Department cannot adopt conflicting positions on same issue in separate cases

Flextronics Technologies India Private Ltd. Vs Commissioner of Customs (CESTAT Chennai)

In the case of Flextronics Technologies India Pvt. Ltd. vs Commissioner of Customs, CESTAT Chennai examined the classification and duty exemption of connectors imported by the appellant. Flextronics filed an appeal against an order by the Commissioner of Customs (Appeals-I), Chennai, which upheld the denial of a 0% Basic Customs Duty (BCD) on the import of connectors. These were initially classified under Customs Tariff Item (CTI) 85369090 for electronic connectors, claiming exemption under Notification No. 50/2017-Cus. The customs authorities, however, reclassified the connectors under CTI 85177090, asserting that they were parts of cellular mobile phones, attracting a 10% BCD under Notification No. 57/2017-Cus.

The appellant argued that the connectors were used in automotive components such as headlamps, tail lamps, and infotainment systems and did not fall under the classification proposed by the customs authorities. Further, Flextronics alternatively sought duty exemption under S.No.6A of Notification No. 57/2017-Cus, which provides exemptions for connectors used in Printed Circuit Board Assemblies (PCBAs) of cellular mobile phones. The appellant cited a prior favorable adjudication in a similar case involving the same goods and period, which the customs department had accepted without further litigation.

CESTAT observed inconsistencies in the department’s stance, noting that the department had previously accepted that the connectors could qualify for exemption under S.No.6A of Notification No. 57/2017. Given this, CESTAT ruled in favor of Flextronics, allowing the appeal and granting consequential relief as per the law. The tribunal emphasized the principle that the department cannot adopt conflicting positions on the same issue in separate cases.

FULL TEXT OF THE CESTAT CHENNAI ORDER

This appeal is filed against the impugned Order-in- Appeal No. AIR C.CUS. I. No.301/2020 dated 23.12.2020 passed by Commissioner of Customs (Appeals-I), Chennai.

2. The undisputed facts are that the appellant filed a Bill of Entry dt. 14.04.2018 seeking clearance of goods declared as “Connectors” on which they had claimed 0% BCD under Sl.No.427 of Notification No.50/2017-Cus. dt. 30.06.2017. Entertaining a doubt that the said notification having been amended by Notification No.40/2018-Cus. dt. 02.04.2018 whereby “Connectors” attracted 10% BCD, Audit Consultative letter and thereafter, many Pre-Audit Consultative letters were issued to the importer/appellant. The importer having not replied to any of the above communications, a demand cum show cause notice dt. 12.09.2019 was issued proposing to demand differential duty thereby proposing to deny the benefit of 0% BCD as claimed and also proposing to reclassify the goods under import under CTH 85177090 (attracting 10% BCD vide Customs Notification No.57/2017-Cus. dt. 30.06.2017, as amended). There being no reply or response to the demand cum show cause notice, the adjudicating authority passed the Order-in-Original No.856/2009-AIR 23.12.2019 thereby confirming the demands as proposed in the above notice.

3. It appears that the appellant preferred an appeal before the first appellate authority but, however, even the Commissioner (Appeals) having rejected their appeal thereby upholding the demands vide impugned OIA 301/2020 dated 23.12.2020, the same has been assailed in this appeal.

4. Heard Shri Rohan Muralidharan, Ld. Advocate for the appellant and Shri Anoop Singh, Ld. Joint Commissioner for the Department, we have carefully perused the documents placed on record and we have also gone through the judicial precedents relied upon by both the parties during the course of arguments before us. Upon hearing both sides, we find that the only issue that is to be decided is, “whether the claim of the importer as to Nil rate of BCD was in order”?

5. The appellant at the time of import, had classified the “connectors” in question for use in PCBA of Head lamp and Tail lamp of cars, Car Infotainment Systems and GPS Modules of automobiles, under CTI 85369090 as ‘Other Electrical Apparatus for Switching or Protecting Electrical Circuits, or for making Connections to or in Electrical Circuits (For Example, Switches, Relays, Fuses, Surge Suppressors, Plugs Sockets, Lamp-Holders and Other Connectors, Junction Boxes), for a Voltage not exceeding 1000 Volts; Connectors For Optical Fibres, Optical Fiber Bundles or Cables parts of mobile phones’ and availed exemption under S.No.427 of Notification No.50/2017 (supra) which provided exemption to all “connectors” that are not used in the manufacture of mobile phones.

5.1 It is the case of the Revenue that the “Connectors” in question / under import were classifiable under CTH 85177090 that attracted 10% BCD vide Customs Notification No.57/2017 (supra), which has been confirmed in both the OIO as well as in the impugned OIA.

6. The above view of the Revenue itself indicates that the doubt entertained by the Commissioner that the “Connectors” under import were the ‘Connectors of cellular mobiles phones’ stood accepted since they chose to reclassify. This being the case, the appellant having no option, chose to claim the benefit of exemption under S.No.6A of Notification No.57/2017 (supra) alternatively, since in terms of the said notification ‘Connectors’ used in Printed Circuit Board Assembly (PCBA) are eligible for exemption thereunder. It was further claimed that the said exemption under the entry is available to all inputs and parts of PCBA of cellular mobile phones irrespective of the classification; the only requirement is that the product in question must be an ‘input’ or ‘part’ of PCBA. In this regard, they have placed reliance on the Order-in-Original No.617/2021 dt. 03.09.2002 passed by the Principal Commissioner of Customs, in their own case, for the very same period, whereby the “Connectors” imported by the appellant were held to be eligible for the benefit under S.No.6A of Notification No.57/2017 (supra).

7. We have carefully perused the said OIO passed by the Principal Commissioner in the appellant’s own case on which the appellant has placed reliance. It is ascertained that the Department has accepted the said order without filing any

8. In view of the above, we are of the view that the Department cannot take divergent stands especially when they themselves admit that the goods in question in this appeal are “Connectors” of cellular phones which were held to be classifiable under CTH 85177090 vide OIO dt. 23.12.2019 which came to be upheld in the Impugned Order-in-Appeal.

9. That being the case, we are of the view that the alternate claim of the appellant for the benefit of S.No.6A of Notification No. 57/2017-Cus. (supra) has merit and accordingly, we entertain the same. In the result, we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.

The MA filed by appellant for consideration of additional grounds thus stands disposed of.

(Order pronounced in the open court on 12.12.2024)