2024-VIL-1243-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Duty Exemption to Lithium-ion Battery, Power Bank - Appellant imported various goods like Housing Plastic, USB Cables, Lithium-ion Cell etc. and availed the benefit of concessional customs duty exemption under Entry No. 512 of Notification No. 50/2017-Customs dated 30.06.2017 - Department alleged that the appellant had used the imported goods in manufacturing Power Banks, which is different from Lithium-ion Batteries, and therefore the appellant was not eligible for the exemption - Whether the appellant is eligible for the customs duty exemption under Entry No. 512 of Notification No. 50/2017-Customs dated 30.06.2017 for the imported parts and components used in manufacturing Lithium-ion Batteries, even though the Lithium-ion Batteries were captively used by the appellant in manufacturing Power Banks - HELD - as per the definition of 'Manufacture' under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, the appellant had used the imported parts and components to manufacture Lithium-ion Batteries, which is a new product having distinct name, character and use. The fact that the appellant had captively used the Lithium-ion Batteries in manufacturing Power Banks does not make the appellant ineligible for the exemption, as the notification only requires 'manufacture' of Lithium-ion Batteries and does not mandate that the Lithium-ion Batteries should be the final product – Further, as per the HSN Explanatory Notes, Power Banks are also considered as Electric Accumulators or Secondary Batteries under Chapter Heading 85.07, and therefore the appellant's captive use of Lithium-ion Batteries in Power Banks would not disentitle the appellant from the exemption - the appellant is eligible for the customs duty exemption under Entry No. 512 of Notification No. 50/2017-Customs dated 30.06.2017 - the order under challenge is set aside and appeal is allowed - Whether the extended period of limitation under Section 28(4) of the Customs Act, 1962 has been rightly invoked by the Department in issuing the show cause notice – HELD - the appellant had complied with all the procedural requirements under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017, including regularly filing the 'Information' with the jurisdictional Assistant Commissioner of Customs, executing the Continuity Bond, and maintaining the required records. Further, the Continuity Bonds were also cancelled by the Assistant Commissioner of Customs after being satisfied about the appellant's compliance, which shows that the Department was aware of the appellant's activities. Therefore, there was no suppression of facts by the appellant, and the show cause notice was barred by limitation.
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