UPS Imports Qualify as ‘Static Converters’ Eligible for Basic Customs Duty Exemption: CESTAT

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Uninterruptible Power Supply (UPS) systems are eligible for exemption from basic customs duty under Notification No. 25/2005-Customs, provided they fall within the ambit of “static converters” specified in the notification. The bench of Justice Dilip Gupta (President) and C J Mathew (Technical Member) was dealing with a batch of 36 appeals arising from a common order passed by the Commissioner of Customs (Appeals), Mumbai-II, which had upheld the assessment of higher duty on multiple Bills of Entry covering imports of UPS systems. The appellate authority had denied the exemption on the ground that UPS equipment could be used across various sectors such as healthcare, infrastructure, data centres and telecommunications, and was therefore not “meant” exclusively for automatic data processing (ADP) machines or telecommunication apparatus as contemplated under the notification. At the heart of the dispute was Serial No. 4 of Notification No. 25/2005-Cus dated 1 March 2005, which grants exemption from basic customs duty to “static converters for automatic data processing machines and units thereof, and telecommunication apparatus, other than static converters for cellular mobile phones.” Customs authorities had taken a narrow view, holding that only static converters exclusively designed for ADP machines or telecom equipment qualified, and that UPS systems with broader applications were outside the scope of the exemption. The Commissioner (Appeals) had relied on the principle of strict interpretation of exemption notifications, observing that words such as “solely” or “principally” did not appear in the notification and that no additional phrases could be read into it. On this basis, the appellate authority concluded that UPS systems used in sectors like healthcare or infrastructure were not eligible for the benefit. The CESTAT noted that the very same issue had already been examined in an earlier decision involving the same importer, where the Tribunal had allowed the exemption on UPS systems classifiable under Customs Tariff Item 8504 4090. In that decision, the Tribunal had categorically held that UPS systems qualify as static converters and are entitled to full exemption from basic customs duty under Serial No. 4 of the notification. The Bench observed that after an adverse speaking order was passed in one case, the importer had, as a matter of caution, self-assessed subsequent Bills of Entry at a higher rate of duty. However, once the speaking order itself was set aside by the Tribunal in February 2025, the foundation for denying the exemption in later cases no longer survived. The Tribunal also placed reliance on another co-ordinate Bench decision in Prostarm Info Systems Ltd v. Commissioner of Customs, where it was held that denial of exemption on UPS imports under the same notification was unsustainable. Importantly, that decision had been accepted by the customs department, lending further finality to the legal position. Rejecting the department’s arguments, the Tribunal emphasized that once a particular interpretation of an exemption notification has been consistently adopted by co-ordinate Benches and accepted by the department, a different view cannot be taken in subsequent cases involving identical issues. It held that the Commissioner (Appeals) was not justified in denying the exemption merely by emphasizing the multi-sectoral use of UPS systems. The Tribunal set aside the impugned order dated 31 October 2023 and allowed all 36 appeals, granting the benefit of exemption from basic customs duty on the imported UPS systems. Case Details Case Title: Socomec Innovative Power Versus Commissioner of Customs (NS-V) Case No.: Customs Appeal No. 85427 Of 2024 Date: 22.01.2026 Counsel For Appellant: T Vishwanathan, Mr Akhilesh Kangazia and Ms Apoorva Parhiar, Advocates Counsel For Respondent: Deepak Sharma, Deputy Commissioner (AR) Click Here To Read Order Read More: Incorrect Understanding Of Law Can’t Automatically Be Treated As Tax Evasion Intention: CESTAT

UPS Imports Qualify as ‘Static Converters’ Eligible for Basic Customs Duty Exemption: CESTAT

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