CESTAT Delhi Holds Oppo Entitled to Customs Duty Exemption on Imported Microphones & Receivers Used in PCBA Manufacturing
Pranav B Prem
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has granted significant relief to Oppo Mobiles India Pvt. Ltd., holding that the company is entitled to customs duty exemption on imported microphones and receivers used in the manufacture of Printed Circuit Board Assemblies (PCBA) for mobile phones. A Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) set aside the order dated 15 June 2020 passed by the Principal Commissioner of Customs, which had confirmed a demand of approximately ₹2.5 crore along with interest and penalties.
The dispute pertained to the applicability of Notification No. 57/2017-Cus dated 30 June 2017, as amended, which grants exemption on components used for manufacturing printed circuit assemblies. Oppo Mobiles had imported microphones and receivers and claimed that these components formed an integral part of the PCBA. The company submitted that these components were soldered onto the PCBA and were essential for conducting sensitivity tests during the manufacturing process. It therefore argued that the benefit of exemption under Serial No. 6, and later Serial No. 6A, of the notification was available for the period from 2 February 2018 to 6 July 2019.
The adjudicating authority had rejected Oppo’s claim on the ground that microphones and receivers were taxable under Serial No. 18 of the amended Notification No. 22/2018-Cus dated 2 February 2018, which dealt with fully imported parts of mobile phones. On that basis, duty was demanded along with interest and penalties. The Commissioner concluded that microphones and receivers were not part of the PCBA and relied on online sources and personal inference rather than technical evidence.
Oppo Mobiles challenged this finding and relied heavily on a Chartered Engineer’s Certificate, which confirmed that microphones and receivers were indeed mounted onto the PCBA and were necessary components. It also argued that the amendments introduced in 2018 and 2019 could not be retrospectively applied and that Notification No. 24/2019-Cus dated 6 July 2019, which explicitly excluded microphones, receivers, connectors and SIM sockets, itself indicated that these exclusions would operate prospectively. The company further relied on Tribunal rulings such as Vivo Mobile India Pvt. Ltd. v. Commissioner of Customs, where expert technical reports from IIT Delhi had established that microphones soldered onto PCBAs were integral to the assembly.
The Department, however, maintained that following the 2018 amendment, microphones and receivers were excluded from the exemption and should be taxed under Serial No. 18. It also relied on the Phased Manufacturing Policy of the Ministry of Electronics and Information Technology and cited the ruling in Flextronics Technologies Pvt. Ltd. v. Commissioner of Customs, Chennai, claiming that the amendments merely clarified the pre-existing legal position.
The Tribunal rejected the Department’s arguments. It held that neither the amendment notifications of 2 February 2018 nor those issued on 2 April 2018 modified Serial No. 6 of the 2017 Notification with respect to microphones and receivers used in PCBA manufacturing. The Bench observed that Serial No. 18 covered only fully imported microphones and receivers as parts of mobile phones, not those used as components mounted onto the PCBA during manufacturing. The Tribunal also expressed strong disapproval of the Commissioner’s reliance on internet research rather than technical evidence.
CESTAT further reasoned that Notification No. 24/2019-Cus, which expressly excluded microphones and receivers from exemption, was prospective in operation. It referred to a 5 July 2019 communication from the Tax Research Unit (TRU), which stated that these items were “now” being explicitly excluded. This, the Tribunal said, clearly indicated prospective effect. It also emphasized that Section 25(4) of the Customs Act, 1962 mandates that exemption notifications operate from the date of issuance unless expressly made retrospective.
The Tribunal held that the decision in Flextronics Technologies was per incuriam for failing to consider Section 25(4), and placed reliance instead on its later ruling in InterGlobe Aviation Ltd. v. Commissioner of Customs (2024), which had been upheld by the Supreme Court in July 2025. Finding merit in Oppo’s submissions, the Tribunal concluded that the company was entitled to the exemption for the entire disputed period and that the July 2019 amendment could not be applied retrospectively. Accordingly, it set aside the differential customs duty demand, including interest and penalty, and allowed the appeal in full.
Appearance
For Appellant: H.K. Sharma, Consultant
For Respondent: Mihir Ranjan, Special Counsel
Cause Title: M/s. Oppo Mobiles India Pvt. Ltd. Versus The Principal Commissioner of Customs (Import)
Case No: Customs Appeal No. 51026 Of 2020
Coram: Justice Dilip Gupta (President), P.V. Subba Rao (Technical Member)
