Strict construction of exemption notifications denied input and SAD relief for solar module inputs, while the Solar PV Glass claim was remanded.

Exemption under Notifications No. 6/2006-CE and 12/2012-CE was held unavailable for imported or externally procured inputs used in Solar Modules, because the entries were construed strictly and applied only to parts manufactured and consumed within the factory of production. On that basis, SAD exemption also failed as it depended on the underlying customs and excise relief. The BCD claim for Solar PV Glass was remanded for fresh examination because an alternate exemption claim had not been considered, while the Edge Tape demand was not pressed. The extended period of limitation was held unavailable since the clearances were disclosed in returns, and penalty was deleted.

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Issues: (i) Whether exemption under Notification No. 6/2006-CE dated 01.03.2006 and Notification No. 12/2012-CE dated 17.03.2012 was available on inputs used in the manufacture of Solar Modules; (ii) whether exemption from SAD was available; (iii) whether exemption from BCD in respect of Solar PV Glass and Edge Tape was available; and (iv) whether the demand for the period 01.04.2009 to 30.04.2011 was barred by limitation.

Issue (i): Whether exemption under Notification No. 6/2006-CE dated 01.03.2006 and Notification No. 12/2012-CE dated 17.03.2012 was available on inputs used in the manufacture of Solar Modules.

Analysis: The exemption entries covered non-conventional energy devices and, in the relevant lists, separately referred to parts consumed within the factory of production of such parts for manufacture of the listed goods. The Court held that this language confined the benefit to parts manufactured and consumed within the factory, and did not extend to imported or externally procured inputs used in the final product. The exemption notification had to be construed strictly, and ambiguity, if any, had to be resolved in favour of the Revenue.

Conclusion: The exemption was not available to the appellant on the imported or procured inputs.

Issue (ii): Whether exemption from SAD was available.

Analysis: The claim to SAD exemption depended on the availability of the underlying customs and excise exemption benefits. Since the appellant was held not entitled to the relevant exemption on the inputs, the foundation for SAD relief failed.

Conclusion: The appellant was not entitled to exemption from SAD.

Issue (iii): Whether exemption from BCD in respect of Solar PV Glass and Edge Tape was available.

Analysis: The demand relating to Edge Tape was not pressed. As regards Solar PV Glass, the record showed an alternate claim for exemption under the cited customs notifications, but that claim had not been examined in the de novo order. The matter therefore required reconsideration on that limited question.

Conclusion: The question of exemption from BCD on Solar PV Glass was remanded for examination, while the demand relating to Edge Tape stood undisturbed.

Issue (iv): Whether the demand for the period 01.04.2009 to 30.04.2011 was barred by limitation.

Analysis: The dispute turned on interpretation of the exemption notifications and the appellant had disclosed the relevant clearances in returns. On those facts, invocation of the extended period was not justified, and duty, if any, was confined to the normal period.

Conclusion: The extended period of limitation was not available.

Final Conclusion: The exemption claims on the impugned inputs and SAD were rejected, the extended period was set aside, penalty was deleted, and the BCD issue on Solar PV Glass was sent back for fresh examination.

Ratio Decidendi: An exemption notification granting benefit to parts consumed within the factory of production is to be construed strictly and cannot be extended to externally procured or imported inputs unless the language clearly covers them.

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