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TMI Blog2025 (2) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... banks.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... een denied to the appellant as the appellant has actually manufactured power bank as different from Lithium Ion Battery from the imported parts and components. 20. XXXX XXXX XXXXX 26. Thus, it stands clear that 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, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s distinct from its component i.e. Individual lithium cell 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. 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 be to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which it is used keeping in view the Commissioner, Gadag Sub- legislative purpose (Assistant Division, Gadag v. Mathapathi Basavannewwa, 1995 (6) SCC 355). Not only that, if the plain construction leads to anomaly and absurdity, the Court having regard to the hardship and consequences that flow from such a provision can even 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wrongly interpreted the manufacture to mean as manufacture of end product. It is held that since the appellant has used the imported parts and components in manufacture of Lithium Ion Battery which irrespective the battery has been captively used to manufacture power bank and irrespective that power bank has a slight different connotation 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 Lithium- ion cells w.e.f. 30.01.2019, the relevant portion of which reads as under: S. No. Chapter or Heading or Sub- Heading or Tarriff item Description of goods Rate Condition No. 17 A 8507 60 00 Lithiumion cell for use in the manufacture of battery pack of cellular mobile phone. 5% 1 17 B 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. 29.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases the container may be subdivided, each subdivision (cell) being an accumulator in itself; these cells are usually connected together in series to produce a higher voltage. A number of cells so connected is called a battery. 36. The chapter note further clarifies accumulators contained one or more cells and the circuitry to interconnect the cells amongst themselves, often referred to as "battery packs". Apparently 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. XXXXXX XXX 40. From the entire above discussion it is clear that the power bank performs the same function of storing and transfering electrical energy, it being a Lithium Ion Battery that is a combination of Lithium Ion Cells, however, connected to a printed circuit board which is meant for converting the 3.7 volt stored energy to 5 volt energy as is required by the gadget to be charged through the said power bank working on Lithium Ion Battery. It also st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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