The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that imported connectors are eligible for Basic Customs Duty (BCD) exemption as parts of the Printed Circuit Board Assembly (PCBA) for mobile phones.
Bharath FIH Ltd., appellant-assessee, imported connectors and classified them under CTH 85369090, claiming benefits under Notification No.50/2017 Sl.No.427. During a post-clearance audit, authorities determined that the connectors should be classified under CTH 85177090, attracting a 10% BCD as per Customs Notification No.37/2018 and Sl.No.5B of Notification No.57/2017. The assessee provided a detailed explanation for its classification, but the original authority rejected it and confirmed the show-cause notice’s proposals.
The assessee appealed before the tribunal.
The assessee argued that connectors were essential parts for mobile phone manufacturing and should be covered under Sl. No. 6A of Notification No.57/2017. These connectors were also exempt from BCD under Notification No.50/2017 until 01.04.2018.
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Notification No.57/2017 defined PCBA as a circuit board with electronic components, including connectors for mobile phone chargers. The notification stated that only connectors used for connecting power adapters would be considered part of the PCBA.
Later, Notification No.37/2018 expanded the description to include parts for manufacturing PCBA. However, Notification No.24/2019 and No.03/2021 introduced exclusions, removing connectors, microphones, and receivers from the exemption.
As a result, connectors were not eligible for the exemption under the later notifications, though BCD exemption was still available under Notification No.24/2019.
The two member bench comprising P.Dinesha ( Judicial Member ) and Ajit Kumar (Technical Member) concluded that the assessee was entitled to the exemption benefit for the subject goods, i.e., “Connectors.”
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