Bijay Kumar ORDER
Bijay Kumar, Member (T)
1. After being recalled the Final order No. 51781/2018 dated 11/5/2018, by our Misc. Order No. 50816/2018, we heard the matter today.
2. The brief facts of the case are that the respondent assessee M/s. S.B. Industries, are engaged in the manufacture of power bank/portable mobile charger out of imported components. For this purpose they have registered themselves with the Central Excise Department for availing facility of import of goods at concessional rate of duty under the Notification No. 12/2012/Customs dated 13/03/2012, as amended. They have also got themselves registered under the Customs (Import of goods at the Concessional rate of duty for Manufacture of Excisable goods) Rules 1996 for import of inputs and parts of the mobile battery charger falling under the CFSTH 8504 40 30 of the Central Excise Tariff Act, 1986.
3. It is argued by Ld. Advocate, on behalf of the respondent that the product manufactured by them is 'power bank' which is used to charge mobile phones as 'mobile battery charger', without use of separate charger. The 'power bank' is primarily used to charge the battery of mobile phone and is different from accumulator has held in the impugned order. It was further submitted that the 'power bank' primarily acts as the charger for mobile handsets and hence the respondent is entitled for Exemption Notification No. 12/2012-Cus, which exempts the part or component as classifiable in any chapter for manufacture of battery charger of a mobile handsets. Ld. Advocate also submitted that the Ld. Commissioner (Appeal), in his order has rightly held that benefit of aforesaid Notification is available to the power bank as mobile battery charger. It was further submitted that the Commissioner (Appeal) has rightly ignored the Ministry's clarification issued to the respondent vide letter F. No. 354/29/2017-TRU dated 26/4/2017, wherein it was clarified that the benefit of impugned Notification is not available to the appellant on the ground that portable device for charging mobile battery (also known as a power bank) is classified under Tariff item 8504 40 30 and treated as accessory to the mobile phone and not entitled to the benefit of duty exemption under Notification No. 12/2012-Cus : MANU/CUST/0068/2012 dated 17/03/2012. It has been stated in the said letter that the power bank merit classification as an accumulator, under heading No. 8507 of the Customs Tariff Act and not eligible for Exemption Notification (supra). It was also stated in the letter that the benefit of Exemption is also not available as on date either under heading 8507, Sl. No. 431 and Sl. No. 430A of Notification as above. It was further clarified in the letter that the benefit of Exemption contained in the above Notification is only for the charger for use in the manufacture of mobile handsets under Sl. No. 430A, and for the inputs, part or sub part of the charger of mobile handsets under Sl. No. 431A of Notification (supra) subject to actual user condition.
4. Ld. Advocate also submitted that the judgments relied upon by the Revenue in case of Delta Power Solution Pvt. Ltd. [MANU/AR/0028/2011 : 2012 (280) ELT 567 (AAR)], is not applicable for their product as the classification was with respect to 'accumulator' which consisted battery cells 2 each is imported and put in the bonded warehouse and on receiving the order from the Customers they cleared from the bonded warehouse after putting 24 battery cells which were housed in suitable receptacle. This is not the case in their product. Ld. Advocate also referred and relied upon the decision of M/s. Punjab Recorders Ltd. vs. CCE [MANU/CE/0266/1991 : 1992 (57) ELT 293 (Tri)] and Orient Paper Mills Ltd. vs. Union of India [178 (2) ELT 534], wherein it is held that the clarification issued by the CBEC is not applicable to the Adjudicating Authority. Therefore, the clarification issued in this case, which has been relied upon by the Ld. Adjudicating Authority was not appropriate as the same is without the application of mind. It was held in the case of Orient Paper Mills (supra) as under;
"11. The rule laid down in the above decisions is fully applicable to the facts of this case. It is obvious as well as admitted that both the Collector and the Central Government proceeded on the basis that the direction given by the Board was decisive of the matter. The revisional applications filed before the Government were heard and decided by one of the members of the Board. He appears to have proceeded on the basis that in view of the directions given by the Board nothing more need be said as to the point in dispute. It is regrettable that when administrative officers are entrusted with quasi-judicial functions, often times they are unable to keep aside administrative considerations while discharging quasi-judicial functions. This Court as well as the High Courts have repeatedly tried to impress upon them that their two functions are separate; while functioning as quasi-judicial officers they should not allow their judgments to be influenced by administrative considerations or by the instructions or directions given by their superiors. In this case both the Collector as well as the Central Government have ignored the line that demarcates their administrative duties and their judicial functions."
5. In this case the clarification was not issued to the Adjudicating Authority, but to the respondent, which was never accepted by them. Therefore, it was imperative on the part of Adjudicating Authority to have considered the merits of the case rather than going by clarification issued to the respondent which infact was not accepted by them.
6. Ld. Advocate has also submitted that functions of 'power bank' is similar to those of mobile charger in as much as the power bank is also used to put constant energy as mobile battery for unforeseen electrical current shrug, which has several advantage over simple mobile charger such as-turning off the power bank when a mobile handset battery is fully charged and only used in event when the battery is not fully charged. He has also summarised the functioning of power bank as under;
(i) Charging of power bank by reducing 5 V DC to constant 3.7 V DC power and storing such 3.7 V DC power in the 3 secondary batteries of power bank;
(ii) Charging of mobile batteries through power bank by boosting 3.7 V DC generated by the secondary batteries of power bank;
(iii) Charging of mobile batteries through power bank boosting 3.7 V DC generated by the secondary batteries to 5 V DC and auto turning-of the power source when the device/mobile is fully charged.
As per Adjudicating Authority a battery charger is a device used to put energy into a secondary cell or rechargeable battery by forcing an electric current through it.
A simple charger of mobile batteries supplies constant direct current to the mobile batteries uninterrupted way, which causes harm to the battery after being fully charged.
The function of a power bank is similar to those of a simple charger in as much as power bank is also used to put constant electric energy into a mobile battery by forcing electric current through it. Moreover it has several advantages over a simple charger. The main advantage is turning off the power bank when the mobile battery is fully charged automatically saving the battery life of the mobile handset.
7. Ld. Advocate also submitted the block diagram of the portable mobile charger (power bank), showing the charging and discharging function of power bank. He has also submitted the various copies of the Bills of Entry for the import of power bank by various importers. In the said Bill of Entry the classification of the power bank has been under Tariff Heading 8504 40 30. In view of above, he has submitted that the classification of the product under the Customs Tariff Act and Central Excise Tariff Act, is aligned and based on the HSN. In view of above also there is no reason to classify the power bank under Heading 8507 as proposed by the Ld. Adjudicating Authority on the basis of classification issued (supra) and hence the denial of Exemption Notification as above. In view of above, he also submitted that the impugned order passed by the Commissioner (Appeal) has considered the relevant facts and came to the conclusion that the benefit of the Notification above is applicable to the respondent, under the notification (supra)
8. Ld. AR on behalf of the Revenue submits that in this case the Board has clarified the classification of the power bank vide the Ministry's letter dated 26.04.2017 (supra) and in view of above there cannot be a case for different classification of the power bank by the respondent. The Commissioner (Appeal) in the impugned order had not considered the above clarification and decided the matter ignoring the said letter issued to the respondent. Therefore, he submits that the impugned order to be set aside and the order of the original Adjudicating Authority to be affirmed the appeal.
9. We have gone through the submission made by the Ld. Advocate on behalf of the respondent and Ld. AR on behalf of the Revenue.
10. We have also considered the various arguments made by the appellant Revenue along with the copies of the Bills of Entry submitted by the Ld. Advocate from the Respondent side. From the perusal of the Bill of Entry, we find that the Customs has classified the 'power bank' under Heading No. 8504 40 30. This Customs classification for the product is also based on the HSN commodity description as in the case of Central Excise Tariff. We, therefore, find that the uniformity in the classification has to be maintained by the Revenue appellant. It cannot be a case of Revenue that for the Customs classification under the Customs Tariff Act, 1975, and Central Excise Tariff, 1986, there can be two classifications for the same product on the ground that both the Customs and Excise Tariff are aligned to the HSN Classification of the goods. It has been held by the Hon'ble Supreme Court in case of CCE, Shillong vs. Wood Craft Products Ltd. [MANU/SC/0684/1995 : 1995 (77) ELT 23 (SC)] & LML Ltd. vs. Comm. of Customs [MANU/SC/0750/2010 : 2010 (258) ELT 321 (SC)]. The HSN classification serves as useful guide in the classification of the product under Customs/Excise Tariff. We don't find as to why and under what circumstances Ministry has clarified that the 'power bank' would be classified as 'accumulator' classifiable under Chapter 8507. We also find that the Commissioner (Appeal) in his order given detailed elaborate order as to how and why he has deferred with the clarification issued by the Ministry. In this regard, we would like to reproduce relevant portion of the order of Commissioner (Appeal);
"4. (i) I have carefully gone through the facts of the case and considered the grounds of appeal made by the appellant. The appeal has been filed with the mandatory pre-deposit under Section 35(F) of the Central Excise Act, 1944. Briefly stated, the appellant tire registered under Central Excise as a manufacturer of Portable Mobile Battery Charger falling under heading 85044030 of Central Excise Tariff Act, 1985 (in short 'CETA'). They have filed application dated 10.12.2015 for Registration under 'Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996' (in short 'said rules') and they have 'been granted registration dated 14.12.2015 under the said Rules for the Import of inputs parts of portable mobile battery charger at concessional rate of duty (mentioned at Sl. No. 431(iii) to the Notification No. 12/2012-Customs : MANU/CUST/0068/2012, dated 17.03.2012) for use in the manufacture of Portable Mobile Battery Chargers. Thereafter vide various applications filed during December, 2015 to January 2016, the appellant have availed the said exemption. To avoid any misuse of exemption, the Range Superintendent has been directed to cheek the use of inputs and the nature of finished products. The said Superintendent vide letter dated 27.01.2016 has reported that the Portable mobile battery charger appears to be classifiable as 'accumulator'. On the basis of this report, the Assistant Commissioner, on the reasonable belief' that the said exemption is not admissible, has directed the appellant to deposit the differential duty of Rs. 1,61,92,844/- (the Customs duty payable on the said inputs/parts as per normal rates less the exempted duty actually paid at the time of import of said goods). Against the said letter, the appellant have moved to the Hon'ble High Court Delhi. The High Court. vide order dated 02.11.2016, has directed the respondent (Revenue) to issue the SCN to the appellant and after hearing the appellant, to pass the final order within three months. Complying with the said directions, the SCN dated 16.11.2016 has been issued to appellant alleging the violation of Rule 8 of the said Rules and proposing the demand of duty on the said inputs/parts under Section 28(1) of the Customs' Act, 1962 read with Section 28(7) of the act ibid along with interest and penalty. Confiscation of 'said inputs/parts' under Section III of the Customs Act, 1962 has also been proposed. The proceedings initiated against the appellant have culminated in the impugned Order-In-Original.
(ii) I find that during the relevant time i.e., during December 2015 to January 2016, the Sl. No. 431(iii) of Notification No. 12/2012-Customs : MANU/CUST/0068/2012, dated 17.03.2012 grants exemption to-"parts or components of any chapter (emphasis supplied) (or the manufacture of battery chargers of mobile handsets."
It is evidently clear that no specific chapter heading has been prescribed either for the parts/components, or for battery charger of mobile handsets. Thus, as far as the admissibility of exemption is concerned, there are two basic requirements (I) 'the said parts/components must be used in the manufacture of battery charger of mobile handsets' and (II) and the appellant should follow the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules: 1996. In the instant case, it is an undisputed position that (a) the applicant have followed the above mentioned rules and, (b) they have used the said parts/components in the manufacture of power banks. So, the only dispute to be resolved is 'whether or not the said power bank is a battery charger of mobile handsets'. In case, it is held that the power bank is a battery charger of mobile handsets, then the said exemption would be admissible. Thus, the admissibility of exemption would squarely depend upon the determination of this issue.
(iii) The Adjudicating Authority, in SCN and O-I-O has adduced the 'following findings to classify the power/bank as an accumulator and to disentitle the exemption from Customs duty (a) The Authority for Advance Ruling, in Delta Power Solutions Ltd. case, has held that storage batteries are used to store electricity; (b) The product manufactured by the appellant is not a 'portable mobile charger' but the same is a power bank which has been used to store the electricity; (c) the CBEC vide letter dated 26.04.2017, addressed to the appellant, has clarified that the power banks are accumulators are as such, the exemption under Notification 12/2012-Cus : MANU/CUST/0068/2012 dated 17.3.2012 is not available to these power banks. Upon analysis of these findings in the light of facts of case and relevant statutory provisions/judgments, I observe that the Hon'ble Authority for Advance Ruling', in the case of delta Power (supra), has never given ay ruling regarding classification of power banks. Hence, the reliance on this judgment is totally misplaced. Regarding second finding, I note that there is no difference in the portable mobile charger and a power bank. In fact, a portable mobile charger is commercially known as "power bank" and this fact is also evident from the website of various e-commerce companies. Regarding third point, with regard to the clarification given by the CBEC, I hold that the same cannot be applied as a ruling by the Adjudication Authority, particularly in adjudication matters. He is bound to give his own independent findings on the basis of material on record.
(iv) To resolve the moot point of dispute, it would be prudent to have a look at the use, which is undisputed by the Adjudicating Authority, of the power banks:-"The said "portable mobile battery charger" among other components also consists of secondary 'storage batteries. Mobile phones cannot sustain/survive fluctuating voltage ....... The said device is an input and output voltage reducing, boosting and constant voltage infusing device for charging the batteries of mobiles. The electric circuit in the device automatically reduces 5 V DC power, released by the adopter, to constant 3.7 V DC. The storage batteries store the electrical charge of 3.7 V DC produced by the device. The device draws constant 3. 7 V DC from the batteries when the device is connected to the mobile. The device circuit board boosts 3.7 V DC to 5V required for charging the batteries of mobile phones. The device auto cuts when the batteries in the device and Mobile phones are fully charged." Thus, the functions of 'the power bank can be summed up in following activities (i) charging of power bank-by reducing 5V DC to constant 3.7V DC power and storing such 3.7V DC power in the secondary batteries of power bank (ii) charging of mobile batteries through power bank by boosting 3.7 V DC generated by the secondary batteries to 5V DC and auto turning-of the power source when the device/mobile is fully charged. As per Adjudicating Authority "a battery charger is a device used to put energy into a secondary cell or rechargeable battery by forcing an electric current through it'. A simple charger of mobile batteries supplies constant' direct current to the mobile batteries, However, such chargers take comparatively long time to charge the batteries. Besides, they may also-cause damage to the mobile batteries by 'over-charging or overheating the batteries'. From the comparative analysis of the functionality of a simple charger and that of a power bank, it can be safely inferred that the functions of a power bank is similar to those of a simple charger inasmuch as a power bank is also used to put constant electric energy into a mobile battery by forcing electric current through it'. Moreover, it has several advantages over a simple charger. The main advantage is 'turning-of the power, bank' when the mobile battery is fully charged. So, there is no possibility of any over-charging/over-heating. Further, as of now, there are different types of battery chargers such as (a) simple charger (b) fast charger (c) inductive charger (d) intelligent charger (e) motion powered charger (f) pulse charger (g) solar charger (h) timer based charger (i) trickle charger (j) universal battery charger (k) USB-based charger (l) power bank. So, the power bank is one of the various specified categories of battery chargers. Moreover, an accumulator can never act as a mobile battery charger without the use of a separate charger whereas the power bank is primarily used to charge the mobile batteries. This is the basic function that differentiate a power bank from an accumulator. The Adjudicating Authority has not appreciated the facts that (a) it is the storage batteries inbuilt in the power banks, and not the power banks, which are classifiable as accumulators (b) the primacy function of a power bank is to charge the mobile batteries.
(v) The trade parlance theory/common parlance theory is a salutary principle to decide the disputes of classification. In para 75 of the 0-1-0, the Adjudicating Authority has admitted that the primary, use of the power banks is to charge the batteries of mobile phones/mobile tablets. I note that in Atul Glass Industries Ltd. Vs. CCE [MANU/SC/0295/1986 : 1986 (25) ELT 473 (SC)], the Hon'ble Supreme Court has held that "The test commonly applied to such cases is how is the product identified by the class or section of the people dealing with or using the product. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between an article and the need it supplies in his life. It is the functional character of the article which identifies it in his mind. In the case of glass mirror the consumer recalls primarily the reflective function of the article which reflects images. It is referred to as a glass mirror only, because the word "glass" is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic and fundamental character of an article lies in its being a mirror. Therefore, glass mirror is not treated as glass and glassware ever in trade parlance." In CCE vs. Shri Baidyanath Ayurvedic Bhawan Ltd. [MANU/SC/0565/2009 : 2009 (237) ELT 225 (SC)], the Hon'ble Supreme Court has held that "Dant Manjan Ltd.-Whether cosmetics or medicament-Common parlance test-Resort should be had to popular meaning and understanding attached to such products by those using the product and not to be had to the scientific and technical meaning of terms and expressions used ...... DML used routinely for dental hygiene - Tooth powder specifically covered by Heading 3306 ibid-Excluded from Chapter 30 ibid". In the present case, also the people buy the power banks to charge the batteries of their mobile phones. It aids as a convenience to them also functions as an aid to the battery of the mobile. With the help of a power bank, for a certain amount of time, they are not dependent on the power source. They can convenience charge the mobile battery as and when required without approaching the power source. They can carry the charged power bank with them to charge the mobile batteries and then they can charge the mobile battery anywhere/anytime without the use of conventional power source. They can work simultaneously and conveniently on the mobile phone while charging with the bank. In the simple charges, it is very difficult to work simultaneously while charging as the person has to stay within the location of power source. When they goes away from the mobile phone for a certain period of time, they can charge the same with the power bank without worrying the damage to the battery due to "over-charging" as the power bank has the feature of auto turning-of the charging process once the mobile battery is fully charged".
11. Therefore, Ld. Commissioner (Appeal) concluded that the 'power bank' is not an accessory of the mobile phone and on that ground that the power bank is not sold in retail market along with package of mobile phones and power bank is separate electric item having independent identity in the market. Mobile phone does not depend on a power bank in order to function and being manufactured and marketed without power bank. Ld. Commissioner (Appeal) has thereafter held that the opinion and contention is acceptable in view of judgments in the case of State of Punjab vs. Nokia India, wherein in the Supreme Court has held that portable charger of mobile phone is an accessory of mobile.
12. We do not find any infirmity in the order of Commissioner in view of his reasonable findings. Further, we find that in this case although the Ministry has issued the clarification to the Respondent regarding the classification of 'power bank' as the 'accumulator' but the same cannot be treated as a circular issued by the Board was as to make it mandatory on the part of the Adjudicating Authority to follow the same. In that case, we are also in agreement with the decision of Punjab Recorders and Orient Paper Mills (supra), wherein it is held that clarification issued by the CBEC is not applicable to the Adjudicating Authority. Therefore, we find that the Commissioner (Appeal) has considered the same and rightly deferred with the classification as decided by the Ministry on the basis of his well reasoned arguments. We do not find any infirmity in the finding of the Ld. Commissioner (Appeal) on this Circular as well.
13. Once it is held that power bank is also a kind of mobile charger, automatically the benefit of the Notification is above will be available to the respondent. It is on record that in this case the goods imported are part and input of power bank (portable mobile battery charger and is entailed for the purpose of use in same, the benefit cannot be denied)
14. In view of above, we are of the view that the respondent is entitled for the benefit of Notification mentioned as above and has held by the Commissioner (Appeal) in this case.
15. In view of above, we dismiss the appeal filed by the Revenue by upholding the order passed by the Ld. Commissioner (Appeal).
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