The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi Bench, has settled a long-standing tax classification dispute concerning the applicable Integrated Goods and Services Tax (IGST) rate on lithium-ion batteries imported for mobile phone manufacturing.
The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that lithium-ion batteries imported for manufacture of mobile phones are covered by entry at Serial No. 203 of Schedule II to IGST Rate Notification and would be subjected to IGST @ 12% from 01.04.2018 upto 31.03.2020. The manufacturers of mobile phones have discharged IGST @ 12% under Serial No. 203. The demand of short paid customs duty @ 28% by taking resort to the entry at Serial No. 139 of Schedule IV upto 26.07.2018 and thereafter @ 18% under Serial No. 376AA of Schedule III to the IGST Rate Notification is not justified.
The central issue revolved around whether such batteries should attract IGST at 12% as “parts for manufacture of telephones” under Entry No. 203 of Schedule II of Notification No. 01/2017-IT (Rate), or higher rates—28% and later 18%—under other entries as contended by the tax department.
The appellant/assessee, Samsung India Electronics Pvt. Ltd. and other leading mobile manufacturers were served show cause notices for allegedly misclassifying lithium-ion batteries. The Department claimed these batteries should be taxed at 28% (prior to July 27, 2018) and 18% (thereafter) based on their standalone classification under Customs Tariff Item (CTI) 8507 60 00, arguing that such batteries were “electric accumulators” rather than parts of mobile phones.
Samsung India, however, maintained that the batteries were specifically imported for integration into mobile phones, making them essential parts. As such, the 12% concessional IGST rate under Entry 203 was applicable.
After detailed examination of statutory provisions, tariff classifications, GST Council meeting notes, and jurisprudence, the Tribunal ruled in favor of Samsung India and other manufacturers.
The tribunal stated that lithium-ion batteries intended for mobile manufacturing satisfy both conditions of Entry 203—falling under Chapter 85 and being used as parts for manufacture of mobile phones. A departmental circular dated August 22, 2017, clarified that battery packs imported for manufacturing attract 12% IGST, while those imported as spares attract 28%.
The Tribunal emphasized that Explanation (iv) to the IGST Rate Notification only allows tariff interpretation rules to apply “so far as may be,” meaning selectively and not rigidly. Agendas from the 31st and 39th GST Council Meetings confirmed the 12% IGST rate for mobile phone parts, including batteries, till the rate was formally raised to 18% post March 31, 2020.
The Tribunal rejected the department’s stance on misclassification being deliberate, stating there was no suppression or fraud, and hence no grounds for confiscation or penalties.
Case Details
Case Title: M/s Samsung India Electronics Pvt. Ltd. Versus Principal Commissioner of Customs
Case No.: CUSTOMS APPEAL NO. 50727 OF 2021
Date: 23.06.2025
Counsel For Petitioner: B.L. Narasimhan, Ms. Nupur Maheshwari, Shri Siddhant Indrajit, Shri Ashwin Sundaram, Shri Kishore Kunal, Ms. Runjhun Pare, Shri Jayesh, Shri Srinivas Kotni, Shri Akshay Kumar and Ms. Madhumita Singh, Advocates
Counsel For Respondent: S.K. Rahman
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