Oppo Mobiles Not Liable to Pay Customs Duty on Imported Microphones, Receivers Used in PCBA Manufacturing: CESTAT

In a major relief to Oppo Mobiles India , the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has ruled that the company could not be denied exemption from customs duty on the import of microphones and receivers used in the manufacture of printed circuit board assemblies (PCBA) for mobile phones. The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) held that the exemption under Notification No. 57/2017-Cus dated June 30, 2017, as amended from time to time, remained available to the company for the period between February 2, 2018, and July 6, 2019. The bench set aside the June 15, 2020 order of the Principal Commissioner of Customs, Air Cargo Complex (Imports), New Delhi, which had confirmed a customs duty demand of ₹2.5 crore along with interest and penalties on Oppo Mobiles. The appellant/assessee, Oppo Mobiles had imported microphones and receivers for use in manufacturing PCBAs — key components used in the assembly of mobile phones — and claimed exemption under Notification No. 57/2017-Customs dated June 30, 2017.The company maintained that these items formed an integral part of PCBA and thus qualified for duty exemption under Serial No. 6 and later 6A of the said notification. However, the Principal Commissioner rejected this claim, holding that microphones and receivers were separately taxable under Serial No. 18 of the amendment Notification No. 22/2018-Cus dated February 2, 2018, and confirmed the demand with interest and penalties. The appellant argued that microphones and receivers were essential components of the PCBA and that the amendments introduced later in 2019 could not be applied retrospectively. They also placed reliance on a Chartered Engineer’s certificate confirming that these components were soldered onto the PCBA and were necessary for sensitivity tests during manufacturing. The department argued that the exemption did not apply to microphones and receivers post the February 2018 amendment and argued that subsequent notifications merely clarified the pre-existing position. Reliance was also placed on the “Phased Manufacturing Policy” of the Ministry of Electronics and Information Technology and on a CESTAT Chennai ruling in Flextronics Technologies Pvt. Ltd. vs. Commissioner of Customs, Chennai (2024). The CESTAT found merit in Oppo’s contention that the amendment notifications of February 2, 2018, and April 2, 2018, did not modify Serial No. 6 of the 2017 exemption notification insofar as microphones and receivers used in the manufacture of PCBA were concerned. aThe CESTAT observed that Serial No. 18, added by the February 2018 notification, applied only to fully imported microphones and receivers as parts of mobile phones, not to those used for manufacturing PCBA. The Tribunal criticized the adjudicating authority for relying on internet sources and personal inference rather than expert or technical evidence to conclude that microphones and receivers were not part of PCBA. The Bench cited the earlier Vivo Mobile India Pvt. Ltd. vs. Commissioner of Customs (2022) ruling, where expert reports from IIT Delhi had established that microphones soldered on PCBA were indeed integral parts of the assembly. The Tribunal emphasized that the Notification No. 24/2019-Cus dated July 6, 2019, which explicitly excluded microphones, receivers, connectors, and SIM sockets from the exemption, was prospective in nature and could not be applied to earlier periods. Referring to a July 5, 2019 communication from the Tax Research Unit (TRU), the Tribunal noted that the TRU itself clarified that “now, all these items are being explicitly excluded,” signifying prospective effect.Section 25(4) of the Customs Act, 1962, also mandates that exemption notifications come into force from their date of issue unless otherwise provided, the Bench pointed out. In doing so, the CESTAT disapproved the reasoning adopted in Flextronics Technologies, which it held to be per incuriamfor not considering the statutory provision of Section 25(4). It instead relied on its later ruling in InterGlobe Aviation Ltd. vs. Commissioner of Customs (2024), upheld by the Supreme Court in July 2025, which confirmed that such amendments could not be applied retrospectively. The Tribunal ruled that Oppo Mobiles was entitled to the exemption for the period in dispute (February 2, 2018 – July 6, 2019) and that the amendment made on July 6, 2019, could not be applied retrospectively. Accordingly, the demand for differential customs duty, along with interest and penalty, was set aside, and the appeal was allowed in full. Case Details Case Title: M/s. Oppo Mobiles India Pvt. Ltd. Versus The Principal Commissioner of Customs (Import) Case No.: CUSTOMS APPEAL NO. 51026 OF 2020 Date: 13.11.2025 Counsel For Appellant: H.K. Sharma, Consultant Counsel For Respondent: Mihir Ranjan, Special Counsel Click Here To Read Order Read More: Assessee Can’t Be Compelled to Make Pre-Deposit Where Only Penalty and Interest Are in Dispute: Calcutta HC

Oppo Mobiles Not Liable to Pay Customs Duty on Imported Microphones, Receivers Used in PCBA Manufacturing: CESTAT

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