TaxTMI 
TaxTMI 
2024 (10) TMI 1189
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....olar Project in the state of Uttar Pradesh. For the said purpose, the Appellant imported Solar Modules, i.e. "Poly Crystalline Silicon (C-Si), Solar Photovoltaic Modules" (hereinafter referred as 'Solar Modules' or "the said goods") from Zhejiang Jinko Solar Company Limited, China, under 26 Bills of Entry, during the period February, 2017 to May, 2017, by declaring them as "Poly Crystalline Silicon (C- Si) Solar Photovoltaic Modules and by classifying them under CTH 85414011 and by claiming benefit of Notification No.24/2005-Cus dated 01.03.2005 (hereinafter referred as Notification No.24/2005') which provides for exemption from Customs Duty, on import. 2.2 At the time of the import, the Appellant had submitted Certificate of Origin in support of their claim that the imported goods were rightly classifiable under CTH 8541. The said certificate also contains a remark classifying the said item under CTH 85414030 of the China HS Code, which covers "Bular Cells" 2.3 Basis the apparent information that the Appellant has wrongly claimed the benefit of Notification 24/2005, the Custom Department subjected the said goods to examination and drew a representative sample fro....
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...., there is no storage device integrated with the solar panel. 2.8 Based on the aforesaid inconclusive test report of IIT Kanpur, the Custom Department issued the SCN F. No. V(15) Off./Adj/Cust/53/2017 dated 02.01.2018 asking as to why the said goods imported by Appellant should not be classified under CTH 8501 instead of CTH 8541, the assessment of 26 Bills of Entry should not be finalized by way of classifying the said goods under CTH 8501, proposal of confiscation of the said goods and Customs duty demand of Rs. 12,34,66,642/- along with the interest and equal penalty. It is noteworthy that the said SCN was issued without even finalization the provisional assessment as mandated under the provisions of Section 18 read with Section 28 of the Customs Act, 1962 ("the Act"). In response to the Impugned SCN, the Appellant filed a detailed reply vide letter dated 14.12.2018. 2.9 However, the Respondent has passed the impugned order dated 29.03.2019 wherein it is ordered as under: • the said goods are to be classified under CTH 8501; • confiscation of the said goods under Section 111 (m) and 111 (o) of the Act with an imposition of fine of Rs. 20,00,00,000....
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....hat the panel is not equipped with any type of convertor/regulator for trolling the generated power. In addition, there is no storage device integrated with the solar panel. 6. Basis the said Test Report a Show Cause Notice [SCN] dated 02.01.2018 was issued to the Appellant proposing to recover Customs duty payable on the solar modules, on the ground that Appellant has misclassified the said goods under CTH 8541 instead of CTH 8501. The proposal made in the said SCN has been confirmed by the Commissioner of Customs (Preventive) Lucknow vide the impugned order which is in challenge before us. 7. Learned Advocate Mr. Jitendra Motwani, Advocate and Learned Advocate Mr. B. L. Narasimhan and Learned Advocate Mr. P.C. Patnaik appearing on behalf of the Appellants, made the following submissions: (a) The key factor for determination of classification is whether the imported solar modules are equipped with elements, that enable it to supply power directly to the external load. As per HSN explanatory note if the solar module is not equipped with element, which can supply power directly to an external load then the same is classifiable under CTH 8541. On the other hand, if the....
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....d by the Commissioner. (f) the document on the basis of which the SCN has been issued viz., IIT Kanpur Test Report is not conclusive as they were not equipped to determine if the imported solar modules were capable of passing power to external load and when read with circular/instructions issued by CBIC, it will be clear that the impugned order reclassifying the goods under 8501 is bad in law and deserves to be quashed and set aside; (g) Alternatively, M/s Wardha Solar Maharashtra Pvt Ltd, sister concern of Prayatna Developers, had imported identical Solar Modules and the Department in Nhava Sheva Port had raised the same allegation i.e Solar Modules ought to be classified under CTH 8501, however, the Commissioner of Customs, JNCH, Nhava Sheva after considering the submissions vide Order-in-Original No. 54/2018-19/Commr/NS-V/JNCH dated 23.07.2018 held that solar modules were correctly classified under CTH 8541 and not under CTH 8501 as alleged by the Department. The said decision is accepted by the Department and was placed on record before the Adjudicating authority. It was incumbent on the Commissioner to follow the said decision to maintain uniformity in the de....
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....a motor, an electrolyser etc., then the solar panel/module is classifiable under CTH 8541. c) Solar panel/module without element is classifiable under CTH 8541. 12. The HSN and CBEC clarification has provided for the following distinguishing factor for determining the classification under CTH 8501 vis a vis CTH 8541. CTH 8501- if the solar module is equipped with elements, elements which supply power to the external load i.e. a motor, an electrolyser etc., CTH 8541 - If the solar module is equipped with elements but these elements do not supply the power to an external load i.e. a motor, an electrolyser etc., 13. Further, upon receiving representations from the trade regarding classification of solar modules/panels, CBEC issued clarification vide Instruction No. 08/2018 Cus dated 06.04.2018, relevant extract of the same is reproduced hereunder: a. the solar panels or modules equipped with bypass diodes are classifiable in heading 8541. b. the solar panels or modules equipped with blocking diodes are classifiable in heading 8501. c. the solar panels or modules equipped with blocking diodes and bypass diodes are classifiable....
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....n admitted position that the imported solar modules are not equipped with any elements that can regulate the wattage/voltage of the module or can allow for the storage of power so that the module can function as a generator. In fact, the said fact has been admitted in Para 3 of the IIT Kanpur test report, detailed submission for which is made in subsequent paragraphs. 16. The fact that the Solar Modules imported by the Appellant did contain bypass diodes has not been disputed by the Adjudicating Authority or before us during the hearing. 17. It is settled law that burden to prove classification is on the revenue and the department has tried to discharge the same burden by placing reliance on the test report provided by IIT Kanpur Test Report which has been reproduced in facts above. As per the said report it is certified that the sample of solar panel is equipped with simple elements (for example, diodes to control direction of the current) which can supply electric power directly to an external DC load. Further the said report clarifies that the supporting field test reports of the panel was to illustrate the typical V-I characteristics of the solar panel and the panel is no....
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....partment of Electrical Engineering, IIT Kanpur vide letter dated 24.10.2018 intimated the commercial details of the requisite test which are as under: i. No. of panels :- 05 panels. ii. Total Testing fee :- Rs. 30 ,000 E.9 in the context above I observe that despite the department being ready for payment of testing fee the requisite text could not be conducted due to the unavailability of representative panels i.e. 05 panels max as required by the Department of Electrical Engineering, IIT Kanpur. Therefore I am proceeding to decide the issue as per available records. It is seen from paragraph E.8 and E 9 of the impugned order that Department attempted to obtain an opinion from IIT Kanpur as to whether the imported goods are equipped with bypass diodes or blocking diodes and in reply to the said query the concerned Department of Mechanical Engineering IIT, Kanpur stated that test is not possible in their laboratory. This clearly shows that the test report is not conclusive and cannot be relied upon for determining classification in the present case in as much as the expert agency has admitted that the required test to find out if the solar modules had p....
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....lar modules contains 'bypass diodes'. The last para of the certificate reads as under: I hereby certify that materials (solar PV module) imported by M/s. Prayatna Developers Pvt Ltd against bill of ladings no. GOSUSNH8142222 dated 11.01.2017, GOSUSNH8142223 dated 11.01.2017, GOSUSUNG8489566 dated 12.01.2017 and GOSUNGB489567 dated 12.01.2017 do not supply power directly to an external load. 22. Certificate dated 02.05.2018 issued by PI Photovoltaic Institute (Suzhou) Co Ltd certifies that the imported solar modules only contains 'bypass diodes' and not 'blocking diodes'. Relevant extract of the certificate reads as under: This is to certify that above mentioned Solar PV modules manufactured and supplied by M/s. Zhejiang jinko Solar. Co., Ltd. to M/s. Prayatna Developers Private Limited was inspected and test witnessed during manufacturing at Manufacturer's work by our inspector. Three (3) Nos. diodes provided in Junction box are by-pass diodes for protection of Solar PV modules against overheating due to partial shaded condition and not as blocking diode to control the direction of Power. This certificate issued by the Chartered Engineer has be....
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....eet the terms of the exclusion of the Explanatory Note to heading 85.41 and merits classification under CTH 8541. Blocking Diode: On the other hand, blocking diodes are usually attached in a series to the final output of the solar panel or module, and control the aggregate output for example, preventing a reverse power flow from a connected electric accumulator). Therefore, the function of blocking diodes is to prevent a reverse power flow from connected devices. Since the blocking diode blocks the current in the opposite direction, which can be considered as a control of the direction of the current as mentioned in the Explanatory Note to heading 85.01, therefore, solar modules/panels equipped with blocking diode merits classification under CTH 8501. 4. In view of above, it is clarified that: a. the solar panels or modules equipped with bypass diodes are classifiable in heading 8541. b. the solar panels or modules equipped with blocking diodes are classifiable in heading 8501. c. the solar panels or modules equipped with blocking diodes and bypass diodes are classifiable in heading 8501. The department while issuing the SCN were boun....