Strict construction of exemption notifications bars solar inverter exemption where the goods are only a system component.

A grid-tied solar inverter was treated as only a component that converts solar DC into AC power, not as a solar power generating system covered by Serial No. 332 read with List 8 of Notification No. 12/2012-C.E. Because exemption entries must be strictly construed and the claimant must prove that the goods squarely satisfy the notification terms, the inverter did not qualify for exemption. The notification's distinction between specified goods and parts, and the absence of compliance with the prescribed conditions for parts, meant the exemption claim failed and denial of relief was upheld.

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Issues: Whether a grid-tied solar inverter is covered by Serial No. 332 read with List 8 of Notification No. 12/2012-C.E. dated 17.03.2012 so as to qualify as a solar power generating system and earn exemption from additional duty.

Analysis: The notification grants exemption only to the non-conventional energy devices or systems specifically listed in List 8, and the relevant entry covers solar power generating system. The inverter imported by the respondent was found to be only a component used for converting solar DC power into AC power and not the solar power generating system itself. The notification, as amended, also distinguishes between the specified goods and parts, and exemption for parts is available only subject to the prescribed condition. Applying the settled principle that an exemption notification must be strictly construed, and that the burden lies on the claimant to prove entitlement, the claim was held not to fall within the notification. The earlier view favouring liberal interpretation was rejected in light of the strict interpretation rule and the absence of fulfilment of the notification conditions.

Conclusion: The grid-tied solar inverter was held not to be exempt under the notification, and the denial of exemption was sustained in favour of the Revenue.

Final Conclusion: The appeal succeeded, the exemption claim failed, and the impugned order granting relief was set aside.

Ratio Decidendi: An exemption notification must be strictly construed, and a claimant seeking its benefit must establish that the goods squarely satisfy the notification's terms and conditions; a component merely forming part of a larger system does not qualify unless the notification expressly covers it.

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