EOU denied exemption under Notifications 6/2006-CE and 12/2012-CE for externally procured solar module parts

M/s. HHV Solar Technologies Ltd. (Formerly known as M/s. HHV Solar Technologies Pvt. Ltd.) Versus The Commissioner of Central Excise, Bangalore-II Commissionerate, Bangalore

M/s. HHV Solar Technologies Ltd. (Formerly known as M/s. HHV Solar Technologies Pvt. Ltd.) Versus The Commissioner of Central Excise, Bangalore-II ... Issues Involved:
1. Eligibility for exemption under Notification No.06/2006-CE and Notification No.12/2012-Cus.
2. Eligibility for exemption from Special Additional Duty (SAD).
3. Eligibility for exemption from Basic Customs Duty (BCD) on Solar PV Glass and Edge Tape.
4. Applicability of the extended period of limitation.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption under Notification No.06/2006-CE and Notification No.12/2012-Cus.:
The appellants, a 100% Export Oriented Unit (EOU), imported parts such as Photovoltaic Glass, Solar Cells, Aluminium Profiles, Solder Flux, and Packing materials without payment of duty. They claimed exemptions under Notification No.6/2006-CE and Notification No.12/2012-Cus. for these parts used in manufacturing Solar Modules. The Tribunal had previously denied these exemptions, remanding the matter to examine alternative notifications. The Commissioner, in de novo proceedings, denied these exemptions again, stating that the notifications apply only to parts manufactured and consumed within the factory. The Tribunal upheld this view, referencing previous cases like M/s. Sova Solar Limited and M/s. Raydean Pvt. Ltd., and Supreme Court rulings in M/s. Dilip Kumar and Co., emphasizing strict interpretation of exemption notifications.

2. Eligibility for Exemption from Special Additional Duty (SAD):
The Commissioner confirmed the demand for SAD, asserting that since the appellants were not entitled to BCD and CVD exemptions, they could not claim SAD exemption either. The Tribunal upheld this decision, reiterating that the denial of CVD exemption under Notification No.6/2006-CE and Notification No.12/2012-CE also negates the SAD exemption under Notification No.20/2006-Cus. and Notification No.21/2012-Cus.

3. Eligibility for Exemption from Basic Customs Duty (BCD) on Solar PV Glass and Edge Tape:
The Commissioner confirmed the demand for BCD on Solar Photovoltaic Glass and Edge Tape, noting that the appellants did not claim exemptions for these items under any alternate notifications. The appellants conceded the demand for Edge Tape but contested the BCD on Solar Photovoltaic Glass, claiming exemptions under Notification No.25/1999-Cus. and Notification No.24/2005-Cus. The Tribunal remanded this issue to the Commissioner for re-examination, as the Commissioner had not considered these exemption claims.

4. Applicability of the Extended Period of Limitation:
The Tribunal found that the issue pertained to the interpretation of exemption notifications, which the appellants were allowed to claim as an alternative plea in de novo proceedings. Therefore, the Tribunal ruled that invoking the extended period of limitation was not justified. Consequently, penalties and interest were set aside, and differential duty with interest was to be calculated for the normal period of limitation.

Conclusion:
The Tribunal upheld the denial of exemptions under Notification No.6/2006-CE and Notification No.12/2012-Cus. and the corresponding SAD exemptions. It remanded the issue of BCD exemption on Solar Photovoltaic Glass for re-examination and ruled out the applicability of the extended period of limitation. The appeals were disposed of accordingly, with specific directions for computation of liability.

(Order pronounced in Open Court on 27.09.2024.)