LED Modules Imported For Street Lights Attract 10% Customs Duty, Not 20% As Lamp Parts: CESTAT Delhi

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that LED modules imported for manufacturing street lights cannot be classified as parts of lamps and lighting fittings merely because they are intended for use in street lights.

A coram comprising Officiating President Dr. Rachna Gupta and Technical Member Hemambika R. Priya observed that while street lights are covered under the category for lamps and lighting fittings, “the usage/utility of the imported goods is not relevant for deciding classification.”

The dispute concerned LED modules imported by Elektron Lighting Systems Private Ltd. for manufacturing LED lights and fixtures. For a consignment imported on January 30, 2019, the company had declared the goods under an electrical goods tariff heading and paid Basic Customs Duty (BCD) at 10%.

Customs took the view that the modules belonged under the category covering lamps, lighting fittings and their parts, attracting BCD at 20%, and demanded differential duty.

The dispute also covered earlier imports between February 23, 2015 and December 20, 2018. Customs alleged short payment of duty on those consignments and issued a show cause notice proposing recovery of ₹72.81 lakh, along with interest and penalties.

The importer contended that the goods consisted of multiple LEDs arranged on a single panel and did not contain the control driver or circuitry needed to regulate the electrical input. The arrangement of several LEDs on one panel, it argued, only increased the intensity of light and did not change the essential character of the goods as LEDs.

The department maintained that the modules were parts of lamps used for exterior lighting, including street lights, and therefore fell under the category covering lamps and lighting fittings, which carried a 20% BCD.

The bench examined the relevant tariff entries and HSN Explanatory Notes. It noted that the tariff specifically covers LED lamps, while the separate category relied on by the department covers lamps, lighting fittings and their parts where they are “not elsewhere specified or included”.

The imported goods contained multiple LEDs arranged in a definite structure to produce greater luminance than a single LED. The bench observed that the presence of multiple LEDs did not change their character as LEDs. It also noted that the modules did not contain active elements such as a driver or control gear.

The absence of a driver or control gear meant that the modules could not operate as imported, the bench observed. Their intended use in street lights, however, did not determine their tariff classification.

The bench relied on the principle that classification has to be determined with reference to the condition of goods at the time of import, rather than their intended purpose. It cited the Supreme Court's decision in Pioneer Embroideries Ltd. v. Commissioner of Customs, Mumbai on this point.

The bench also noted that the category covering lamps and lighting fittings applies to goods that are “not elsewhere specified or included”.

Since LED lamps are specifically covered under the category for LED lamps, the residuary category could not be invoked to classify the imported goods under the lamps and lighting fittings heading.

The bench ultimately held that the goods belonged under the category covering LED lamps and attracted BCD of 10%. It therefore found that there was no short payment of customs duty as alleged by the department.

It set aside the findings in both Orders-in-Original dated February 22, 2021 and April 2, 2019, upheld the Order-in-Appeal dated October 27, 2021, dismissed the department's appeal and allowed Elektron's appeal.

For Appellant: Advocates B.L. Narasimhan, Anurag Kapur and Ashwin Sundaram, 

For Department: Rajesh Singh, Authorised Representative.