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TMI Blog2025 (1) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs or parts for use in manufacturing of display assembly which in turn will be used for manufacturing of cellular mobile phones? - HELD THAT:- On the question of whether the benefit of Sl. No. 5d(B) of Notification No. 57/2017-Customs, dated 30th June 2017 (as amended) shall be available in Respect of inputs or parts imported for use in manufacturing of Display Assembly which get scrapped during the manufacturing process, the Applicant imports inputs and parts for use in manufacturing of display assemblies which in turn are used in manufacturing of cellular mobile phones - The process of manufacturing display assemblies is subject 'to a certain amount of process loss on account of modification of parts for the purpose of assembling, process failure, etc. The inputs and parts damaged during the manufacturing process are scrapped by the Applicant. The scrap generated during the manufacturing process are sold to the Government authorised e-waste vendors who are empanelled with the Applicant. The e-waste vendor collects the scrap and disposes off as per the authorised Government norms. >Whether the benefit provided in relation to inputs and parts for use in manufacture of display ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be available in case of import of inputs or parts for use in manufacturing of display assembly which in turn will be used for manufacturing of cellular mobile phones. ii) The benefit shall be available in respect of inputs or parts imported for use in manufacturing of display assembly which get scrapped during the manufacturing process. iii) The contention of the Port Commissionerate to state that the present Advance Application Ruling filed by the Applicant is not eligible in terms of Section 28E(b) merits rejection is completely untenable. X X X X Extracts X X X X X X X X Extracts X X X X ..... spection :- After arrival of inputs and parts inside the Applicant factory, inputs and parts are thoroughly tested and any defective input or part is exported back to the original supplier. >(b) Loss during manufacturing process :- Once the inputs and parts are approved during the quality inspection such inputs and parts are moved to the assembly line for the purposes of manufacture of display assemblies. The process of manufacturing display assemblies is subject to a certain amount of process loss on account of modification of parts for the purpose of assembling, process failure, etc. At present, Applicant pays the applicable customs duty on the imported value of inputs and parts damaged during the manufacturing process. >8. It is imperative to highlight that the Applicant imports these inputs and parts only for the purpose of use in the manufacturing display assemblies. The Applicant does not import any inputs or parts for any purpose other than manufacturing of display assemblies. >The Applicant qualifies as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ('Customs Act') >9. Section 28E(c) of the Customs Act reads as under : >"(c) "applicant" means a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act') on import of inputs and parts and principles to be adopted for the purposes of valuation of goods as detailed out in Annexure II. Therefore, the questions raised by the Applicant falls within the purview of the provisions of Section 28H(2)(b) of the Customs Act. >13. Hence, the application for advance ruling is being filed in conformity with the provisions of Section 28H of the Customs Act. >Question raised under the present advance ruling application is not before any officer of customs, the Appellate Tribunal or any Court. >14. As per Section 28-I(2)(a) of the Customs Act regarding procedure on advance ruling application, no application for advance ruling will be accepted if the question raised in the application is already pending before any forum. Relevant extracts of the provision are reproduced below : >"28-I. Procedure on receipt of application. - >(1) xx xx xx >(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application : >Provided that the Authority shall not allow the application where the question raised in the application is - >(a) already pending in the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... >(ii) If the answer to the Question No. 1(b) above is in negative, whether the availed customs duty exemption to be fully reversed or to be reversed in proportion to the values of scrap, so generated? >QUESTION I : WHETHER BENEFIT OF SL. NO. 5D (B) OF NOTIFICATION NO. 57/2017-CUSTOMS DATED 30TH JUNE 2017 (AS AMENDED) SHALL BE AVAILABLE - >(A) IN CASE OF IMPORT OF INPUTS OR PARTS FOR USE IN MANUFACTURING OF DISPLAY ASSEMBLY WHICH IN TURN WILL BE USED FOR MANUFACTURING OF CELLULAR MOBILE PHONES? >3. For the import of inputs and parts for manufacturing of display assembly and Applicant's interpretation regarding availability of benefit under Notification No. 57/2017-Customs, dated, 30th June, 2017 (hereinafter referred to as 'exemption notification') is discussed in the ensuing paragraphs. >4. The import and export of goods into and out of India is regulated by the Customs Act, 1962 ('Customs Act'). Section 12 of the Customs Act is the charging section which stipulates that duties of customs shall be levied on all goods imported into India or exported out of India at such rates as may be specified under the Customs Tariff Act, 1975 ('Tariff Act'). >5. Section 2 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions >1. >If the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. >11. Vide Notification No. 74/2022-Customs (N.T.), dated, 9th September 2022 the Central Government in supersession of the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 notified the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. >12. Rule 5 of the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 provides for the procedure to be followed. The procedure specified in Rule 5 is furnished below for ease of reference : >(1) The importer who intends to avail the benefit of a notification shall be required to mention the HN (referred to in sub-rule (2) of Rule 4) and continuity bond number and details while filing the Bill of Entry. >(2) 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 notification to the importer. >(3) Where a Bill of Entry is cleared for home consumption, the bond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of use in manufacturing of display assemblies which in turn will be used in manufacturing of cellular mobile phones, the Applicant understands that exemption under entry no. 5D (b) of Notification No. 57/2017-Customs, dated 30th June, 2017 should be available irrespective of the classification under Tariff Act of the such inputs and parts. >QUESTION I: WHETHER BENEFIT OF SL. NO. 5D (B) OF NOTIFICATION NO. 57/2017-CUSTOMS DATED 30TH JUNE 2017 (AS AMENDED) SHALL BE AVAILABLE - >(B) IN RESPECT OF INPUTS OR PARTS IMPORTED FOR USE IN MANUFACTURING OF DISPLAY ASSEMBLY WHICH GET SCRAPPED DURING THE MANUFACTURING PROCESS? >18. As discussed above, the Applicant imports inputs and parts for use in manufacturing of display assemblies which in turn are used in manufacturing of cellular mobile phones. Further as discussed in Annexure I, the inputs and parts imported by the Applicant are put on the assembly line where these are put through various assembling processes for the purpose of manufacturing of display assemblies. >19. The process of manufacturing display assemblies is subject to a certain amount of process loss on account of modification of parts for the purpose of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The phrase 'for use in manufacture' has not been defined under the Customs Act, however, what amounts to 'inputs being used in the manufacture of goods' has been analysed by various courts in numerous judgments few of which have been relied upon by the Applicant in the ensuing paragraphs. >28. The Hon'ble Supreme Court while examining the phrase 'inputs being used in the manufacture of goods' in light of Section 8(3)(b) of the Central Sales Tax Act, 1956 in the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur and Anr. - AIR 1965 SC 1310 held that if any process is integrally connected with the ultimate production of goods so much so that but for the said process, manufacture of goods would be commercially inexpedient, goods used as inputs in that process would fall within the ambit of the expression 'used in the manufacture of goods' and such inputs will be considered as being part of the final manufactured product irrespective of the fact that they are physically not present in it. Copy of the judgment is enclosed herewith as Appendix-3. >29. Similar view was also upheld by the Hon'ble Madras High Court in the case of M/s. Rupa & Co. Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eakage and loss on account of damage. The words for use' used in similar exemption Notifications have also been construed by this Court earlier in the State of Haryana v. Dalmia Dadri Cement Ltd. [1987 (11) TMI 94 -SUPREME COURT OF INDIA] to mean 'intended for use'. According to this decision the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage." >Copy of the judgment is enclosed herewith as Appendix-5. >34. Similarly in the case of Steel Authority of India Ltd. v. Collector of Central Excise - 1996 (7) TMI 147 - SUPREME COURT the Hon'ble Supreme Court dealt with the question whether exemption available to raw naphtha intended for use in the manufacture of fertiliser would be available in respect of raw naphtha consumed for the gases vented out during the interim stages of manufacture due to unavailability of power. The Hon'ble Apex Court held as under : >"There can be no doubt that the raw naphtha that was fed by SAIL into its plant was for the purpose and with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing process even though the said inputs do not form part of the finished goods. >37. Therefore, it is the submission of the Applicant that benefit under Entry No. 5D (b) of Notification No. 57/2017-Customs, dated 30th June, 2017 should be available in respect of inputs and parts which are damaged during the manufacturing process and are subsequently scrapped by the Applicant. >QUESTION II : IF THE ANSWER TO THE QUESTION NO. I(B) ABOVE IS NEGATIVE, WHETHER THE AVAILED CUSTOMS DUTY EXEMPTION TO BE FULLY REVERSED OR TO BE REVERSED IN PROPORTION TO THE VALUES OF SCRAP SO GENERATED? >38. In light of the submissions made in relation to question I(a) & I(b) above, the Applicant understand that benefit under Entry No. 5D (b) of Notification No. 57/2017-Customs, dated 30th June, 2017 should be available in respect of inputs and parts which are damaged during the manufacturing process and are subsequently scrapped by the Applicant. However, if the answer to the question no. I(b) above is negative, authority may clarify that the availed customs duty exemption is to be reversed in proportion to the values of scrap, so generated. >39. In view of the above, the Applicant humbl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing of display assemblies which will in turn be used in manufacturing of cellular mobile phones", and has self-assessed the goods and availed the benefit of BCD @ NIL in terms of Notification No. 57/2017, Sl. No. 5D(b). >2.3 Therefore, the applicant is seeking advance ruling for the availment of benefit on BCD in terms of Notification No. 57/2017, Sl. No. 5D(b) in which they are already importing the same product i.e. inputs and parts for use in manufacturing of display assemblies. It appears that the applicant does not fulfil the provisions of Section 28E(b) of the Customs Act, 1962 to seek advance ruling in respect of the goods which are already being imported by them in commercial quantity before any written decision of the authority. In view of the above, it appears that the application filed by M/s. Samsung Display Noida Pvt. Ltd. (hereinafter referred to as the 'importer') merits rejection in terms of Section 28E(b) of the Customs Act, 1962. >2.4 The point wise comments to para 3 (iv) of the aforementioned letter issued by the CAAR, New Delhi is as under : >(i) The matter is examined and it is found that the basic issue as involved in the said application for adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative of the applicant reiterated the submissions already made in their application for advance ruling on the issue of applicability of advance ruling in case of imports already made and also provided additional submission to establish the applicability of the benefit of the said notification and the treatment of scrap generated during the process of manufacture of 'display assembly'. >4. ADDITIONAL SUBMISSIONS ON BEHALF OF THE APPLICANT >(A) This submission is in furtherance to the Application dated 8-3-2024 (filed on 11-3-2024) for Customs Advance Ruling under Section 28H of the Customs Act, 1962 ('Customs Act') filed by M/s. Samsung Display Noida Private Limited ('Applicant') for seeking clarity inter alia on the issue regarding eligibility of the Applicant to avail benefit of Sr. No. 5D(b)of Notification No. 5717-Customs, dated 30-6-2017 (as amended) ('Notification No. 57/2017') for import of inputs or parts for use in manufacturing of display assembly which get scrapped during the manufacturing process. >(B) At the outset, the Applicant would sincerely like to thank your good office for providing it with an opportunity for a personal hearing on 30-5-2024 in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (II) APPLICANT'S RESPONSE TO THE LETTER DATED 21-5-2024 : >(A) Eligibility under Section 28E(b) of the Customs Act : >(E) Section 28E(b) provides the definition of 'advance ruling' as "a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation." >(F) The Applicant understands that the Ld. Assistant Commissioner has interpreted the phrase "in respect of any goods prior to its importation or exportation " to mean that an Advance Ruling Application can only be filed for any goods prior to its first importation or exportation. Accordingly, since in the present case the Applicant is already involved in the importation of inputs and parts used in the manufacture of mobile phones, an advance ruling in respect of these goods is not permissible, as interpreted by the Ld. Assistant Commissioner. >(G) In view of the above, the Applicant wishes to submit that the interpretation of the definition of term "advance rulings'" as adopted by the Ld. Assistant Commissioner does not seem to be correct. >Scope of Customs Advance Riding over the years : >(H) Advance Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il 2018, an Advance Ruling under Customs Law' could only be filed for a particular goods before its first import or export. Hence, the interpretation adopted by the Ld. Assistant Commissioner in relation to eligibility of obtaining advance ruling could only hold good up unit the year 2018. >Amendment in law relating to Customs Advance Rulings vide Finance Act, 2018 : >(L) In the year 2018, major amendments were carried out to the scheme of advance rulings vide the Finance Act, 2018, including the amendment of the definition of "advance ruling". As per the amended definition, "advance riding" now meant to be "a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. >(M) Thus, in view of the amendment vide the Finance Act, 2018, there was a shift in the scope of advance ruling under the Customs law. Now an applicant could now seek an advance ruling on - >(a) any of the questions referred to in Section 28H of the Customs Act (for instance, issues like classification, valuation, exemption interpretation, etc.), and >(b) in respect of any goods prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Accordingly, upon application of principle of harmonious construction and the fact that each import is a separate event, the Applicant is of the considered opinion that an advance ruling can also be sought prior to importation of a goods which is being imported by the Applicant (but before the importation in question takes place). >(T) In order to buttress its stand, the Applicant places reliance on the judgment dated 11-1-2023 of the Hon'ble Delhi High Court in the matter of Directorate of Revenue Intelligence (HQRS.) v. M/s. Spraytec India Ltd. - 2023-TIOL-184-IIC-DEL- CUS. In this case, the question involved was whether CAAR could pass a ruling on the subject matter under investigation by DRI in terms of Section 28-I(2). Herein, the Hon'ble Delhi High Court affirmed the eligibility of the CAAR to pass a ruling on the subject matter under investigation. This judgment indirectly proves that upon conjoint reading of Section 28E(b) and Section 28-I(2), even the courts have accepted this position of law that any importer shall be eligible to make an advance ruling application for the same goods which have been imported before or in respect of which investigation is initiated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld. Assistant Commissioner to state that the present Advance Application Ruling filed by the Applicant is not eligible in terms of Section 28E(b) and merits rejection since the Applicant is already involved in the importation of inputs and parts of mobile phone, is completely untenable. Thus, the Advance Ruling Application ought to be considered by your good office and an applicable ruling should be issued. >B. Extension of exemption under Sl. No. 5D(b) of Notification No. 57/2017 on inputs and parts which get scrapped during manufacturing of mobile phones : >(Y) Further, the Ld. Assistant Commissioner in the letter dated 21-5-2024 has also stated that the entry at Sl. No. 5D(b) of Notification No. 57/2017 is silent on the aspect of extension of the benefit of concessional rate of duty on the import of the input or parts that get scrapped during the manufacturing process. In our view, this interpretation of the Ld. Assistant Commissioner is completely incorrect. >(Z) Notification No. 57/2017 has been issued by the Central Government as per the power conferred under Section 25 of the Customs Act. This notification provides exemption benefits to importers for import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or "inputs being used in the manufacture of goods". In such a case, the courts have consistently held that damaged goods or scrapped goods are to be considered as goods used in the manufacture of the finished goods. A few of the judgments have been provided as follows : >Name of the Case >Citation >Relevant Paragraph >J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. The Sales Tax Officer, Kanpur and Anr. >AIR 1965 SC 1310 >Para 8 >BPL Display Devices Ltd. v. Commissioner of Central Excise, Ghaziabad >2004 (10) TMI 92 - SUPREME COURT >Para 2 >Multi-metals Ltd. v. Assistant Collector, Central Excise >1992 (57) E.L.T. 209 (S.C.) >Para 4 >Detailed discussion in this regard has been done in Annexure-II to the Advance Ruling Application which for the sake of brevity is not being reproduced herein. >(EE) Further, reliance may also be placed on the case of State of Haryana v. Dalmia Dadri Cement Ltd., 2004 (178) E.L.T. 13 (S.C.). wherein the Hon'ble Supreme Court has interpreted the term "for use" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of exemption under Sl. No. 5D(b) of the Notification No. 57/2017 is available for input and parts imported by the Applicant which are thereafter used in the manufacturing of Display Assembly of mobile phones. Hence, based on liberal construction of the exemption provision it can be said that all the imported inputs and parts which are used in the manufacture of Display Assembly, even if they are scrapped during the manufacturing process, will be eligible for exemption under the aforesaid entry. >(HH) In order to substantiate the interpretation of the Applicant, support is borrowed from the IGCR Rules, 2022 wherein as per Rule 4(3), the importer who intends to avail the benefit of a notification shall submit a continuity bond that the goods imported shall be put to use for manufacture of goods. Furthermore, Rule 6 requires the importer to maintain accounts and produce before the jurisdictional commissioner indicating the goods imported which shall be put to use for manufacture of goods or for rendering output service. >(II) Here it is pertinent to highlight that even the IGCR Rules, 2022 uses the language that the imported goods shall be "put to use" for manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated in the process is also eligible to avail the benefit of the said Notification on the basis of the information on record as well as the existing legal framework having bearing on the interpretation of the benefit. >5.1 The Comments of the Air Cargo Complex (Import) Customs New Delhi Commissionerate with regard to points raised in the application are furnished as under : >5.1 In this context, it is important to refer to the comment to para 3(iii) of the aforementioned letter issued by the CAAR, New Delhi : >(iii) Para 3(iii) Specify whether the claim of the applicant regarding the nature of activity, i.e. it is ongoing/proposed is correct : >As per Section 28E(b) "advance ruling" means a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation." >5.2 It is clear from the plain reading of the above that there should be a written decision of "advance ruling" on the questions referred by the applicant in respect of any goods prior to its importation. However, the applicant in its application has already submitted that they are already involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the value. In this regard, the said matter is examined with the provisions of Notification No. 57/2017, Sl. No. 5D(b) which reads as follows : >5D >Any Chapter >(a) Display Assembly for use in manufacture of cellular mobile phones >BCD @ 10% >IGCR Condition No.1 >(b) inputs or parts for use in manufacture of items mentioned al (a) above >BCD @ NIL >IGCR Condition No.1 >5.6 As such from the reading of the provisions of the notification as amended, it is evident that there is no motif in the claim of the importer pertaining to the clarification as sought under Sl. No. 8, para-(b) as mentioned under Form CAAR-1 as submitted by the importer. Further, entry at Sl. No. 5D (b) of the Notification No. 57/2017 is silent on the aspect whether, notification benefit is available on the input or parts that get scrapped during the manufacturing process, and if, the availed customs duty exemption has to be fully reversed or reversed in proportion to the value, therefore, it may be not be possible for this office to comment on the same. >6. Having gone through the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, etc. At present. Applicant pays the applicable customs duty on the imported value of inputs and parts damaged during the manufacturing process. >6.3.2 It is imperative to highlight that the Applicant imports these inputs and parts only for the purpose of use in the manufacturing display assemblies. The Applicant does not import any inputs or parts for any purpose other than manufacturing of display assemblies. >6.4 It has been provided that the Applicant qualities as an 'applicant' under Section 28E(c) of the Customs Act, 1962 ('Customs Act') : >Section 28E(c) of the Customs Act reads as under : >"(c) "applicant" means any person - >(iv) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; or >(v) exporting any goods to India; or >(vi) with a justifiable cause to the satisfaction of the Authority, who makes an application for advance ruling under Section 28H;" >6.4.1 The question raised in the application for advance ruling by the Applicant squarely falls within the ambit of Section 28H(2)(a) of the Customs Act. Section 28H of the Customs Act provides for the questions in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2022. Rule 5 of the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 provides for the procedure to be followed. The procedure specified in Rule 5 is furnished below for ease of reference : >(1) The importer who intends to avail the benefit of a notification shall be required to mention the HN (referred to in sub-rule (2) of Rule 4) and continuity bond number and details while filing the Bill of Entry. >(2) 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 notification to the importer. >(3) Where a Bill of Entry is cleared for home consumption, the bond submitted by the importer gets debited automatically in the customs automated system and the details shall he made available electronically to the jurisdictional Customs Officer." >6.5.2 For the purpose of this application, the Applicant hereby submits that it will duly comply with the procedure laid down in Rule 5 of the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022. It is evident from Sl. No. 5D(b) of the exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts and parts for use in manufacturing of display assemblies which in turn are used in manufacturing of cellular mobile phones. Further as discussed earlier, the inputs and parts imported by the Applicant are put on the assembly line where these are put through various assembling processes for the purpose of manufacturing of display assemblies. The process of manufacturing display assemblies is subject 'to a certain amount of process loss on account of modification of parts for the purpose of assembling, process failure, etc. The inputs and parts damaged during the manufacturing process are scrapped by the Applicant. The scrap generated during the manufacturing process are sold to the Government authorised e-waste vendors who are empanelled with the Applicant. The e-waste vendor collects the scrap and disposes off as per the authorised Government norms. >6.6.1 The question under the present application is in relation to the inputs and parts which are damaged during the manufacturing process and are subsequently scrapped by the Applicant. In specific, the question is whether the benefit provided in relation to inputs and parts for use in manufacture of display assembly shall be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that process would fall within the ambit of the expression 'used in the manufacture of goods' and such inputs will be considered as being part of the final manufactured product irrespective of the fact that they are physically not present in it. >(ii) Similar view was also upheld by the Hon'ble Madras High Court in the case of M/s. Rupa & Co. Limited, Tirupur v. The Customs, Excise and Service Tax Appellate Tribunal, The Commissioner of Central Excise, 2015 (324) E.L.T. 295 (Mad.) wherein the Hon'ble High Court allowed the CENVAT credit against the entire inputs used by the assessee even when there was 5% manufacturing process loss. The Hon'ble High Court observed as under. >"13. To say that what is contained in finished product is only a quantity of all the inputs of the same weight as that of the finished product would presuppose that all manufacturing processes would never have an inherent loss in the process of manufacture. The expression 'inputs of such finished product' contained in finished products' cannot be looked at theoretically with its semantics. It has to be understood in the context of what a manufacturing process is. If there is no dispute about the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the interim stages of manufacture due to unavailability of power. The Hon'ble Apex Court held as under : >"There can be no doubt that the raw naphtha that was fed by SAIL into its plant was for the purpose and with the intention of manufacturing fertiliser and that it was only because of supervening circumstances, namely, the low, uncertain and fluctuating availability of power, that the reformed gas produced during the interim stage of manufacture had to be vented out. The benefit of the exemption notification is, therefore, available to SAIL in regard to the raw naphtha that it utilised in its plant for the manufacture of fertiliser but which, for reasons over which it had no control, did not, in fact, result in the manufacture of fertiliser but had, at the interim stage of reformed gas, to be vented out." >(iii) The Hon'ble Supreme Court in the case of Multimetals Ltd. v. Assistant Collector, Central Excise - 1992 (57) E.L.T. 209 (S.C.) dealt with the question whether the duty referable to that portion which is lost also should get rebate while assessing for excise duty on the pipes and tubes of copper and copper alloys held as under : >"Rebate is to be equival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... major amendments were carried out to the scheme of advance rulings vide the Finance Act, 2018, including the amendment of the definition of "advance ruling"- "a written decision on any of the questions referred to in Section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation. Thus, there was a clear shift in the scope of advance ruling under the Customs law. >6.7.2 However, the meaning of the term "its" used in the definition of advance ruling under Section 28E(b) of Customs Act also needs to be looked into. This is because the term "its" does not clarify whether advance ruling can only be sought prior to first importation of a particular goods which has never been imported or it can also be sought before importation of a goods which is being imported by the Applicant. Further, it is trite law that principle of harmonious construction must be kept in mind while construing any statute. This principle enunciates that while interpreting any law. the statute must be read as a whole, and all the legal provisions must be read harmoniously to give effect to each word of the statute. Accordingly, to correctly interpret the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not on the imports already concluded. Accordingly, the contention of the Port Commissionerate to state that the present Advance Application Ruling filed by the Applicant is not eligible in terms of Section 28E(b) and merits rejection is completely untenable. >6.8 As far as extension of exemption under Sr. No. 5D(b) of Notification No. 57/2017 on inputs and parts which get scrapped during manufacturing of mobile phones, the Port Commissionerate has stated that the entry at Sr. No. 5D(b) of Notification No. 57/2017 is silent on the aspect of extension of the benefit of concessional rate of duty on the import of the input or parts that get scrapped during the manufacturing process. The applicant feels the interpretation of the Port Commissionerate is completely incorrect. It is reiterated that the exemption benefit under the Notification No. 57/2017 is subject to Condition No. 1, which mandates that "If the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017". The said Rules have now been replaced by the Customs (Import of Goods at Concessional rate of Duty or for Specified End Use) Rules, 2022 ("IGCR Rules, 2022"). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... >[AIR 1965 SC 1310] >Para 8 >BPL Display Devices Ltd. v. Commissioner of Central Excise, Ghaziabad >[2004 (10) TMI 92 -SUPREME COURT] >Para 2 >Multimetals Ltd. v. Assistant Collector, Central Excise >[1992 (57) E.L.T. 209 (S.C.)] >Para 4 >6.8.3 Further, reliance may also be placed on the case of State of Haryana v. Dalmia Dadri Cement Ltd., [2004 (178) E.L.T. 13 (S.C.)], wherein the Hon'ble Supreme Court has interpreted the term "for use" mentioned in an exemption notification to mean "intended for use". The relevant excerpt of the judgment has been extracted as follows : >"10. ………….. On a Plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use ". If the intention of the legislature was to limit the exemption only to such goods sold as were actually wed by the undertaking in the generation and distribution of electrical energy, the phraseology used in the exemption clause would have been different as, for example, "goods actually" used or "goods used". >xx xx xx >13. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein as per Rule 4(3), the importer who intends to avail the benefit of a notification shall submit a continuity bond that the goods imported shall be put to use for manufacture of goods. Furthermore, Rule 6 requires the importer to maintain accounts and produce before the jurisdictional commissioner indicating the goods imported which shall be put to use for manufacture of goods or for rendering output service. Here it is pertinent to highlight that even the IGCR Rules, 2022 uses the language that the imported goods shall be "put to use" for manufacture of goods. Therefore, the intent of the Rules is clear (and in alignment with the Notification No. 57/2017) i.e., to provide concessional benefit where the goods have been consumed during the manufacture process and not necessarily the goods which form part of the manufactured goods. >6.9 The applicant also submitted two additional documents including one case law [2002 (141) E.L.T. 721 (CEGAT - Delhi) in SAPA Electricals Pvt. Ltd. v. Commr. of Customs, Allahabad and one copy of Statutory Provisions under Rule 8 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1966 on 'Recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, irrespective of the fact that the same forms part of the finished goods or are scrapped during the manufacturing process. >6.11 It is reiterated that the contention of the Port Commissionerate to state that the present Advance Application Ruling filed by the Applicant is not eligible in terms of Section 28E(b) merits rejection is completely untenable. >The answers to the questions raised by the applicant are as follows : >Whether benefit of Sl. No. 5D(b) of Notification No. 57/2017-Customs dated 30th June 2017 (As amended) shall be available: >(a) Question 1 : In case of import of inputs or parts for use in manufacturing of display assembly which in turn will be used for manufacturing of cellular mobile phones? >Answer : Yes, the benefit shall be available in case of import of inputs or parts for use in manufacturing of display assembly which in turn will be used for manufacturing of cellular mobile phones. >(b) Question 2 : In respect of inputs or parts imported for use in manufacturing of display assembly which get scrapped during the manufacturing process? >Answer : Yes, the benefit shall be available in respect of inputs or parts imported for use in man ..... X X X X Extracts X X X X X X X X Extracts X X X X
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