2025-VIL-403-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs – Applicable rate of IGST on import of lithium-ion batteries, parts of cellular mobile phones – Appellant imported lithium-ion batteries and discharged IGST at 12% under S. No. 203 of Schedule II to Notification No. 01/2017 - IT (Rate) - Department found that as per S. No. 376AA of Schedule III to the same notification, inserted by Notification No. 19/2018-IT (Rate) dated 26.7.2018, the IGST rate on lithium-ion batteries was 18% - Demand of differential duty along with interest and penalty - Whether the lithium-ion batteries imported by the appellant are eligible for the 12% IGST rate under S. No. 203 of Schedule II to Notification No. 01/2017 - IT (Rate) as "parts for manufacture of Telephones for cellular networks or for other wireless networks" or are liable to 18% IGST under S. No. 376AA of Schedule III to the same notification – HELD - The lithium-ion batteries imported by the appellant are correctly liable to 18% IGST under S. No. 376AA of Schedule III to Notification No. 01/2017 - IT (Rate), as inserted by Notification No. 19/2018-IT (Rate) dated 26.7.2018 - as per the Customs Tariff, lithium-ion batteries are classifiable under Heading 8507 and there is a specific entry at S. No. 376AA covering "lithium-ion batteries". Applying the principles of interpretation, when a specific entry is available, the general entry cannot be resorted to - The appellant failed to establish before the original authority that the imported lithium-ion batteries were "parts" of cellular mobile phones and mere assertions cannot be accepted without supporting evidence - The duty rate notifications for Customs and for IGST purposes are not in pari materia and the description of goods in a customs notification will not help decide the matter either way – Further, the end-use of a product is not determinative of its classification and a residuary entry cannot be taken refuge of in the presence of a specific entry - The demand for IGST on “lithium-ion batteries” @ 18% as per S. No. 376AA of Schedule III to Notification No. 01/2017 – IT (Rate), is upheld. However, the demand for interest is set aside – The appeal is partly allowed - Whether interest is leviable on the differential IGST demand – HELD - Interest is not leviable on the differential IGST demand for the period prior to the substitution of Section 3(12) of the Customs Tariff Act, 1975 by the Finance (No. 2) Act, 2024, which specifically included "interest" among the borrowed provisions from the Customs Act, 1962. The Tribunal relied on the decisions of the Bombay High Court and the Supreme Court in the case of Mahindra & Mahindra Ltd. v. Union of India, wherein it was held that in the absence of a specific provision for levy of interest, the same cannot be charged.
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