CESTAT grants benefit of exemption from additional customs duty to Lenovo

CESTAT grants benefit of exemption from additional customs duty to Lenovo

The company was denied benefits beyond 6 percent for certain computer items

The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has allowed the benefit of exemption from additional duties of customs to hard disk drives.

The petitioner, Lenovo India Pvt Ltd had challenged the intent of the customs authorities to deny it the benefit beyond 6 percent, accorded to 'hard disk drives.'

The 2006 and 2018 notifications mentioned the adoption of tariff items under the Customs Tariff Act (CTA), 1975 on the import of 'external/portable hard disk drives' of several makes and models.

The Mumbai Principal Commissioner of Customs, Air Cargo Complex (Import), confirmed the differential duty of Rs.14,02,637 during the period of the dispute. This was on imports effected through Air Cargo Complex (ACC), Mumbai, Delhi, and Chennai and Inland Container Depot (ICD), Whitefield, Bangalore.

The petitioner contended that the tribunal had decided the eligibility for the exemption in several disputes. It argued that the nature of the product involved in the disputes was 'external hard disk drives.' The orders held they were the same as 'hard disk drives' which, indisputably, were entitled to the benefit of the exemption notification.

Lenovo stated that CTA encompasses all products within the tariff enumeration. It did not offer scope for traversing beyond the 98 chapters making it evident that certainty of fitment was one of the characteristics of classification for the smooth operation of international trade.

The company added that the settled classification could be unsettled only by the argument of inapplicability owing to the distinguishable nature of the product, which was not put forward by the authorized representative. Therefore, judicial propriety required a non-discriminatory application of classification and notwithstanding the continuing cavil of the revenue department about the eligibility for concessional duty.

While allowing the appeal and setting aside the impugned order, the bench of Ajay Sharma (judicial member) and C J Mathew (technical member) observed, "It is the foregoing of revenue and not the principle espoused in the said exemption notification that engenders the contrarian approach on the part of the tax collector. It is not an acceptable argument to unsettle the settled law."