Importer-Trader Entitled to 1% Concessional CVD on Mobile Phones Under Notification: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that an importer-trader of mobile phones is entitled to concessional Countervailing Duty at 1% under Notification No. 12/2012-CE.

Brightpoint India Pvt. Ltd. imported mobile phones during May to July 2015 under several Bills of Entry. The goods were classified under CTH 85171290. At the time of import, the company paid CVD at 12.5% on MRP basis along with applicableNational Calamity Contingent Duty.

Later, Brightpoint claimed concessional CVD at 1% under Notification No. 12/2012-CE, Sl. No. 263A. The original authority denied the benefit on the ground that imported goods could not satisfy the condition relating to non-availment of CENVAT credit on inputs used in manufacture.

TheCommissioner of Customs (Appeals-I), Chennai allowed the benefit by relying on the Supreme Court ruling in SRF Ltd. The department challenged this order before the CESTAT. The dispute covered 76 appeals arising out of different Bills of Entry.

The department’s counsel argued that exemption notifications must be strictly interpreted and that the claimant must prove eligibility. It argued that the condition of non-availment of CENVAT credit was linked to manufacture and could not be presumed in the case of imports.

The department also argued that SRF Ltd. could not be applied mechanically because of later clarifications and amendments. It relied on decisions including Eagle Flask Industries Ltd. and Hari Chand Shri Gopal.

No one appeared for Brightpoint before the tribunal. Since the order of the Commissioner (Appeals) was in its favour, the tribunal treated the reasoning in that order as the importer’s case.

The bench comprising Vasa Seshagiri Rao, Technical Member, and Ajayan T.V., Judicial Member, observed that CVD under Section 3(1) of the Customs Tariff Act is levied to counterbalance excise duty on like goods manufactured in India.

The tribunal explained that the Supreme Court decision in SRF Ltd. had attained finality after dismissal of review petitions. For CVD, imported goods must be imagined as manufactured in India. If like goods manufactured in India are eligible for exemption, the importer cannot be denied the same benefit merely because it is not a manufacturer.

The tribunal observed that Brightpoint was a trader-importer and could not have availed CENVAT credit on inputs or capital goods. It held that insisting on literal proof of non-availment of credit from such an importer would defeat the exemption.

The tribunal also pointed out that the EDI system did not permit concessional assessment at the relevant time and manual filing was not allowed. The department’s appeal was dismissed, and the concessional CVD benefit was upheld.

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