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TMI Blog2025 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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 heading. The tariff heading 8518 refers to "micro phones and stands therefor; loud speakers, whether or not mounted in their enclosures; head phones and ear phones, whether or not combined with a micro phone etc." which are perhaps separate parts per se whereas the "Receiver" under dispute in this appeal is a "part" of the phone - The classification sought to be made by the Revenue under CTH 8518 lacks any merit and set aside - since 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. There are no infirmity in the non-levy of redemption fine. Classification of imported Microphone - to be classified under 85183000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " are not eligible for exemption under the claimed notification. iii) Connectors are essential parts of mobile phones and are eligible for exemption under the relevant notifications and classified CTH 85369090. iv) The covers and assemblies are integral to cellular phones and eligible for exemption under N/N. 50/2017 and should be classified under CTH 85177090.
Appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record. We have also carefully considered various judicial pronouncements relied upon by the contesting parties. We find that this very Bench in the case of Flextronics Technologies Pvt. Ltd. Vs CC Chennai has considered the classification o "Receiver" vide Final Order Nos.40203-40208/2024 dt. 28.02.2024. In the said order, however, the bench felt it proper to remand this issue for the detailed reasons given therein. We have also considered the interpretations given by various judicial fora. Section Note 2 to Section XVI of Customs Tariff Act, 1975 lays down the rules to be followed while classifying parts of machines falling under 84 & 85 which prescribes the guidelines as under : "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 8484, 8544, 8545, 8546 or 8547) are to be classified according to the following rules: parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; other parts, if suita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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/40096/2020 is dismissed. II) Appeals C/40281/2020 & C/40291/2020 9. Appeal C/40281/2020 is filed by Assessee-Importer against Order-in-Original No. 76/2020-AIR dated 25.01.2020. Brief facts are that assessee had imported "Microphone" which is a specialized item exclusively used in the PCBA of mobile phone by classifying them under 85183000, by availing „Nil' BCD under Notification No.57/2017 [Sl.No.6(b)] up to 01.04.2018 and from 02.04.2018, under Sl.No.6(a). Entertaining a doubt that "Microphone" is not eligible for "Nil" BCD benefit under the above notification, Show Cause Notice dated 31.07.2019 was issued inter alia proposing to classify the same under 8518 which attracted BCD at 15%, apart from proposing to demand consequential interest and penalty. Assessee appears to have filed a detailed reply justifying its classification but, however, not satisfied with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Microphone cartridges" deals with microphones per se (standalone and not mobile parts). Appellant's Averments 9.1 The following pleadings have been made by the Appellant: (i) All microphones, irrespective of whether they are used in cellular mobile phones or otherwise are covered in List 20 (S. No. 427) of Notification No. 50/2017-Cus. dated 30.06.2017. (ii) The 'microphones' imported by Flextronics are transducers/variable capacitors that convert acoustic pressure waves to electric signals. They are parts mounted on Printed Circuit Board Assembly (PCBA) of cellular mobile phones using Surface Mounting Technology (SMT) and are therefore eligible for exemption under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017. (iii) Exemption to microphones under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 has been withdrawn only after issuance of Notification No. 24/2019-Cus. dated 06.07.2019 amending Notification No. 57/2017-Cus. (iv) It cannot be presumed that the amendment dated 06.07.2019 was only clarificatory and retrospective in nature. (v) It had been decided by the Tribunal in Vivo Mobile India - I (supra)that the exemption under Sl.No. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istor, SMD capacitor, processors, diode, ICs etc. to create a functional circuit. It provides for a MIC interphase. PCBA is a part of the cellular phone just as a microphone, camera, LCD etc are.All these items, mentioned are at some stage of manufacture of cellular phones soldered onto the PCBA circuitry, for they require power supply from the battery to function among other things, but that does not make them a part of the PCBA. A microphone is a distinct commodity and is not known in trade parlance as a part of a PCBA. Their integration with the PCBA contributes to the functionality of the cellular phone. Just as type writer ribbon is not an essential part of a typewriter, microphone is neither a basic construction component or an essential part of a PCBA, and they are commercially not known to be a part of PCBA. They play a crucial role in devices such as cellular phones, headsets, audio recording equipment etc. to capture sound waves and convert them into electrical signals. Just because a microphone is required for functional testing of the PCBA circuitry it does not mean that it is a part of the PCBA. It was also pointed out by Revenue during arguments that while the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p India Ltd. v. Union of India [1976 (2) SCC 241] have settled this proposition. How is the product identified by the class or section of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable as was held in Atul Glass Industrial (Pvt.) Ltd. v. CCE [1986 (3) SCC 480] and Indian Aluminium Cables Ltd. v. Union of India [1985 (3) SCC 284]. In Asian Paints India Ltd. v. CCE [1988 (2) SCC 470] which was a case of emulsion paint, at para 8, it was said: "It is well settled that the commercial meaning has to be given to the expressions in tariff items. Where definition of a word has not been given, it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject matter with which the statute is dealing, would attribute to it." Again in Court in C.I.T. Andhra Pradesh v. M/s. Taj Mahal Hotel Secunderabad, ([1972] 1 SCR 168) stated that in incorporating items in the statutes like Excise, Customs or Sales-tax whose primary object is to raise revenue and for which to classify diverse products, articles and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully to find whether it is purported to have that effect. The issue of the valid prevalence of two contradictory positions in the same notification would fail even if the test for reasonability is that of the "prudent man". One way to resolve the issue is by expanding on the Latin maxim generalia specialibus non derogant which means that general law shall not derrogate from specific law or the provisions of a general statute must yield to those of a special one. A similar view was held by the Apex Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P., [(1961) 3 SCR 185], where it was clarified that not only does this rule of construction resolve the conflicts between the general provision in one statute and the special provision in another, it also finds utility in resolving a conflict between general and special provisions in the same legislative instrument too and observed that: "9. … The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and Judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so." Since Notification No. 24/2019 Cus. dated 06.07.2019 amending Sl. No 6A of Notification No. 57/2017-Cus. by way of a 'proviso' seeks to remove the confusion which pertains to two Sl. Nos. of the same notification it is hence only clarificatory in nature. A harmonious reading of the notification shows that it could never have been intended by the Legislature to have taxed the same goods at two different rates of duty, more so in the very same notification, for the Appellant to choose the Sl.No. which is more beneficial to him. In the case of M/s Rohit Pulp and Paper Mills Ltd Vs Collector of Central Excise, reported in [1990 (47) ELT 491 (SC)], the Apex Court held that 'in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of, and not in derogation of that purpose'. Further the circumstances under which the amendment was brought in existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the same will not always be decisive on the question of construction. But the contemporaneous construction placed by administrative or executive officers charged with executing the statute, although not controlling, is nevertheless entitled to considerable weight as highly persuasive. TRU DOF No. 334/3/2019-TRU dated05/07/2019 at sl 16 under Chapter 84 and 85 of Annexure 'A' hence is of relevance. It states: "(16) Microphones, receivers and SIM sockets of mobile phones attracts 15% BCD by tariff rate. Further, in general speakers attracts 15% BCD by tariff rate. Also, connectors for use in cellular mobile phones attracts concessional 10% BCD [S. No. 5B of the notification No. 57/2017-Customs., dated 30th June, 2017 refers]. Now all these items have been explicitly excluded from scope of entry at Sr. No. 6A of the Notification No. 57/2017-Cus." (emphasis added) The circular makes it clear that the intention of the amendment was to make explicit what was considered implicit and remove any confusion there may have been in this regard. The TRU's DO reflects the position as discussed above. 9.11 Exemption notification should be interpreted strictly. Further the Appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations. 9.13 Whether intention of Notification to be understood through declared Government Policy The matter can be looked at from another angle. Language is an imperfect vehicle of thought and the ability of written language to precisely convey technical information and description of products as done by mathematical symbols and formula, especially in the case of legal matters, enactment or notifications, may not at all times be achieved. This in exactitude of words at times makes it necessary as discussed above, to understand the legislative intent in issuing these notifications by looking at the subject of legislation and object of the law, when an ambiguity exists. As held by the Hon'ble Supreme Court in R.K. Garg vs Union of India (supra), laws impacting economic activities must be viewed with greater latitude and deference. We can hence examine the policy of Government with regard to the Phased Manufacturing Programme (PMP) for promoting indigenous manufacturing of Cellular Mobile Handsets, its sub-assemblies and parts/ sub-parts/ inputs of the sub-assemblies relied upon by Revenue in the impugned order and during oral arguments. 9.14 It is seen that PMP was notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order for non- imposition of redemption fine, the Hon'ble Supreme Court in Asstt. Collector v. Bussa Overseas and Properties Pvt. Ltd. [2004 (163) E.L.T. A160 (S.C.)], dismissed the SLP against the judgment and order dated 04/08/1992 of the Bombay High Court in Bussa Overseas and Properties Pvt. Ltd. v. C.L. Mahar, Asstt. Collector [2004 (163) E.L.T. 304 (Bom.)] The High Court had held that once the imported goods are cleared for home consumption they cease to be 'imported goods' as defined in Section 2 of the Customs Act, 1962 and are consequently not liable to confiscation. This needs to be differentiated from the Supreme Court judgement in the case of Weston Components Ltd. Vs Commissioner of Customs, New Delhi [2000 (115) ELT 278 (SC)], wherein the Hon'ble Supreme Court, had earlier upheld confiscation of goods and consequently imposition of redemption fine on the goods not physically available but the same (goods) were allowed provision alrelease under Bond. In the present case no bond has been executed by the Appellant for the clearance of goods. The Hon'ble Supreme Court again in Commissioner Vs Finesse Creation Inc. [2010 (255) E.L.T. A120 (S.C.)], dismissed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the same notification or between two notifications issued on the same date with regard to the impugned goods that are a subject matter of a specific policy formulation of the government and try to resolve it by considering the law as perthe statute and also as declared by the Apex Court in a number of cases, in as muchas; (i) while dealing with goods falling under statutes like the Customs Act 1962 whose primary object is to raise revenue and for which to classify diverse products, articles and substance arises, resort should be had not to the scientific and technical meaning of the substance but to their popular meaning viz., the meaning attached to these expressions by those dealing in them. [Ramavatar Budhai prasad v. Assistant Sales Tax Officer [(1962) 1 SCR 279]] (ii) Notification No. 24/2019 Cus dated 06.07.2019 amending Sl. No 6A of Notification No. 57/2017-Cus. by introducing a 'proviso' only seeks to remove the confusion which pertains to two Sl. Nos. of the same notification and is only clarificatory in nature and will hence have retrospective effect. The Appellant in this case agrees that the amendment removes the exemption benefit for the impugned goods, but on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur mind gains even greater importance where persons including industry are guided to arrange their affairs on the basis of the legal position as obtaining in Government policy that is cemented through appropriate fiscal exemptions, a few of which have become a matter of interpretational disputes as in the impugned matter. [R.K. Garg vs Union of India, [(1981) 4 SCC 675]] 9.19 From the issues and judgements detailed above, we find that the appellant in the said cases have not led evidence on facts and important points of law involved so as to prove their eligibility for the exemption. These were not placed before the Coordinate Bench for consideration nor was it independently perceived before arriving at a conclusion on the points of the lis. The Bench thus had decided in favour of the appellant based on the limited issues considered. The decisions are hence felt not to be an authority on the eligibility of microphones for exemption from duty as the decisions came to pass sub silentio. The judgments are hence distinguished." 11. However, this Bench in the aforecited case supra has held that there was no suppression involved since the case involves a genuine interpretative issue f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re claimed to be essential parts for the manufacture of mobile phones and therefore covered vide Sl. No. 6A of Notification No.57/2017 dated 30.06.2017; they were also exempted from BCD vide Notification No.50/2017 dated 30.06.2017 -Sl. No. 427 list 20 and that parts of mobile phone, in any case, were exempted from BCD till 01.04.2018. 13.2 Notification No.57/2017 supra has provided the definition of PCBA as printed circuit board assembled with electronic components, such as resistance, capacitors, diodes, inductors, IC, and mechanical components such as contact springs, or connectors of charger or adapter of cellular mobile phones. Connectors are distinctly identifiable commodity/parts of mobile phone and were imported as such. The said Notification has specific entries pertaining to mobile parts like connectors, microphone, receiver, etc. and in respect of connectors, the definition explicitly states that only those connectors which will be used to connect power adapter for charging mobile will be considered as part of PCBA. 13.3 Amending Notifications to the original Notification No. 57 Supra dated 30.06.2017 by which Sl. No. 6A was inserted, subsequently came to be modified w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connectors would also not be eligible for any benefit. However, the fact remains that the exemption to BCD was very much available in terms of Notification No. 24/2019 Supra. 14. In view of our above discussions above, we hold that the Assessee is eligible for benefit for exemption for the subject goods viz. "Connectors". Appeal No.C/40279/2020 is allowed with consequential benefits, if any, as per law. 15. The Department has filed Appeal C/40293/2020 against the very same Order-in-Original No.130/2020 dated 26.02.2020 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/40293/2020 is dismissed. The cross objection filed by Assessee in this appeal stands disposed of. IV) Appeal Nos.C/40252/2020 & C/40294/2020 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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