2025-VIL-956-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Classification and applicable rate of IGST on Lithium-ion batteries, Parts for manufacture of mobile phones - Customs Tariff Vs IGST Rate Notification - Appellants imported lithium-ion batteries for use in the manufacture of mobile phones, classifying them under Customs Tariff Item 8507 60 00 and discharging IGST at 12% under Serial No. 203 of Schedule II to the IGST Rate Notification - Department issued notices demanding IGST at 28% under Serial No. 139 of Schedule IV to the IGST Rate Notification up to 26.07.2018, and thereafter at 18% under Serial No. 376AA of Schedule III - Whether the lithium-ion batteries imported and used in the manufacture of mobile phones are chargeable to IGST at 12% under Serial No. 203 of Schedule II to the IGST Rate Notification, as claimed by the manufacturers, or at the higher rates claimed by the Department - HELD - The IGST Rate Notification is not completely aligned with the Customs Tariff, and the phrase "so far as may be" in Explanation (iv) to the IGST Rate Notification means that the rules for interpretation of the Customs Tariff can only be generally followed to the extent possible and cannot be applied rigidly. The Authority for Advance Ruling in the case of Epcos India Pvt. Ltd., held that lithium-ion batteries used in the manufacture of mobile phones would be covered under Serial No. 203 of Schedule II to the IGST Rate Notification. The IGST Rate Notification is a taxing notification and should be strictly construed and any ambiguity should be interpreted in favor of the taxpayer – Further, the words "for manufacture" in Serial No. 203 should be construed to mean "intended for manufacture", in line with the Supreme Court's decision in BPL Display Devices Ltd. vs. Commissioner of Central Excise - The lithium-ion batteries imported by the manufacturers for use in the manufacture of mobile phones are chargeable to IGST at 12% under Serial No. 203 of Schedule II to the IGST Rate Notification - the impugned orders are set aside and the appeals filed by manufacturer-importers are allowed
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