the extended period has rightly been invoked while issuing the show cause notice. 4.1 With respect to the merits about the confirmed demand, it is submitted that the exemption Notification No. 50/17 categorically states that the benefit is available only for such parts and components as shall be used for manufacturing Lithium Ion Batteries. Since the appellant is admittedly manufacturing power bank, a product different from Lithium Ion Batteries, the benefit of exemption/ concessional duty of customs has wrongly been availedby the appellants . The demand of duty forgone is therefore rightly confirmed by the adjudicating authority below. The appellant actually was not eligible for exemption from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty fore gone has rightly been confirmed. Impressing upon no infirmity in the order under challenge, the appeal is prayed to be dismissed. 5. 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 denied to the appellant as the appellant has actually manufactured power bank as different from Lithium Ion Battery from the imported parts and components. 6. It is an undisputed fact that the appellant is engaged in manufacture of products Likemobile handsets, CCTV cameras etc. Controversy herein has emerged as appellant has availed the benefit of exemption from Customs Duty in terms of Notification no. 50/2017 dated 30.06.2017, entry at sr.no. 512, while importing following parts and components: (i) Housing Plastic, (ii) USB Cables, (iii) Lithium-ion Cell, (iv) Nickel Strips, (v) Plastic Casing/ Housing. 7. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, 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(1) - These rules shall apply to an importer, who intends to avail the benefit of an exemption notification issued under subsection (1) of Section 25 of the Customs Act 1962 (52 of 1962) and where the benefit of such exemption is dependent upon the use of imported goods covered by that notification for the manufacture of any commodity or provision of output service Rule 2(2)- These rules shall apply only in respect of such exemption notifications which provide for the observance of these rules 11. The benefit of exemption notification should not be extended to circumvent any good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apes, glues, screws, insulation tapes etc. (v) Shell/housing/protective casing 13. 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 well as mechanically. Imported cables are then been connected the imported heat resistance tapes and insulation stickers are used on the imported Lithium Cells to be wrapped around terminal of those cells as a protection measure to avoid any shot circuit/over heating. The form stickers are also used around the combination of those imported cells to act as a shock observers only and to keep the cells tightly packed in the imported protective case. At this stage it is Lithium Ion Battery which comes into existence. 14. As per the above quoted definition of Manufacture of IGCR Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms 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 that when words in a statute are clear, plain and unambiguous sand only one meaning can be inferred the courts are bound to give effect to the said meaning irrespective of the consequences in applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. Especially in fiscal statutes and penal statutes. it has also been held that regard must be had to the clear meaning of words and matter should be governed wholly by the language of notification, equity or intendment having no place in interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 must clarify the position of 'plain meaning rule or clear and unambiguous rule' with respect of tax law. The plain meaning rule suggests that when the language in the statute is plain and unambiguous, the Court has to read and understand the plain language as such, and there is no scope for any Interpretation. This salutary maxim flows from the phrase cum inverbis nullaambigultas est, non debet admittivoluntatis quaestio . Following such maxim, the Courts sometimes have made strict interpretation subordinate to the plain meaning rule (Mangalore Chemicals case (Infra para 37).), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 19. 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, Lithium-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 03/2019- Cus 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%. 20. After the discussion above, it is important to also check as to how HSN code considered the products in question at the relevant time i.e.during the year 2017 to 2019.It can judicially be noticed that the period in question from 2017 to 2019 was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttery 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 interconnect cells amongst themselves often referred as 'Battery Packs' are covered under Electric Accumulator of CTH 85.07. 24. Since 'Electric Accumulator', as per HSN, means only to cover Storage Batteries and Secondary Batteries, and there being no dispute Battery/Battery Pack in the present case fall under Chapter Heading refers to the same product, such products are covered under Electric Accumulator. Even HSN recognizes Battery or Battery Pack as Secondary Battery or Storage Battery. 25. Chapter Note 3 of Chapter 85 of the CTH, the crux, is that so lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent 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. 29. 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 the department alleged that the powerbank was known as a different product than lithium battery since the Year 2017 itself. But we find that entry 376AA came into existence only on 20.08.2018 and it talks only about Lithium Ion Batteries. The entry no. 376AAA though introduced the word Power Bank but we observe that this entry came into existence on 29.01.2020 i.e. after the period in dispute. It has already been observed above that it was only in the Year 2019 that Notification No. 02/2019 dated 29.01.2019 has used word Power Bank of Lithium-ion for the first time and the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd power bank came into existence for the first time in January, 2019 vide Notification No. 02/2019. 32. In the light of entire above discussion we hold that from the raw material imported by the appellant at concessional/ exempted rate of customs Duty in terms of Notification No. 50/2017 dated 30.06.2017 has been utilised by them to manufacture Lithium Ion Battery (Accumulator) which has been captively used by them to manufacture Power Bank . Hence it is held that appellants have rightly claimed the exemption. 33. Now coming to the decision of this Tribunal in S B Industries (supra), it is observed that in the instant case battery used in Power Bank is manufactured from Lithium ion Cells imported by the appellant. The finding of this Hon ble Tribunal in SB Industries (supra) also provides details of process carried out for bringing into existence of Lithium ion Battery from Lithium ion Cells. Appellant herein also carries out the same process for manufacture of Lithium ion Battery from Lithium ion Cells (imported under Rules, 2017). Since Lithium ion Battery has been manufactured by use of imported lithium ion Cells, utilization of the same in the Power Bank , cannot be the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put service, with an undertaking to pay the amount equal to the difference between the duty leviable on inputs but for the exemption and that already paid, if any, at the time of importation, along with interest, at the rate fixed by notification issued under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay. (3) 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, shall forward one copy of information received from the importer to the Deputy Commissioner of Customs, or as the case may be, Assistant Commissioner of Customs at the Custom Station of Importation. (4) On receipt of the copy of the information under clause (b) of sub-rule (1), the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs at the Custom Station of importation shall allow the benefit of the exemption notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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