Case Law Details
In re Coslight India Telecom Private Limited (CAAR Delhi)
In a recent case before the Customs Authority for Advance Rulings (CAAR) in Delhi, a company, M/s Coslight India Telecom Private Limited, sought an advance ruling on the interpretation of a customs notification. The company’s query pertained to the applicability of a particular notification regarding the import of Lithium-ion battery packs for electric vehicles. However, the CAAR’s response sheds light on its role and limitations in providing rulings.
Background of the Case: M/s Coslight India Telecom Private Limited imported Lithium-ion battery packs for manufacturing electric vehicles. They had been benefiting from certain customs duty exemptions provided under a specific customs notification. However, the company was uncertain about the future applicability of this exemption after a certain date, and they sought clarification through an advance ruling.
The Company’s Questions: The company posed the following questions to the CAAR:
- Would the exemption under the customs notification remain valid after a specific date, and could the company continue to pay customs duty at the rate of 15%?
- If the exemption does not apply after the specified date, what would be the applicable customs duty rate for importing Lithium-ion battery packs for electric two-wheelers?
Response from the Concerned Commissionerate: The concerned Commissionerate reviewed the relevant sections of the Customs Act and concluded that conditional exemptions in force as of a certain date would expire on 31.03.2023, unless extended or rescinded earlier. They further noted that the exemption for goods listed under serial number 528A of the customs notification had lapsed, and the applicable duty rate for these goods would be the standard rate, i.e., a Basic Customs Duty of 20%.
Personal Hearing and CAAR’s Clarification: A personal hearing was conducted on 04.10.2023. During this hearing, the authorized representative (AR) of the company referred to the specific customs notification and began discussing the intention behind its provisions. The CAAR clarified that its role does not include providing rulings on the intent of notifications. However, the AR was informed that a ruling or order would be issued in response to the application.
CAAR’s Decision: Following a comprehensive review of the case, the CAAR concluded that the applicant was seeking a ruling on the intention of the customs notification. They reiterated that the mandate of advance ruling authorities does not authorize them to provide rulings on the intent of notifications. Notifications are to be construed based on the words and phrases used within them, without scope for interpretation beyond that. As such, the application for advance ruling was deemed beyond the provisions laid down in Chapter V-B of the Customs Act, 1962, and was therefore rejected.
Conclusion: The case before the CAAR Delhi serves as a reminder of the limitations of advance ruling authorities. While they can provide clarity on the application of existing laws and regulations, they cannot provide interpretations or rulings on the intent of specific customs notifications. In this case, the CAAR clarified its role and upheld its commitment to providing rulings within its defined scope.
FULL TEXT OF ORDER OF CUSTOMS AUTHORITY FOR ADVANCE RULINGS
M/s Coslight India Telecom Private Limited, Plot No. 122, Sector-4, IMT. Manesar, Gurugram-122050 having IEC No. 050803839, and PAN- AADCC1091R (applicant, in short) has filed an application dated 05.04.2023, received in this office on 25.04.2023, seeking advance ruling under section 28-H 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. 10/2023 dated 25.04.2023.
2. The applicant has stated in then application for advance ruling that, the company has imported Lithium-ion battery pack for manufacturing electric vehicle at its plant; the goods have been imported under serial number 528A of Notification No. 50/2017-Cus. dated 30.06.2017, as inserted by 03/2019-Customs dated 29.01.2019 and amended vide Notification No. 02/2021-Customs dated 01.02.2021 and 21/2021-Customs dated 31.03.2021. The applicant, vide the aforesaid application has stated that on the basis of facts, the following questions arise:
A) Whether serial number 528A of Notification No. 50/2017-Cus. dated 30.06.2017, as amended vide Notification No. 03/2019-Customs dated 29.01.2019, Notification Nos. 02/2021-Customs dated 01.02.2021 and 21/2021-Customs dated 31.03.2021 would be covered under such exemption even after 31.03.2023 and the applicant would be eligible to pay Customs duty at the rate of 15%?
B) If the answer to the above is in negative, then what would be the applicable rate of duty w. e. f. 01.04.2023 on import of Lithium-ion battery pack for manufacture of Electric Two-Wheeler?
3.1 The applicant has also stated that, they had imported Lithium-ion battery pack for manufacturing electric vehicles in India: the said product was classified under Sub-heading 85076000 attracting levy of Basic Customs Duty a; 15% on fulfilling the condition of furnishing of Bond under the Customs (Import of Goods at Conessional Rate of Duty) Rules, 2017.
3.2 Further, the applicant has submitted that, after announcement of Union Budget for the year 2023-24, Notification Nos. 02/2021-Customs dated 01.02.2021 has been issued wherein the validity of exemption available on account of import has been extended to certain goods however, the extension of exemption till 31.03.2024 does not cover entry provided at serial number 528A of Notification No. 50/2017-Cus. dated 30.06.2017: at this stage, they are unaware about the Government’s intention as to whether such exemption would be available to serial number 528A after 31.03.2023; if this exemption is not provided, then this would be a great setback for the Electric Vehicle Industry; validity of exemption has been extended for serial number 527B till 31.03.2024 which covers lithium-ion cell for use in the manufacture of battery or battery pack of electrically operated vehicle or hybrid motor vehicle: battery cells play an important role in manufacturing of battery pack: since the validity of battery cells has been extended, there is no clarity whether the same is made applicable in the case of battery pack: the extension of validity may have been erroneously missed out in Notification No. 02/2023-Customs dated 01.02.2023 for serial number 528A.
4. Comments in the matter have been received from the concerned Commissionerate wherein, it is inter-alia stated that upon reviewing Section 25(4) and Section 25(4A) of the Customs Act,1962, it is deduced that all existing conditional exemptions in force as on the date on which the Finance Bill, 2021 receives the assent of the President unless having a prescribed end date, shall come to an end on 31.03.2023 (if not specifically extended/rescinded earlier) on review. Additionally, upon, examining Notification No. 02/2023-Customs dated 01.02.2023, it is noted that the exemption for goods listed under serial number 528A of Notification No. 50/2017 has lapsed. Furthermore, the applicable duty rate for the mentioned goods will be the Standard rate i.e. Basic Customs Duty 20%.
5. Personal hearing, in the matter was held on 04.10.2023 wherein the Authorized Representative (AR) referred to serial number 528A of the Notification No. 50/2017-Cus. and started discussing intention behind provisions under the serial number of the said notification. The Authority explained that the mandate of advance ruling do not authorise the Authority to give ruling on the intent of the notification. However. the AR was informed that ruling or order, as the case may be shall be issued in the application.
6. Thus, having gone through the application for advance ruling, comments of the concerned Commissionerate and having heard the authorized representatives of the applicant during the personal hearing, I note from the submissions of the applicant that the applicant intend to seek ruling on intention of the notification and during the personal hearing it was clarified that mandate of advance ruling do not authorise the Authority to give ruling on the intent of the notification. Moreover, it is a settled proposition that a notification has to be construed by the words and phrases used in the notification, beyond that there is no scope for interpretation of the notification. Whereas sub-section (2) of section 28H provides for the question on which the advance ruling shall be sought and such question do not mandate seeking of advance ruling on interpretation of a notification. In light of the foregoing discussion, I order that the application for advance ruling is liable to be rejected as the issue and question raised by the applicant are beyond the provision laid down, in this regard under Chapter V-B of the Customs Act, 1962.
