Battery Packs Imported To Manufacture Phones Fall Under 12% GST Category: CESTAT Allows Samsung’s Appeal
The Customs, Excise & Service Tax Appellate Tribunal at Delhi has held that lithium-ion batteries used for the manufacture of cellphones as much as March 31, 2020 would entice 12% GST.
A Bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) added that if lithium-ion batteries weren’t used within the manufacture of cellphones, they’d entice 28% GST as much as July 26, 2018 and 18% GST thereafter till March 31, 2020.
The problem earlier than the Tribunal was with respect to the GST charge relevant to Lithium-ion batteries imported on/ earlier than March 31, 2020, to be used within the manufacture of cellphones.
Samsung argued that since there was no dispute within the classification of the stated Lithium-ion batteries underneath tariff merchandise 8507 60 00, they have been squarely coated throughout the entry Sl. No. 203 of Schedule II of the IGST Fee Notification, which prescribes a 12% charge.
Nevertheless, a present trigger discover got here to be issued to Samsung, alleging that the imported lithium-ion batteries might be leviable to twenty-eight% GST (underneath Serial No. 139 of Schedule IV) as much as 26.07.2018 and thereafter 18% GST (underneath Serial No. 376AA of Schedule III).
Samsung argued that the IGST Fee Notification prescribes 12% GST for the manufacture of telephones for mobile networks or for different wi-fi networks, and a Lithium-ion battery is a ‘half’ of cellphones, primarily based on technical performance and normal parlance.
The Division relied on Common Guidelines of Interpretation (GRI) of the Customs Tariff to contend that particular entries at Serial No. 139 of Schedule IV masking ‘Digital accumulators’ and Serial No. 376AA of Schedule III masking ‘Lithium-ion Batteries’ will prevail over Serial No. 203 of Schedule II, that covers ‘components for manufacture of telephones for mobile networks’.
Samsung then submitted that the entries of the Customs Tariff and IGST Fee Notification usually are not aligned, and due to this fact, help couldn’t be taken from the GRI for decoding the related entry of the IGST Fee Notification.
After listening to the events, the Tribunal proceeded to look at the related entries, ie.e.— Serial No. 203 [Parts for manufacture of Telephones for cellular networks or for other wireless networks] of Schedule II; Serial No. 139 [Electric accumulators and other Lithium-ion accumulators including Lithium-ion power banks] of Schedule IV; and Serial No. 376AA [Lithium-ion Batteries] of Schedule III.
It famous that battery packs are charged to twenty-eight% GST if they’re imported as spares, but when they’re imported for the manufacture of cellphones, they’re charged to 12% GST.
It additionally famous the Fitment Committee’s suggestion to extend the GST charge on cellphones and their components from 12% to 18% with a view to take away the inversion in charges.
“This additionally acknowledges that the GST charge for components of cellphones was 12% and it was raised to 18%,” the Tribunal remarked.
It agreed with Samsung that when the Customs Tariff and IGST Fee Notification usually are not utterly aligned, GRI can’t be urged to be utilized for decoding the IGST Fee Notification. It noticed,
“Customs Tariff gives for 8 digit classification for varied merchandise, which is ex-facie totally different from the Schedules to the IGST Fee Notification… items falling underneath Chapter 85 within the IGST Fee Notification itself have been labeled in numerous Schedules with the totally different descriptions when put next with Customs Tariff in the course of the related interval.”
Such being the place, the Tribunal held that guidelines for interpretation of the First Schedule to the Customs Tariff can solely be typically adopted to the extent potential, and it can’t be urged that such provisions have been integrated by pen and ink and should be adopted underneath all circumstances.
For the reason that Lithium-ion batteries imported by the Assessees happy the outline of Sl. No. 203 of Schedule II of the IGST Fee Notification, they have been el to IGST at 12%.
Accordingly, the follow adopted by Samsung was discovered to be accepted and legitimate.
Look: Mr. B. Lakshmi Narasimhan (Advocate) together with Ms. Nupur Maheshwari, Mr. Anurag Kapur, Mr. Rohan Muralidharan, Mr. Siddhant Indrajit (Advocates) and Mr. Ashwin Sundaram (Chartered Accountant) represented the Assessees; Shri S.Ok. Rahman, Licensed Consultant for the Division.
Case title: Samsung India Electronics Pvt. Ltd. & Ors. v. Principal Commissioner of Customs
Case no.: CUSTOMS APPEAL NO. 50727 OF 2021
