Case nº Ruling AAR/07/CE/2011 in Application No. AAR/44/CE-I/08/2009 of Authority for Advance Rulings, September 30, 2011 (case Delta Power Solutions India Pvt. Ltd. Vs The Commissioner of Central Excise)

President:Y.G. Parande, Member and P.K. Balasubramanyan, Chairman
Defense:Central Excise Act, 1944 - Section 3
Resolution Date:September 30, 2011


Y.G. Parande, Member

  1. M/s Delta Power Solutions India Pvt. Ltd., the applicant, is a wholly owned Indian subsidiary company of a foreign company M/s DET International Holdings Limited, Cayman Island and DET Video Technology Ltd., Tortola, British Virgin Islands. The applicant has filed an application under Section 23 C of the Central Excise Act, 1944 seeking an advance ruling regarding its liability to pay excise duty in respect of operations performed by it on battery cells for their clearance as battery bank.

  2. The applicant proposes to import battery cells of two volts each, store the battery cells in a customs bonded store room and effect supplies of battery banks comprising 24 battery cells inserted in battery cabinets along with base stand and connectors etc. After ascertaining the comments of the concerned Commissioner, the application was admitted under Section 23D of the Central Excise Act 1944. The questions on which advance ruling is sought are-

    Q. 1 Whether the nature of activity is trading or manufacturing?

    Q. 2 What is the excise classification for 'battery bank' assembled in a rack with connectors and can an excise invoice be raised for the clearance of 'battery bank'?

    Q. 3 Can the imported VRLA batteries be charged in the bonded warehouse before being cleared from warehouse?

    Q. 4 Can refund of SAD Under Section 3(5) of Customs Tariff Act, 1975 be claimed?

  3. During the course of arguments it was observed that the facts given by the applicant were inadequate to enable the Authority to give a ruling. The Departmental Representative further pointed out that the applicant is having manufacturing / distribution facilities at several places in the country apart from Chennai. In the circumstances the applicant was called upon to file an affidavit describing the entire range of operations connected with the batteries from the stage of their importation to their clearance for supply to their customers.

  4. The applicant then filed an affidavit, a copy of which was made available to the Departmental Representative also. The applicant, while explaining the details of the operations undertaken by its various units at different places, requested that the question on which a ruling was sought from the Authority be confined to the activities of the applicant at Chennai. It was explained that the applicant intends to import Valve Regulating Lead Acid (VRLA) battery cells of two volts each from China and warehouse the same in the Customs bonded warehouse. After receiving an order from the customers, the batteries would be cleared from the bonded warehouse to a non-bonded area adjacent to the bonded warehouse. The battery cells would be tested in this area and recharged, if required, by using the battery charging points in the non-bonded warehouse. The individual battery cells are inserted manually with a mechanical fixture (a kind of lever press) into the cabinets of mechanical shelves. Each shelf contains 4 cabinets and six shelves constitute the containers for the battery bank of 24 battery cells. The batteries are not connected and such connections are made by the customer at the site itself. A battery bank of 48 volts consists of -

  5. 6 mechanical shelves having capacity to insert 4 battery cells in each shelf.

  6. 24 battery cells (2V each).

  7. Bus bars and connectors

  8. Accessories (screws, connectors, cover etc.)

  9. Packing material i.e., wooden pallet, corrugated boxes etc.

  10. The process of connecting in series the various batteries is simple, without the use of any sophisticated device. It is the contention of the applicant that the manner of clearance of battery cells as aforesaid does not bring into existence any new manufactured product and hence it is not liable to pay any excise duty in respect of the processing undertaken by it. According to the applicant, it is engaged in a process of purchase and sale of batteries and hence required to take registration as a central excise dealer. The applicant also requested that it is primarily interested in a ruling on the question whether the activity undertaken by it amounts to manufacture or not. The applicant is not pressing for a ruling on other related questions.

  11. The Commissioner of Central Excise, Chennai-II Commissionerate, the concerned Commissioner, in his comments on the application, has explained that as per the flow chart submitted by the applicant, it is importing two volts battery cells (electric accumulators) and the goods are classified under heading 85072000. The applicant procures the cabinet, base stand, metal connectors and clamps locally. They arrange 4 cells in a cabinet and such cabinets consist of 24 cells wrapped together to form a battery bank which is then placed on wooden pallets for convenience of transportation. The clamps and metal connectors are separately packed and sent along with the battery bank to their customers. According to the Commissioner, "though a commercial nomenclature has been given by the dealer as battery bank it is nothing but a cluster of batteries (electric accumulators - 85072000). As such...

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