Flextronics Technology India Pvt. Ltd. Vs Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai held that demand for IGST on ‘lithium-ion batteries’ at the rate of 18%, however, demand for interest set aside since section 3(12) of the Customs Tariff Act incorporated interest only with effect from 16.08.2024.
Facts- M/s. Flextronics is engaged in the manufacture of cellular mobile phones and imports various parts and components. Department Audit found that during the period 26.7.2018 to 31.8.2018, IGST was discharged @12% for “lithium-ion batteries”. Since Sl. No. 376AA of Schedule – III of Notification, inserted by Notification No. 19/2018-IT (Rate) dated 26.7.2018 specifically covered “lithium-ion batteries”, it appeared that IGST was to be discharged at 18%. After due process of law, Adjudicating Authority confirmed the demand along with interest and imposed penalty. In appeal, Commissioner (Appeals) upheld the differential demand but however set aside the penalty. Hence this appeal against the duty and interest demanded.
Conclusion- Hon’ble Bombay High Court in Mahindra & Mahindra Ltd. v. Union of India, [2022 (10) TMI 212 – BOMBAY HIGH COURT], has examined an identical issue regarding interest. It was held that there is no substantive provision in Section 3 of Customs Tariff Act, 1975 requiring payment of interest and in the absence of specific provisions for levy of interest, same cannot be levied or charged.
