Case Law Details
In re ATL Battery Technology (India) Private Limited (CAAR Delhi)
CAAR held that For an application for advance ruling to be considered before an officer of customs, illustrative list of situations has been cited in a recent ruling in the application of M/s HQ Lamps Manufacturing Co. Pvt Ltd., by this Authority. Further, re-assessment of bill of entry is also a situation which merits inclusion in the said illustrative list of situations. Moreover, though the fact of issue of pre-consultation notice is not on record but the applicant has taken further steps to take up the matter for re-assessment of Bills of Entry and payment of differential duty. The issue of reassessment needs to be decided by the proper officer. Thus, the question raised in the instant application for advance ruling is pending before the Officer of Customs which makes the instant application for advance ruling liable for rejection.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s. ATL Battery Technology (India) Private Limited, Plot No. 197, Sector-4. Phase-11, HSIIDC Industrial Area, Growth Centre, Bawal, Rewari. Haryana-I23501, having 1EC No. AATCA2028A (applicant, in short) has filed an application dated 15.06.2023 received in this office on 10.07.2023 seeking advance ruling under section 28-1-1 of the Customs Act. 1962 before the Customs Authority for Advance Rulings, New Delhi (CAAR. New Delhi, in short).The application was accordingly registered under Serial No. 20/2023 dated 10.07.2023.
2. As per the application in Form CAAR-I, the applicant has sought ruling on the question, whether the effective rate of Integrated Goods and Services Tax (IGST, in short) leviable on the import of impugned products would be on classification at the rate of 18% GST or not and the applicant has also stated that the question(s) raised for ruling are not pending in their case before any officer of Customs, Appellate Tribunal, or any Court. Further. in the Annexure-I to Form CAAR-I, the applicant has reiterated that by virtue of the present application, they want to seek an advance ruling with respect to the effective rate of Integrated Goods and Services Tax leviable on import of the said raw materials required for manufacturing of Lithium-ion cells. However, in the Annexure to CAAR-1 Form, the applicant has also stated that on following questions, advance ruling is required:
(i) Whether the 13 products used for manufacturing the Lithium-ion cells in India, imported/to be imported by the applicant are classifiable under the respective tariff entry as mentioned along with them?
(ii) If the answer to the above question is negative then what would be the correct classification of all the 13 products and their applicable effective rate of IGST leviable on the import of the said Products?
(iii) If the answer to the above question no. (i) above is positive then whether the products mentioned therein are claiming correct rate of IGST leviable on the import of the said products?
3. Further, the applicant has inter-alia stated that, they are a global leader in manufacturing of Lithium-ion Battery Cells; they have set up a facility unit by the name of M/s. ATL Battery Technology (India) Pvt. Ltd. for manufacturing Lithium-ion cells in India to cater to the business requirement of world-renowned branded smart phones and other ICT products. The applicant has also stated that, they shall import 13 different items of raw material from foreign suppliers to manufacture Lithium-ion Cells in India and provided the details of the products imported/to be imported by them.
4. Comments in the matter have been received from the concerned Commissionerate of Customs, wherein, it is inter-alia stated that they are in receipt of a few letters from DRI wherein it is informed that investigation in the matter is going on; however, the same has not been disclosed by the applicant in their application for advance ruling; in view of the above, and in terms of the proviso to section 281 of the Customs Act, 1962, the instant application for advance rulings is liable for rejection.
5 I Personal Hearing in the matter, scheduled on 04.09.2023, was attended by the authorized representative of the applicant wherein she mentioned that she will only he giving submissions as regards admissibility of the application under the provisions related to Customs Authority. For Advance Rulings, because comments of the concerned Commissioner refer only to admissibility. She also informed that they have only received letter from MI Hyderabad Zonal Unit, asking them to submit details of goods imported by them under CTH 85079090 along with explanation as regards rationale ,for claiming the exemption notification at the time of import; moreover summons have also been issued to the applicants by DR1 Zonal Unit. As such, the matter is not pending before the officer of Customs in light of the Judgement of the Hon’ble High Court and Ruling issued by CAAR, in the matter of M/s Sprayed and M/s Holitech; similarly, there is no reason to dis-allow their application, on the grounds that documents having been sought and summon have been issued by DN. She further requested for another date for PH, in the matter as on account of ill health, she will not be able to make further submissions.
5.2 Next personal hearing, in the matter was held on 13.09.2023 wherein the authorized representative stated that the goods in question are raw material, inputs, to be used for the manufacturing of Lithium-ion batteries thus covered under heading 8507. She submitted that confusion is anticipated in the classification and IGST tax rate due to some query from the department with respect to the eligibility of the product falling under the Schedule III and entry no. 453 bearing at tax rate of 18% on the same. They have submitted that there is no doubt that all the goods under question are the raw material, inputs to be used for the manufacture of the final product Lithium-ion battery. They have also shown the samples of the inputs/raw material and the final product and averred that it is very clearly evident that they are being used in the manufacturing of the lithium-ion battery and even the department has not raised any doubt on the same. She further stated that, as the issue raised for invoking Entry no 139 of Rate Schedule IV and drawn attention to the text of the same which is as follows: “Electric Accumulators, including separators therefor, whether or not rectangular [including square] other than lithium-ion battery [and other lithium-ion accumulators including lithium-ion power banks] “. She also stated that, as there is clear wording that the entry will not be including the separators and accumulators of lithium-ion battery hence there is no question of making this entry applicable in the present matter on the goods involved in the Advance Ruling application namely cathode and separator. She gave details with regards to the application of entries namely 523A of the Not No. 50/2017 dated 30.06.2017 as amended. 376 AAA & 453 of Rate Notification 01/2017 CT and explained the basis of few classifications and their understanding for the HSN adopted by them like 85451900 for Anode due to graphite content. She mentioned that they would also he giving detailed submissions for the sake of ease of reference.
5.3 The applicant has also given detailed submissions vide their email dated 03.10.2023.
6. I note that the concerned Commissionerate has commented that DRI has been investigating the matter related to short payment of IGST on ‘Cathode coating’, ‘Anode sheet’ and Separator, however, the same has not been disclosed by the applicant in their application at column serial no 11 of Form CAAR-I; accordingly, in terms of proviso to the Section 281 of the Customs Act, 1962, the instant application for advance rulings is liable for rejection. However, as regards applicability/admissibility of Advance Rulings in the instant application vis-a-vis provisions under Section 28-I (2) of the Customs Act. l%2, the applicant’s authorized representative, during the personal hearing has stated that they have only received letter from Dla Hyderabad Zonal Unit, wham, they haw been asked to submit details of goods imported by them under (“PH 85079090 along with explanation as regards rationale far claiming the exemption notification at the lime of import; moreover summons have also been issued to the applicants by DM Zonal Unit. As such, the mailer is not pending before the (*leer of Customs in light al the Judgement of the Hon’ble High Court and Ruling issued by (AAR, in the matter ofit4,:s Spraytec and M/S Holitech, respectively. Similarly, there is no reason to dis-allow their application, on the grounds that documents having been sought and summon have boon issued by DRI.
7. Directorate of Revenue Intelligence, Hyderabad Zonal Unit, vide an e-mail dated 03.11.2023 has forwarded their letter dated 02.11.2023 wherein it is inter-alia stated that M/s. ATL Battery Technology (India) Pvt. Ltd. vide their e-mail dated 10.05.2023 has informed that they are in the process of making payment of differential duty and they have also requested DRI to send a communication to the respective Customs offices to allow the applicant for re-assessment and pay differential duty with applicable interest.
8.1 I note that the Section 28-I (2) of the Customs Act, 1962 provides that the Authority may, after examining the application and the records called for, by order, either allow or reject the application, provided that the Authority shall not allow the application where the question raised in the application is (a) already pending in the applicant’s case before any officer of Customs, the Appellate Tribunal or any Court; (b) same as in a matter decided already by the Appellate Tribunal or any Court.
8.2 Further, it is also on record that Directorate of Revenue Intelligence has been investigating a case for short levy of duty in respect of the imports made by the applicant and in the Summons dated 27.02.2023 issued by the Hyderabad Zonal Unit of DRI to the applicant, it is mentioned that inquiry is being made in connection with the import of parts of batteries under CTH 85079090. The instant application for advance ruling has been filed on 10.07.2023 i.e. after issue of Summons to the applicant, however, the fact related to on-going inquiry has not been disclosed in the application for advance ruling.
8.3 As per definition of ‘advance ruling’ under section 28E, it means a written decision on any of the questions referred to in section 28H, raised by the applicant in his application in respect of any goods prior to importation or exportation. In this regard, it is noted that the Customs Authority for Advance Rulings, in a number of rulings has maintained that though the definition of ‘advance ruling’ in section 28E refers to rulings on questions related to goods prior to their importation but in the interest of consistency, certainty and trade facilitation, applications for advance rulings have been allowed and rulings have been issued on the questions raised in the application for advance rulings when the questions raised are not hit by the conditions in the first proviso to Sub-section (2) of Section 28-I of the Customs Act, 1962. As regards the instant application for advance ruling, it is felt that while seeking ruling on question related to goods prior to their importation, each and every fact related to such goods should have been brought out in the application for advance ruling including the fact related to inquiry undertaken by DRI in respect of import of parts of batteries under CTH 85079090.
8.4 Also, provisions under the section 28 of the Customs Act, 1962 provides for issue of notice on the person for short-levy or short-payment of duty, requiring him to show-cause as to why he should not pay the amount specified in the notice provided that before issuing notice, the proper officer shall hold pre-notice consultation with the person chargeable with duty or interest in such manner as may be prescribed. It is further provided under section 28 that the person chargeable with the duty or interest, may pay before service of notice on the basis of (i) his own ascertainment of such duty; or (ii) the duty ascertained by the proper officer.
8.5 I also note that the Hon’ble High Court of Delhi vide decision dated 11.01.2023, in the case of the Directorate of Revenue Intelligence (HQRs) v M/s Spraytec India Ltd. has noted that the proviso to Sub-section (2) of 28-1 of the Customs Act proscribes the CAAR from allowing any application filed for advance ruling, where question raised in the application is pending in the applicant’s case before “any officer of customs, the Appellate Tribunal or any Court” or if the said question has already been decided by the Appellate Tribunal or any Court. In the present case, DRI had not issued any pre-consultation notice or. show cause notice which would indicate that the question regarding classification of any goods was pending before DRL Thus, even if it is accepted that an officer of DRI is an officer of Customs, it cannot be accepted that the question raised by the respondent in its application under Section 28H of the Customs Act was pending ‘in the applicant’s case’ before DRL In order to consider a question to be pending before any officer qf customs, it would be necessary for the question to be raised in any notice enabling the assessee to respond to the said issue. It is only after this stage that it would be necessary for the officer of customs to render its decision on the question. Merely because an officer of customs contemplates that a question may arise, does not mean that the question is pending consideration. For a question to be stated to be pending, the concerned officer must formally set forth the same for the assessee to contest the same. Any preliminary exercise done by an officer of customs, to consider whether any question for consideration arises, would not preclude the CAAR from giving its advance ruling on that question. The possibility that a question would arise for consideration of a customs officer, appellate tribunal or court, is not a ground contemplated under Clause (a) of the proviso to Section 28-1(2) of the Customs Act. Clearly, a distinction must be made between that question pending consideration and a possibility of a question arising consideration. The CAAR had also examined the aforesaid aspect and we concur with the view of the CAAR and find no infirmity with the impugned order rejecting the representations made by DM The Hon’ble High Court ordered that the appeal is unmerited and, accordingly, dismissed.
8.6 I further note that in a recent ruling in the application of M/s HQ Lamps Manufacturing Co. Pvt Ltd., this Authority has opined that an application may be considered ‘pending” before any officer only if it is pending before an officer in formal manner before an officer who is competent to answer the said question in terms of specific powers vested with the officer under the Customs Act, An illustrative list of such situations would include cases wherein a Show Cause Notice has been issued; bill of entry has been provisionally assessed under section 18 of the Customs Act, 1962; the matter is pending before the Special Valuation Branch of the Customs Commissionerate for the purpose of valuation of the goods in question; or the proper officer has held the pre-notice consultation with the applicant in terms of the proviso of subsection (a) of Section 28(1) of the Customs Act. 1962. Therefore. in cases. such as the extant case. wherein an officer of customs is engaged in an investigation that may result in formulation of a question that would be posed before another competent officer would not quay as ‘Pending before an officer.”
9. In view the foregoing, along with other facts, it is also noted that the applicant is in the process of making payment of differential duty with applicable interest and getting bills of entry re-assessed. For an application for advance ruling to be considered before an officer of customs, illustrative list of situations has been cited in a recent ruling in the application of M/s HQ Lamps Manufacturing Co. Pvt Ltd., by this Authority. Further, re-assessment of bill of entry is also a situation which merits inclusion in the said illustrative list of situations. Moreover, though the fact of issue of pre-consultation notice is not on record but the applicant has taken further steps to take up the matter for re-assessment of Bills of Entry and payment of differential duty. The issue of reassessment needs to be decided by the proper officer. Thus, the question raised in the instant application for advance ruling is pending before the Officer of Customs which makes the instant application for advance ruling liable for rejection.
10. I order accordingly.
