PMI Electro Mobility Solution Private Limited Vs Principal Commissioner of Customs (Preventive) (CESTAT Delhi)
Customs Concession Survives Job-Work Manufacturing Where Imported Components Fulfil the Prescribed End Use
Background: Imported Components Used to Manufacture Electric Buses
The appellant manufactured electrically operated vehicles and imported components including battery packs, motors, controllers, converters, braking systems and electric compressors.
It claimed concessional customs duty under Entries 528 and 528A of Notification No. 50/2017-Cus, subject to condition 9 requiring compliance with the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017—IGCR Rules.
The appellant had two rented units at Dharuhera, Haryana. Its parent company, PMI Coaches Private Limited, was engaged in bus-body fabrication.
Following an order from Himachal Road Transport Corporation for twenty electric buses, the appellant imported components and entered into a memorandum of understanding with PMI Coaches. Under this arrangement, PMI Coaches fabricated the buses at the shared manufacturing premises using components supplied by the appellant. The completed buses were returned to the appellant and supplied to the transport corporation.
Department Treated the Arrangement as Sale of Imported Goods
The Department alleged that the appellant had sold the imported components to PMI Coaches, rather than sending them for job work.
It relied on GST invoices, statements of company officials, and the separate legal identities of the two companies. According to the Revenue, the components had been cleared “as such” without obtaining permission or paying the customs duty originally forgone.
The adjudicating authority denied the concession and confirmed differential duty of ₹1,06,69,156, interest under section 28AA and penalty under section 114A. It also appropriated ₹25 lakh already deposited.
The appellant challenged the order, maintaining that the arrangement concerned contract manufacturing and that the imported components had actually been used for their prescribed purpose.
Appellant’s Defence: Manufacturing Through Another Entity Was Permissible
The appellant argued that neither the exemption notification nor the applicable rules required it to physically perform every manufacturing operation itself.
The substantive requirement was that the imported components be used in manufacturing electrically operated vehicles. That requirement had been fulfilled.
It also explained that both companies shared the manufacturing premises. The components had not physically left the appellant’s factory, and fabrication took place under its supervision and control.
According to the appellant, the use of GST tax invoices did not alter the essential manufacturing arrangement. It further relied on the intimations, continuity bond and returns furnished under the IGCR framework.
Tribunal Focused on Actual End Use and Substantial Compliance
CESTAT recorded that the appellant had furnished intimations to the jurisdictional authority, submitted the bond with surety or security, and regularly filed returns.
The Tribunal found that the imported components were used in manufacturing the twenty electric buses subsequently supplied to Himachal Road Transport Corporation. There was no allegation that the components had been used for a purpose different from that specified in the notification.
It also accepted that the appellant and PMI Coaches shared the manufacturing premises and that the components had not physically moved outside the appellant’s factory.
The Tribunal treated the arrangement under which the goods were shown as sold to the job worker as a business arrangement giving rise to a procedural lapse. On these facts, it did not regard that lapse as defeating the substantive customs concession.
Earlier Decisions Recognised Manufacturing Through Job Workers
The Tribunal relied on Tamil Trading Corporation v. Commissioner of Central Excise, FDC Limited v. Commissioner of Central Excise, Godrej Consumer Products Ltd. v. Commissioner of Customs, and Intas Pharmaceuticals Ltd. v. Commissioner of Customs.
These decisions recognised, in their respective settings, that the use of another entity’s manufacturing facilities does not necessarily defeat an end-use exemption.
The authorities discussed the distinction between ownership of a factory and manufacture undertaken on the importer’s behalf. In particular, the quoted decisions emphasised use of the imported goods for the specified purpose and, where relevant, retention of ownership by the importer.
CESTAT also noted that the subsequent IGCR amendment in 2021 expressly provided for sending goods to a job worker, recognising the business practice.
It did not separately hold that every provision of that amendment applied retrospectively.
Decision: Duty, Interest and Penalty Order Set Aside
CESTAT held that procedural lapses may be condoned where substantial compliance is established and the substantive outcome remains unaffected.
In the present case, the prescribed components were used to manufacture electric buses at the appellant’s premises. The Tribunal therefore found substantial compliance with Notification No. 50/2017-Cus and condition 9.
The impugned order was set aside and the appeal allowed. The Tribunal granted relief on merits without separately deciding the appellant’s extended-limitation challenge.
Author’s Comments
The decision protects an end-use concession where the manufacturing arrangement achieved the notification’s purpose. Its strongest factual foundation was actual use in electric buses, shared premises, absence of physical removal, and compliance records.
It should not be read as permitting unrestricted sale of concessional imports. Nor does it establish that GST invoices can always be disregarded. The Tribunal assessed those documents within the particular manufacturing arrangement and accepted the claimed substantial compliance.
For practitioners, a defensible job-work arrangement should clearly document ownership, manufacturing responsibility, component consumption and delivery of finished goods. These records help distinguish genuine manufacture on the importer’s behalf from an outright transfer into the domestic market.
The broader principle is that the prescribed end use remains central, while the significance of a procedural defect must be assessed against the applicable conditions and proven facts.
Cases Discussed
- Senthil Kumar v. Commissioner of Customs, Chennai — W.P. 21639/2025, dated 22.08.2025
- Union of India v. Intercontinental (India) — 2008 (226) ELT 16 (SC)
- Tata Teleservices Ltd. v. Commissioner of Customs — 2006 (194) ELT 11 (SC)
- Tamil Trading Corporation v. Commissioner of Central Excise, Tuticorin — 2006 (198) ELT 539 (Tri.-Chennai)
- Finolex Cables v. Commissioner of Central Excise, Goa — 2017 (358) ELT 990 (Tri.-Mumbai)
- FDC Limited v. Commissioner of Central Excise, Belapur — 2017 (357) ELT 464 (Tri.-Mumbai)
- Suchitra Components v. Commissioner of Central Excise — 2007 (1) TMI 4 (SC)
- Pushpam Pharmaceuticals Co. v. Commissioner of Central Excise — 1995 (78) ELT 401 (SC)
- Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise — 2005 (7) SCC 749
- Easland Combines v. Commissioner of Central Excise — 2003 (3) SCC 410
- Uniworth Textiles Ltd. v. Commissioner of Central Excise — 2013 (288) ELT 161 (SC)
- Eagle Flask Industries Ltd. v. Commissioner — 2004 (171) ELT 296 (SC)
- Intas Pharmaceuticals Limited v. Commissioner of Customs, Ahmedabad — 2023 (11) CENTAX 24 (Tri.-Ahmd.)
- Godrej Consumer Products Limited v. Commissioner of Customs (Air), Chennai — 2025 (12) TMI 610 (CESTAT Chennai)
- Silver Line Plastpack Pvt. Ltd. v. CCE & ST, Bhavnagar — 2015 (10) TMI 2262 (CESTAT Ahmedabad)
FULL TEXT OF THE CESTAT DELHI ORDER
