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CESTAT Delhi Rules Lithium-Ion Batteries for Mobile Phones Attract 12% IGST, Not 28%/18%.

  • CESTAT Delhi ruled that lithium-ion batteries imported for mobile phone manufacturing are classifiable under Serial No. 203 of Schedule II of Notification No. 01/2017-IGST (Rate) with a 12% IGST rate.
  • M/s Samsung India Electronics Pvt. Ltd. imports these batteries, classified under Customs Tariff Item 85076000, paying 15% Basic Customs Duty and 12% IGST.
  • A Show Cause Notice was issued alleging misclassification and short payment of IGST, suggesting a higher rate under different serial numbers.
  • The Department argued that batteries should be classified under their specific heading, not as parts for mobile phones, using General Rules for Interpretation.
  • The Appellant argued that batteries are integral to mobile phones and qualify as parts for manufacturing, supported by prior clarification and the language of Entry 203.
  • CESTAT observed reliance on a 2017 clarification stating batteries for mobile phone manufacturing attract 12% IGST, while those as accessories attract higher rates.
  • The 31st GST Council Meeting confirmed the legislative intent for a 12% rate when used in mobile phone manufacturing.
  • CESTAT held that Entry 203 covers parts for manufacturing telephones for cellular or other wireless networks, with specific conditions.

Source: a2ztaxcorp.net

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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