1995 (3) TMI 231 - AT - Customs

Issues Involved:
1. Classification of imported components for Solar energy equipment under Customs Tariff.
2. Applicability of exemption under Notification No. 120/81-C.E.
3. Classification for the purpose of Countervailing Duty (CVD).
4. Reclassification authority of the Collector.

Detailed Analysis:

1. Classification of imported components for Solar energy equipment under Customs Tariff:
The appellants challenged the order of the Collector (Appeals), Bombay, which rejected their claim for classifying the imported components under Heading 84.17(1) of the Customs Tariff for customs duty. The Collector instead classified the goods under the residuary Heading 84.65 of the Customs Tariff. The appellants argued that the components should be classified under Heading 84.17(1), asserting that Concentrating Self Tracking Solar Collectors perform the same function as traditional boilers by converting water into steam or heating oil to high temperatures. The department contended that the imported items were incomplete as they lacked essential components like glass covers and water tubes, thus could not be classified as a complete product under Heading 84.17(1).

2. Applicability of exemption under Notification No. 120/81-C.E.:
The appellants sought exemption under Notification No. 120/81-C.E., which the Collector granted for classification under Item 68 of the Central Excise Tariff for CVD purposes. However, the department argued that the exemption applies only to complete solar collectors, not to parts or sub-assemblies, and since the imported components were incomplete, the exemption was not applicable.

3. Classification for the purpose of Countervailing Duty (CVD):
The Collector classified the goods under Item 68 of the Central Excise Tariff for CVD purposes, which the department contested. The department sought classification under Heading 30A of the CET, which deals with power-driven pumps. The appellants argued that Heading 84.17(1) was appropriate as the imported components involved the treatment of materials by a process involving a change of temperature.

4. Reclassification authority of the Collector:
The appellants contended that the Collector reclassified the goods under Heading 84.65 without due notice to them. The department supported the Collector's reclassification, asserting that the Collector had inherent power to correct and reclassify the classification.

Judgment Summary:
The Tribunal reviewed the submissions and the literature provided by the appellants, which described the equipment as "Concentrated Self Tracking Solar Collector Components." The Tribunal noted that the invoice and order-in-original did not support the Collector's finding that the components were in CKD (Completely Knocked Down) condition. The Tribunal agreed with the department that the absence of essential components like glass covers and water tubes indicated that the imported items were incomplete.

Regarding the classification, the Tribunal analyzed the relevant tariff entries:
- Heading 84.17 pertains to machinery for the treatment of materials by processes involving a change of temperature.
- Heading 84.65 pertains to machinery parts not containing electrical connectors and not classified under any other heading in Chapter 84.

The Tribunal concluded that the imported components did not involve the treatment of materials by processes such as heating or steaming, as required by Heading 84.17. Therefore, they could not be classified under this heading. The Tribunal also found that the Collector adopted the residuary heading (84.65) without examining other potential headings and without hearing the appellants on this aspect. Consequently, the Tribunal remanded the matter for de novo consideration by the original authorities to determine the appropriate classification for customs duty purposes.

The Tribunal also addressed the issue of CVD classification, noting that the department sought classification under Heading 30A of the CET, which deals with power-driven pumps. The Tribunal deemed it proper to remand this aspect for reconsideration by the original authorities.

Conclusion:
The appeals were disposed of with directions for de novo consideration of the classification for customs duty and CVD purposes by the original authorities. The Tribunal emphasized the need for a thorough examination of all relevant headings and proper hearing of the appellants' arguments.

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