2025 (5) TMI 416 - AT - Customs

Benefit of N/N. 25/1999-CUS dated 28.02.1999 (Sl. No. 62) and N/N. 24/2005-CUS dated 01.03.2005 (Sl. No. 39) - aluminium based Copper Clad laminates which was imported and used after following the procedure prescribed in the Customs (Import of Goods at concessional rate of duty for manufacture of excisable goods) Rules 2017 2017 Rules to manufacture aluminium clad printed circuits boards . Are Metal core printed circuit boards (MCPCBs) also printed circuit boards (PCBs) or are they different from them? - HELD THAT - Metal core printed circuit board performs the same function as the printed circuit board and is manufactured using the same method but has an additional functionality of dissipating heat quickly which is required in certain applications. Merely because a good has some additional functionality it does not cease to be the good. A car for instance will NOT cease to be a car simply because it has power steering or power break or auto-transmission advanced navigation or entertainment systems. The car does not cease to be the car because of these additional features and functions. Was the benefit of the exemption Notification No. 25/1999-Cus (S.No. 122) before it s amendment on 2.2.2022 available to the aluminium based copper clad laminates which were imported? - HELD THAT - Since the goods in question are composite materials applying the General Rules of Interpretation they could fall under any of the Chapters depending upon the composition and essential character of the goods. Chapter 39 covers goods of plastic Chapter 74 covers goods of copper Chapter 75 covers goods of nickel and Chapter 76 covers goods of aluminium. The goods covered by S.No. 122 of the notification can fall under any of these Chapters. Therefore it cannot be said that goods which also have aluminium core are not covered by the notification when clearly goods which are classifiable under Chapter 76 are also covered by the notification. For instance if there is metal core laminate with large amount of aluminium by weight and if it is classified accordingly as an article of aluminium the goods are still entitled to exemption under S.No. 122. The functions of assessment and re-assessment under Section 17 and the recovery of duty under Section 28 are distinct. Therefore the exercise of functions under Section 17 can only act as a jurisdictional fact for the purpose of excluding the jurisdiction of other proper officers empowered under that section for the exercise of the rest of the functions specified therein. Similarly the exercise of the function of issuing show cause notices under Section 28 by a particular proper officer serves as a jurisdictional fact which would exclude the jurisdiction of other proper officers empowered under Section 28. In the case of Vintek when in respect of 29 of the 80 Bills of Entry were already decided by the jurisdictional Commissioner in favour of the importer by order dated 13.10.2023 and further when such decision was not even assailed by the Revenue could the Commissioner of Customs (Preventive) pass a contrary order confirming the demand in respect of 80 Bills of Entry including the 29 in respect of which an order was already passed? - HELD THAT - Clearly the demand in respect of the 29 Bills of Entry is hit by lack of jurisdiction of the Principal Commissioner of Customs (Preventive) to issue the SCN dated 30.6.2022. Once the Additional Commissioner (Preventive) and Deputy Commissioner exercised their powers under section 28 in respect of these Bills of Entry it automatically precluded every other proper officer including the Principal Commissioner of Customs (Preventive) from also exercising his jurisdiction under section 28 in respect of the same Bills of Entry. This legal position is evident from Cannon India 2024 (11) TMI 391 - SUPREME COURT (LB) . The order of the Commissioner of Customs (Preventive) dated 30.6.2022 cannot also be sustained in respect of the remaining 51 Bills of Entry because the issue involved in all the 80 Bills of Entry is identical. Once the order dated 26.9.2022 passed by the Commissioner of Customs (Import) Tughlakabad decided the issue and it was not appealed against and thereby attained finality the Commissioner of Customs (Preventive) could not have taken a contrary view on the same issue. It would have been a different case if the issue was still disputed and SCNs were issued for subsequent Bills of Entry. Conclusion - i) MCPCBs are PCBs for the purpose of exemption notifications. ii) Aluminium based copper clad laminates were covered by the exemption under Notification No. 25/1999-CUS (S.No. 122) even before the 2022 amendment. iii) The Principal Commissioner of Customs (Preventive) lacked jurisdiction to issue show cause notices and pass orders in respect of the 29 Bills of Entry already adjudicated by the jurisdictional Commissioner and could not take a contrary view on the remaining 51 Bills of Entry. The impugned order is set aside - appeal allowed.

Summary

The core legal questions considered by the Tribunal in these appeals are as follows:

(a) Whether Metal Core Printed Circuit Boards (MCPCBs) are to be regarded as Printed Circuit Boards (PCBs) or are distinct products;

(b) Whether the benefit of exemption under Notification No. 25/1999-CUS (S.No. 122) prior to its amendment on 2.2.2022 was available to aluminium based copper clad laminates imported for manufacture of MCPCBs;

(c) Whether the Principal Commissioner of Customs (Preventive) had jurisdiction to issue a show cause notice and pass an order demanding differential duty in respect of 29 Bills of Entry already adjudicated by the jurisdictional Commissioner of Customs in favour of the importer, and whether a contrary order by the Principal Commissioner was sustainable.

Issue-wise Detailed Analysis:

(a) Are MCPCBs also PCBs or distinct products?

The legal framework involves the interpretation of the term "Printed Circuit Boards" as used in exemption notifications and the classification of goods under the Customs Tariff. The Tribunal considered the technical and functional nature of PCBs and MCPCBs. PCBs traditionally consist of an insulating substrate with a copper layer printed to form circuits, enabling compact assembly of electronic components. MCPCBs differ by having a metal core (such as aluminium) beneath the insulating layer to enhance heat dissipation, a feature necessary for certain applications like LED lighting.

The Tribunal reasoned that the addition of a metal core does not exclude the product from being a PCB, as the fundamental function and manufacturing process remain the same. The analogy was drawn that additional features do not change the essential character of a product (e.g., a car remains a car despite added features). The Tribunal relied on its earlier decision in Crompton Greaves, where it was held that MCPCBs are a form of PCBs. This decision was upheld by the Supreme Court, which dismissed the Revenue's appeal both on delay and merits, thereby attaining finality.

The Revenue's argument that MCPCBs are distinct due to their metal base and specialized use was rejected, affirming that MCPCBs fall within the scope of PCBs for the purpose of the exemption notifications.

(b) Was the benefit of exemption under Notification No. 25/1999-CUS (S.No. 122) before its amendment available to aluminium based copper clad laminates?

The relevant legal framework includes the text of Notification No. 25/1999-CUS and its amendment by Notification No. 14/2022-CUS. The original notification exempted "Composite copper clad materials consisting of paper + epoxy + glass cloth" used in manufacture of PCBs. The amendment in 2022 explicitly included "Aluminium based copper clad laminates." The Revenue contended that prior to the amendment, aluminium based laminates were not covered and thus not eligible for exemption.

The Tribunal analyzed the language of the unamended notification and noted it did not restrict the description to "only" paper, epoxy, and glass cloth, thereby not excluding laminates with additional components such as aluminium cores. Further, the notification referenced multiple Customs Tariff chapters (39, 74, 75, 76), which include plastics, copper, nickel, and aluminium, indicating that goods classified under these chapters are covered. Since aluminium based laminates fall under Chapter 76, they are encompassed within the notification's scope.

The Tribunal concluded that the exemption was available to aluminium based copper clad laminates even before the 2022 amendment, as the description was broad enough to include metal core laminates used in MCPCBs.

(c) Jurisdictional issue regarding overlapping Bills of Entry in Vintek's case

The legal framework includes the provisions of Section 28 of the Customs Act, 1962, and principles of jurisdiction and res judicata. The issue arose because 29 of the 80 Bills of Entry in question had already been adjudicated by the jurisdictional Commissioner of Customs (Import) in favour of the importer, with no appeal filed by the Revenue, thus attaining finality. Subsequently, the Principal Commissioner of Customs (Preventive) issued a show cause notice and passed an order demanding differential duty on all 80 Bills, including the 29 already adjudicated.

The Tribunal relied on Supreme Court precedent in Commissioner of Customs versus Canon India, which clarified that the issuance of a show cause notice under Section 28 by one proper officer excludes the jurisdiction of other officers to issue notices for the same subject matter. The functions under Section 17 (assessment) and Section 28 (recovery) are distinct, and jurisdiction is determined by the officer who first issues the show cause notice under Section 28.

Applying this principle, the Tribunal held that once the Additional Commissioner and Deputy Commissioner had exercised jurisdiction under Section 28 in respect of the 29 Bills of Entry, the Principal Commissioner was precluded from exercising jurisdiction over the same Bills. Further, since the issue in the remaining 51 Bills of Entry was identical and had been decided by the jurisdictional Commissioner in favour of the importer without appeal, the Principal Commissioner could not take a contrary view.

The Tribunal thus found the impugned order in respect of these Bills of Entry to be without jurisdiction and unsustainable.

Treatment of Competing Arguments:

The Revenue's arguments emphasizing strict interpretation of exemption notifications, the distinct nature of MCPCBs, and the need to defer to the Revenue in case of doubt were considered but rejected based on the technical and legal analysis. The Tribunal emphasized that exemption notifications should be interpreted in a manner consistent with the purpose of the exemption and the nature of the goods. The importers' contention that MCPCBs are a subset of PCBs and that aluminium based laminates were covered was accepted, supported by prior Tribunal and Supreme Court rulings.

The Revenue's reliance on the amendment to Notification No. 25/1999-CUS to argue non-coverage prior to 2022 was found unpersuasive given the broad language of the original notification and the inclusion of relevant tariff chapters covering aluminium products.

Significant Holdings:

"Metal core printed circuit board performs the same function as the printed circuit board and is manufactured using the same method but has an additional functionality of dissipating heat quickly which is required in certain applications. Merely because a good has some additional functionality, it does not cease to be the good."

"The description of the goods was 'composite copper clad materials consisting of paper + epoxy + glass cloth'. The description does NOT say the exemption is available if 'consisting of ONLY paper + Epoxy + glass cloth'. So there could also be other materials in addition to paper, epoxy and glass cloth. Metal core laminates are not specifically excluded from the description of the goods."

"Since the goods in question are composite materials, applying the General Rules of Interpretation, they could fall under any of the Chapters depending upon the composition and essential character of the goods. Chapter 39 covers goods of plastic, Chapter 74 covers goods of copper, Chapter 75 covers goods of nickel, and Chapter 76 covers goods of aluminium. The goods covered by S.No. 122 of the notification can fall under any of these Chapters."

"The exercise of the function of issuing show cause notices under section 28 by a particular proper officer serves as a jurisdictional fact which would exclude the jurisdiction of other proper officers empowered under section 28."

Core principles established include:

- MCPCBs are a subset of PCBs and entitled to the same exemption benefits as PCBs under relevant notifications.

- Exemption notifications must be interpreted in light of the description and tariff classification, not narrowly confined to literal enumeration of materials.

- Jurisdiction under Section 28 of the Customs Act vests exclusively in the proper officer who first issues the show cause notice for recovery of duty, precluding other officers from exercising concurrent jurisdiction on the same subject matter.

Final determinations:

- MCPCBs are PCBs for the purpose of exemption notifications.

- Aluminium based copper clad laminates were covered by the exemption under Notification No. 25/1999-CUS (S.No. 122) even before the 2022 amendment.

- The Principal Commissioner of Customs (Preventive) lacked jurisdiction to issue show cause notices and pass orders in respect of the 29 Bills of Entry already adjudicated by the jurisdictional Commissioner, and could not take a contrary view on the remaining 51 Bills of Entry.

- The appeal filed by the importer Vintek is allowed and the impugned order set aside with consequential relief.

- The Revenue's appeals against the orders of the Commissioner (Appeals) allowing exemption benefits to other importers are dismissed.