The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that connectors imported for use in Printed Circuit Board Assemblies (PCBAs) of mobile phones were correctly classified under CTH 85177090. The tribunal allowed the Basic Customs Duty (BCD) exemption under Sl. No. 6A of Notification No. 57/2017-Cus.
Flextronics Technologies India Private Ltd., the appellant is engaged in manufacturing activities and had filed a Bill of Entry on 14.04.2018 for the clearance of connectors. The appellant claimed a 0% Basic Customs Duty (BCD) exemption under Sl. No. 427 of Notification No. 50/2017-Cus.
The Customs Department suspected misclassification as the said notification had been amended by Notification No. 40/2018-Cus imposing a 10% BCD on such connectors. The department issued a show cause notice dated 12.09.2019 stating a reclassification of the goods under CTH 85177090 and demanding differential duty.
Know When to Say No to Cash Transactions, Click Here
The adjudicating authority confirmed the demands in Order-in-Original dated 23.12.2019, and the Commissioner (Appeals) upheld the same on 23.12.2020. Aggrieved, the appellant approached the CESTAT.
The appellant’s counsel argued that the connectors were not used in mobile phone manufacturing and were correctly classified under CTI 85369090 which made them eligible for a 0% BCD under Notification No. 50/2017-Cus.
The appellant’s counsel argued that it was alternatively eligible for exemption under Sl. No. 6A of Notification No. 57/2017-Cus which applies to connectors used in Printed Circuit Board Assemblies (PCBA) of cellular mobile phones.
Know When to Say No to Cash Transactions, Click Here
The appellant relied on a prior favorable Order-in-Original issued by the Principal Commissioner of Customs for the same goods and period which the department had accepted without appeal.
The revenue countered that the connectors were classifiable under CTH 85177090 which attracted a 10% BCD and denied the exemption claims. It argued that the appellant’s reliance on the earlier order was misplaced as each case should be examined independently.
The two-member bench, comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the department had already accepted the earlier favorable order without challenging it which showed inconsistency in their argument. It observed that the appellant’s alternative claim under Notification No. 57/2017-Cus had merit, as the connectors qualified as parts or inputs of PCBA.
Know When to Say No to Cash Transactions, Click Here
So, the tribunal set aside the order refusing exemption and held that the appellant was eligible for exemption under the notification.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
