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2020 (9) TMI 1225 - AAR - GSTClassification of goods - solar power generating system - classified under chapter 85 or not - What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT - As per Rule 2b of General Rules for interpretation of the first schedule (Import Tariff), any reference in a heading to a material / substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. As per Rule 3a of the said Rules of interpretation, the heading which provides the most specific description shall be preferred to heading having more general description. According to Rule 3b of the Rules of interpretation, in case Rule 3a is not applicable, the goods shall be classified as if they consisted of the material/ raw material which give their essential character. In the applicant's case, the essential character to Solar Power Generating System is Solar Panel consisting of multiple solar cells - Chapter Note 9 of Chapter 85 states that for the classification of the articles defined in this Note, headings 8541 and 8542 shall take precedence over any other heading in this Schedule, except in the case of heading 8523. As such, the four digit HSN of Solar Power Generating System is 8541. What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT - The Ministry of New and Renewable Energy (MNRE) in various instances has also approved entire BOQ consisting of various parts e.g. cables, module, monitoring structures, spares etc. as essentials of Solar Power Generating System - Solar Panel, Inverter, Controller and Battery are essential components of 'Solar Power Generating System'. But, we also hold that cable monitoring structures are supplementary components of 'Solar Power Generating System'.
Issues Involved:
1. Correct 4-digit HSN code classification for solar power generating system under Chapter 85. 2. Components and technical requirements that constitute a solar power generating system under Chapter 85. Issue-wise Detailed Analysis: 1. Correct 4-digit HSN code classification for solar power generating system under Chapter 85: The applicant sought an advance ruling on the correct 4-digit HSN code classification for solar power generating systems. The applicant classified it under Chapter 8541 based on industry practice. The jurisdictional officer suggested that the classification could fall under Chapter 8541 or 8543 depending on the actual use. The relevant HSN codes under Chapter 8541 are: - 8541: DIODES, TRANSISTORS AND SIMILAR SEMI-CONDUCTOR DEVICES; PHOTO SENSITIVE SEMI-CONDUCTOR DEVICES; INCLUDING PHOTO VOLTAIC CELLS, WHETHER OR NOT ASSEMBLED IN MODULES OR MADE UP INTO PANELS; LIGHT EMITTING DIODES; (LED); MOUNTED PIEZO-ELECTRIC CRYSTALS. - 854140: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED). - 85414011: Solar cells whether or not assembled in modules or panels. - 85414012: Solar cells, assembled in modules or made up into panels. The ruling relied on the General Rules for Interpretation of the First Schedule (Import Tariff), specifically Rule 2b, Rule 3a, and Rule 3b. It was determined that the essential character of the Solar Power Generating System is the Solar Panel consisting of multiple solar cells. Chapter Note 9 of Chapter 85 prioritizes headings 8541 and 8542 over other headings. Therefore, the 4-digit HSN code for the Solar Power Generating System is 8541. 2. Components and technical requirements that constitute a solar power generating system under Chapter 85: The applicant sought clarification on what constitutes a solar power generating system under Chapter 85 and the various components and technical requirements involved. The ruling referred to the AAR of Uttarakhand's decision in the case of M/s Eapro Global Limited, which identified four main components: - Solar Panels: Convert sunlight into electricity using photovoltaic cells. - Inverters: Convert DC electricity from solar panels to AC electricity. - Controllers: Prevent overcharging and under-discharging of lead-acid batteries. - Batteries: Store solar electricity and provide a stable power supply. The Ministry of New and Renewable Energy (MNRE) has approved entire Bills of Quantities (BOQ) consisting of various parts as essential components of Solar Power Generating Systems. These include cables, modules, monitoring structures, and spares. The ruling concluded that Solar Panels, Inverters, Controllers, and Batteries are essential components of a Solar Power Generating System. Cables and monitoring structures are considered supplementary components. Ruling: 1. HSN Code Classification: The 4-digit HSN code for 'Solar Power Generating System' is 8541. 2. Constituent Components: Solar Panels, Inverters, Controllers, and Batteries are essential components of a 'Solar Power Generating System'. Cables and monitoring structures are supplementary components. This ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
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