Case Law Details
In re Xiaomi Technology India Private Limited (GST AAAR Karnataka)
In this case, we find that the Power Banks consists of not only the Lithium-ion Polymer battery but also the circuitry such as ‘charge management system’ and ‘voltage boost converter’. All the components together make up the Power Bank. Admittedly, it is not the battery alone which makes up a Power Bank. The battery combined with the charge management system and the voltage boost convertor constitute the Power Bank. All three components work in tandem to perform the function of storing electrical energy and discharging it to the connected device when required. The mere fact that there is a converter in the Power Bank will not take make it a Static Convener. It is emphasised that the primary difference between the Static Converter and the Accumulator is the fact of storage of electrical energy. It is not the function of converting the direct current from its input supply to its output device by either stepping up the voltage which characterises an accumulator. Accumulation of electrical energy and the conversion of electrical energy from DC to DC that step up the voltage from its input supply to its output load together characterise the function of a Power Bank. The critical aspect of storage of electrical energy is what distinguishes an accumulator from a static converter. In view of the aforesaid, we hold that the Power Bank traded by the Appellant is classifiable as an accumulator under Chapter heading 85.07.
Our view as detailed above is reinforced by the recent changes in the GST rates for goods under Chapter 85.07. With the onset of CST. Notification No 01/2017 IT (R) dt 28.06.2017 prescribed a GST rate of 28% to the goods listed in Schedule IV of the said Notification. As per SI.No 139 of Schedule IV the .goods described as “Electric accumulators, including separators thereof, whether or not rectangular (including square)” falling under Chapter Heading 85.07 attracted GST rate of 28%. The description of goods at entry SI.No 139 (Chapter Heading 85.07) was substituted vide Notification No 18/2017 IT (R) dated 26.07.2018 to read as: “Electric accumulators, including separators thereof, whether or not rectangular (including square) other than Lithium-ion battery.” The said Notification inserted an entry SI.No 376AA in Schedule III for Lithium-ion batteries classifiable under Chapter Subheading 8507 60 00. By this insertion in Schedule III. Lithium-ion batteries became chargeable to 18% GST.
In December 2018, further amendment was made to the entry SI.No 139 of Schedule IV by virtue of Notification No. 24/2018 Central Tax (R) dt 31.12.2018. whereby, the description of goods against entry SI.No. 139 (Chapter Heading 85.07) was amended to read as “Electric accumulators, including separators thereof, whether or not rectangular (including square) other than Lithium-ion battery and other Lithium-ion accumulators including Lithium-ion power banks.” Therefore, Lithium-ion Power Bank (85.07) was not chargeable to 28% GST rate. By the same Notification, the goods “Lithium-ion accumulators. (other than battery) including lithium-ion power bank” falling under Chapter Heading 85.07 was inserted as a new entry SI.No 376AAA in Schedule III where the GST rate is 18%. From the above changes to the GST rates, it is seen that the goods “Lithium-ion battery” and “Lithium-ion accumulator including Lithium-ion power bank” were carved out from the original category “Electrical accumulators” The Lithium-ion battery was classified under 8507 60 00 while the Lithium-ion Power bank was classified under 85.07. This corroborates our findings that Power Bank was always considered as an accumulator and never a Static Converter. With the tariff Notification No 24/2018 Central Tax (R) dated 31.12.2018. the issue of classification of Power Bank under Chapter Heading 85.07 gets settled.
Read AAR Ruling- Power Bank classifiable under Heading 8507 as Accumulator
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