2023 (2) TMI 619 - AT - Customs

Rejection of Classification of imported goods - Portable Solar Home Electric Light HANS 300 and HANS 150 - classification of imported goods under Customs Tariff Heading, CTH No. 85131010 and IGST S. No. 234 of Schedule I of Notification No. 1/2017-IGST (Rate) dated 28.06.2017 was rejected and the imported goods were held to be classifiable under CTH 85076000 and covered under S. No. 139 of IGST Schedule IV of Notification No. 1/2017-IGST (Rate) dated 28.06.2017 - case of the Revenue is that the imported goods should be classified as per their main function which is that of an accumulator - recovery alongwith interest and penalty - HELD THAT - The imported goods in question are designed for the purpose of performing several complementary or alternative functions viz. (a) generation of electricity solar energy; (b) storing the electricity so generated or collected through four other different means; and (c) supplying electricity to the in-built LEDs as well as for charging mobiles and running electrical devices. Principal Function - HELD THAT - Evidently, their heart is the storage which can be done by five different means, one of which is charging using in-built solar panel. The power so generated can be used for several purposes and not only for using the LED lamps built into it the goods. Thus, they have multiple inputs and multiple output options. The imported goods can be used regardless of which input source is used or what the output purposes are but they cannot be used without the accumulator. Therefore, in our considered view, they deserve to be classified as accumulators under CTH 8507. Whether the classification of the imported goods under IGST. S. No. 234 of Schedule I of the IGST Notification 1/2017 covers solar power based devices is correct? - HELD THAT - The notification does not place any restriction of the Customs Tariff Heading and it applies so long as such devices fall under Chapter 84 or 85 of the Customs Tariff. Evidently, the goods falling under 8507 would also be entitled to classification under Schedule I at S. No. 234 if they are solar power based. There can be no manner of doubt that they are solar power based. The reason this classification was not accepted by the adjudicating authority is that they are not SOLELY based on solar power and other power can also be used charged the devices - the adjudicating authority has erred in coming to this conclusion because the Notification does not say devices based solely on solar power but says solar based devices . It does not in any way forbid the alternative sources of power to support them. Simply because there are four other alternative means through which they can be charged, it does not mean that the imported goods are not solar power based devices. Therefore, the imported goods merit classification under 234 of Schedule I of Notification 1/2017. Consequently, the demand for IGST differential duty along with interest cannot be sustained. The essential nature of the imported goods to be that of accumulators, the appellant s contention that they should be classified under CTH 85013120 as DC generators cannot be accepted and consequently no refund of customs duty is admissible to the appellant. As the demand for differential IGST itself is not sustainable, the question of interest or imposition of penalty under Section 112 or 117 also do not arise - the impugned order confirming the demand for differential IGST along with interest under Section 112 117 on the appellant is set aside. Appeal disposed off.

Summary

Issues Involved:
1. Classification of imported goods.
2. Applicability of IGST notification schedules.
3. Recovery of differential IGST with interest.
4. Refund of differential customs duty.
5. Imposition of penalties under Sections 112 and 117.

Detailed Analysis:

1. Classification of Imported Goods:
The appellant imported goods described as "Portable Solar Home Electric Light - HANS 300 and HANS 150," classified under CTH 85131010 as torches. The Revenue reclassified them under CTH 85076000 as accumulators. The appellant later argued for classification under CTH 85013120 as DC generators. The Tribunal noted that the goods have multiple functions including generating and storing electricity and providing light. However, the essential function is storage, making them accumulators under CTH 8507.

2. Applicability of IGST Notification Schedules:
The appellant argued that the goods should be classified under S. No. 234 of Schedule I of IGST Notification No. 1/2017 as solar power-based devices. The Revenue classified them under S. No. 139 of Schedule IV. The Tribunal found that the goods are indeed solar power-based, despite having alternative charging methods. The notification does not require the devices to be solely solar-powered. Thus, the goods merit classification under S. No. 234 of Schedule I.

3. Recovery of Differential IGST with Interest:
Since the Tribunal concluded that the goods are correctly classified under S. No. 234 of Schedule I, the demand for differential IGST along with interest is not sustainable. The adjudicating authority's decision to recover IGST based on the classification under S. No. 139 of Schedule IV was set aside.

4. Refund of Differential Customs Duty:
The appellant's claim for a refund of excess customs duty paid under CTH 85131010 was rejected. The Tribunal held that the essential nature of the goods is that of accumulators, not DC generators, thus no refund of customs duty is admissible.

5. Imposition of Penalties under Sections 112 and 117:
Given that the demand for differential IGST was not sustainable, the imposition of penalties under Sections 112 and 117 of the Customs Act, 1962, was also set aside. The penalties were linked to the incorrect classification and subsequent IGST demand, which was overturned.

Conclusion:
The Tribunal set aside the impugned order confirming the demand for differential IGST along with interest and penalties under Sections 112 and 117. The appeal was allowed to the extent of reclassifying the goods under S. No. 234 of Schedule I of IGST Notification No. 1/2017 and rejecting the demand for differential IGST. The appellant's request for a refund of customs duty was denied.