9911796707
TMI Blog2025 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 which attracted BCD at 10% which was further increased to 15% w.e.f. 02.02.2018 vide the Notification No.57/2017 dt. 30.06.2017, the Revenue through the Commissioner issued Show Cause Notice dt. 04.05.2019 inter alia proposing to reclassify "Receiver" under CTH 8518, to demand differential duty under Section 28 (1) of the Customs Act, 1962 along with applicable interest under Section 28AA ibid and penalty under Section 112 (a) ibid. It also proposed to confiscate the goods in respect of some of the Bills of Entry under Section 111 (m) and 111 (o) of the Act ibid. 2.1 The assessee appears to have filed a detailed reply justifying its classification and thereby requesting for the dropping of the further proceedings, but however not accepting the reply, the Commissioner of Customs, Chennai VII vide Order-in-Original No.600/2019-AIR dt. 09.10.2019 confirmed the proposals made in the SCN. The consequent demand, interest and penalty have also been confirmed in the said order. It is against this order that Appeal C/40065/2020 has been filed by Assessee-Importer before this forum. 3. When the matter was taken up for hearing Smt. N. Aruna, Ld. Advocate appeared for the Assessee Importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all cases to be classified in their respective headings; other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of heading 8517 and 8525 to 8528 are to be classified in heading 8517; (a)all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 7. Taking cognizance of Note 2 to Section XVI as above, we find that "parts" which are goods included in any of the headings of Chapter 84 or 85 are required to be classified in their respective headings; parts which are suitable for use principally with goods of heading 8517 and 8525 to 8528 are to be classified in Heading 8517. "Receiver" claimed to be specifically coming under CTH 8518 is required to be considered in ejusdem generis, i.e in the context of the words accompanying with the headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification but, however, not satisfied with the reply, the original authority confirmed the proposals made in the SCN and it is against this Order-in-Original No.76/2020 dt. 25.01.2020, the appeal C/40281/2020 has been filed by Assessee-Importer. 10. After having heard both sides, we find that this very Bench in the case of Flextronics Technologies Pvt. Ltd. (supra) has dealt with the classification of "Microphones" very exhaustively and further held that "Microphones" were not eligible for exemption as claimed by the assessee under Sl.No.6(a) of Notification No.57 (supra) as under : MICROPHONES Department's View: 9.0 The following points have been made by Revenue: a) The microphones are complete and distinctly identifiable commodities imported as such. As per Boards Circular 09/2016- Customs dated 11/03/2016 all microphones are classifiable under tariff item 85181000. b) Microphone, receiver etc. are known in trade parlance as distinct commodities and not as parts of PCBAs. c) 'Microphones' are not eligible for concessional rate of duty under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 as they are not a part of PCBA. Further S. No. 18 of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I (supra)that the exemption under Sl.No. 427 of Notification No. 50/2017- Cus. read with List 20 would squarely apply to microphones of mobile phones. 9.2 We find that the classification of the imported goods i.e, 'microphones' is not under challenge. The question which arises for consideration in this appeal relates to the interpretation of exemption notifications and the eligibility of the goods to concessional duty. 9.3 The first dispute relates to whether 'microphones' are eligible for concessional rate of duty under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 as part of PCBA or should be denied exemption as they are not parts of PCBA's and are also specifically covered under S.No. 18 of the same Notification, which specifically denied exemption to microphones of cellular mobile phones. S. No. 6A and 18 of the said Notification are extracted below: S. No. Chapter or Heading or Subheading or tariff item Description of goods Standard rate Condition No. (1) (2) (3) (4) 6A Any Chapter (a) Inputs or parts for use in manufacture of Printed Circuit Board Assembly (PCBA) of cellular mobile phones. (b) Inputs or sub-parts for use in manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out by Revenue during arguments that while the period of dispute in the case of microphones is from June 2018 to December 2018, PCBA's have been defined in notification no 57/2017-Cus as per insertion made by Notification No.22/2018-Cus Dated 02/02/2018 to read as under: (b) "Printed Circuit Board Assembly (PCBA)" means printed circuit board assembled with electronic components such as resistors, capacitors, diodes, inductors, ICs and v mechanical components such as contact springs or connectors of charger or adapter of cellular mobile phones. They do not include a microphone and the use of the word "means" in the insertion shows that the definition is exhaustive. As has been observed in Feroze N. Doti wala v. P. M. Wadhwani [(2003) 1 SCC 433, 442]: "Generally, when the definition of a word begins with "means" it is indicative of the fact that the meaning of the word has been restricted; that is to say, it would not mean anything else but what has been indicated in the definition itself." The learned Counsel for the Appellant has stated that this insertion should be read with Sl no's 7A, 7B and 7C of the notification only as mentioned in the notification and is not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich to classify diverse products, articles and substance resort should be had not to the scientific and technical meaning of substance but to their popular meaning viz., the meaning attached to these expressions by those dealing in them. Further in Ramavatar Budhai prasad v. Assistant Sales Tax Officer [(1962) 1 SCR 279], the Hon'ble Apex Court was concerned with the meaning of the word `vegetable' occurring in C.P. and Berar Sales Tax Act, 1947. It referred to the Excise Tax Actin Planters Nut Chocolate Co. Ltd. v. The King [(1952) 1 Bom. L.R. 385. 389], where the Exchequer Court had observed as follows :- "Now the statute affects nearly everyone, the producer or manufacturer, the importer, wholesaler and retailer, and finally the consumer who, in the last analysis, pays the tax. Parliament would not suppose in an Act of this character that manufacturers, producers, importers, consumers, and others who would be effected by the Act, would be botanists. The object of Excise Tax Act is to raise revenue, and for this purpose to class substances according to the general usage and known denominations of trade. In my view, therefore, it is not the botanist's conception as to what cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect." (emphasis added) In CCE v. Jayant Oil Mills (P) Ltd., (1989) 3 SCC 343 the Apex Court has accepted the aforesaid rule as "the basic rule of construction" that isto say "a more specific item should be preferred to one less so." In this light, the listing of special or declared goods in the very same notification seems to be that as far as cellular phones are concerned the object was to treat microphones which are parts of cellular phones differently as against parts of PCBA. When the Sl no of a notification denies concessional rate of duty to a specific part of a cellular phone, like a microphone, it cannot be held in terms of strict interpretation to be eligible for exemption under another Sl no of the same notification by elaborate discussions on what constitutes inputs or parts of a PCBA. 9.7 Whether the insertion in notification is clarificatory and retrospective in nature We find that Notification No. 24/2019 Cus dated 06.07.2019 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was brought in existence and the consequences of the amendment would have to be understood in terms of government policy on cellular phones which is discussed below. 9.8 This being so microphones will not be eligible for exemption under Sl. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017, being part of a cellular mobile phone specifically mentioned under Sl. No. 18 and are also excluded from Sl. No. 6A of the said Notification. The insertion made by Notification No.22/2018-Cus only clarifies this position and would be effective retrospectively. 9.9 Onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee The Appellant has contended that it is not the case of the learned Principal Commissioner, that even without the impugned microphones being mounted, the PCBAs will be complete. We find that the Learned Adjudicating Authority has stated in the impugned order that microphones are distinct commodities as known in trade parlance and are treated so in various extant notifications. Implicit in that reasoning is the fact that microphones are not part of PCBA's and are distinct. Further as held by a Constitutional Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further the Appellant has claimed full BCD exemption under of S.No. 427ofNotification No. 50/2017-Cus. dated 30.06.2017. S. No. 427 as it stood during the relevant period is extracted below for ease of reference: S.No. Chapter or Heading or sub-heading or tariff item Description of goods Standard Rate (1) (2) (3) (4) 427 84, 85 or 90 The goods specified in List 20 Nil List 20 (See S. No. 427 of the Table) 1. Ferrite parts including memory cores and ferrite magnets 2. Switches with contact rating less than 5 amperes at voltage not exceeding 250 Volts AC or DC 3. Connectors other than those of cellular mobile phones 4. Microphones /Microphone cartridges 5. Relays of contact rating up to 7 amperes 6. Microwave passive parts 7. ......." It is the contention of Revenue that Notification No. 50/2017-Cus. is a general exemption notification covering standalone microphones, whereas Notification 57/2017 dated 30/06/2017, applies to electronic items with specific entries for mobile phone parts. The learned AR has taken us to the HSN notes for Chapter 85.18 wherein it has been stated that there are many varied applications of microphones (e.g., in publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t PMP was notified with the objective of progressively increasing the domestic value addition for establishment of a robust Cellular mobile handsets manufacturing eco-system in India. The PMP is intended to enable the Cellular mobile handset and related sub- assembly/component industry to plan their investments in the sector. It covers microphones also. The policy is hence a major initiative for promoting indigenous manufacturing of Cellular mobile handsets in India. In matters relating to Information Technology, Board has from time to time issued clarificatory Circulars in consultation with the Department of Electronics and Information Technology, Ministry of Communication and Information Technology. This shows the importance of aligning revenue objective with the policy directions of the government. It is thus clear that the legislature intended to treat cellular mobile handset and related sub-assembly/component is part of a well-orchestrated policy and differently from that of other general products of similar description. The notifications where a distinct reference to cellular mobile handset and related subassembly/component have been made have to prevail over a general descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)], dismissed the SLP filed by Commissioner of Customs (Import) against the Judgment of the High Court of Bombay in Commissioner Vs Finesse Creation Inc [2009 (248) E.L.T. 122 (Bom.)]. The High Court had distinguished the Apex Court decision in case of Weston Components Ltd. (supra), while holding that concept of redemption fine arises in the event the goods are available and are to be redeemed, and if goods are not available, there is no question of redemption of goods. In any case the Appellant has not been found committing a blame worthy act and the demand has been restricted to the normal period. Hence the appeal filed by Revenue is rejected. 9.17 Judgments on exemption to cellular microphones The learned counsel for the Appellant submits that the issue has been decided in favour of the importer by the Tribunal in Vivo Mobile India - I (supra) wherein it has been held that the exemption under Sl. No. 427 of Notification No. 50/2017-Cus. read with List 20 would apply to microphones of mobile phones. In Sennheiser Electronics India Pvt. Ltd. v. CC [2017 (356) E.L.T. 277 (Tri. - Del.)], the Tribunal has held that Notification No. 21/2002-Cus. exempts all 'microphones' includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned goods, but only prospectively. [Commissioner of Income Tax, Bombay & Ors. v. Podar Cement Pvt. Ltd. & Ors. [AIR 1997 SUPREME COURT 2523 / (1997) 5 SCC 482]] (iii) that there could not be an intention to exempt the same goods differently on the same day. As held by the Apex Court, when the same person gives two directions one covering a large number of matters in general and another to only some of them, his intention is that the latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect. [J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P., [(1961) 3 SCR 185]] (iv) if the in exactitude of words used in a notification at times leads toambiguity and makes it necessary to understand the legislative intent in issuing these notifications, then it has to be done by looking at the subjectof legislation and object of the law. [M/s Rohit Pulp and Paper Mills Ltd Vs Collector of Central Excise [1990 (47) ELT 491 (SC)]] (v) that the interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. Hence the policy of Government with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretative issue for which, extended period could not be invoked. Hence, the demand, if any, is to be confined to the normal period with applicable interest, if any. Following the same, we hold that "Microphone" is not eligible for exemption and the demand is restricted to normal period with applicable interest. The impugned order stands modified to this extent. Appeal C/40281/2020 is partly allowed with consequential benefits, if any, as per law. 12. The Department has filed Appeal being aggrieved by the non-imposition of redemption fine under Section 125 ibid since the goods were not physically available by way of its grounds of appeal but, however, since we have held that the classification declared by the assessee was in order, there was no scope for levying or demanding duty and the consequential interest and penalty and hence, the goods are not liable for confiscation. We therefore do not find any infirmity in the non-levy of redemption fine for above reasons. In the result, Department Appeal C/40291/2020 is dismissed. The cross objection filed by Assessee in this appeal stands disposed of. III) Appeal C/40279/2020 & C/40293/2020 13. Appeal C/40279/2020 is fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently came to be modified with another Notification No.37/2018 dated 02.04.2018. In the said Notification, the description of goods is inputs or parts for use in manufacture of PCBA of cellular mobile phones; inputs or sub - parts for use in manufacturer of parts mentioned in the above. 13.4 The same was further modified vide Notification No. 24/2019 dated 06.07.2019 wherein, exception class was added to the effect that „nothing contained in the entries mentioned at items A and B shall apply to inter alia, connectors, microphones and receivers'. The said restriction/exception was continued even vide Notification No.03/2021 - Customs dated 01.02.2021. 13.5 From the above, it boils down to the fact that inputs or parts for use in manufacture of PCBA of cellular phones are eligible for exemption under Serial No. 6A, irrespective of their classification under any chapter. That is to say, the only requirement to avail the above benefit is that the product in question must be an input or a part of PCBA. Connectors are mounted on the PCB, which is used to transfer the signal or power from one PCB to another or transfer to PCB from another source within the unit. Connectors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C/40252/2020 & C/40294/2020 16. Appeal No.C/40252/2020 is filed by Appellant importer against Order-in-Original No.803/2019-AIR dated 09.12.2019 whereby the Commissioner of Customs, Chennai-VII has rejected the classification adopted for the impugned goods by appellant in the subject Bills of Entry as listed in Annexures A to Z of SCN and ordered reclassification of subject goods under Customs Tariff Item 39209999. Brief facts are that during Post Clearance Audit of various Bills of Entry as annexed to SCN dt. 16.07.2019, it was observed by Audit that the importer had declared the imported goods as "Rear Cover, A Cover, D Cover Assy. B Cover, Front Housing, Rear Housing, Camera Lens, Front Cover ASM and Battery Cover ASM" and classified these items under 85177090 and paid BCD @ 5% by claiming the benefit under Customs Notification No.50/2017- Sl.No.499 and in pursuance to IGST Notification No.01/2017 dated 28.06.2017, effective from 1st July 2017, the IGST was paid @ 12% under Schedule II, Sl.No.202 of CTH 8517. However, Audit was of the opinion that the imported goods are made of plastics and appropriately classifiable under CTH 39209999, hence attract BCD @10% which has been in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
