2018 (11) TMI 401 - AAR - GST

Classification of manufactured item - items used for manufacture of Solar Cells - whether parts for manufacture of Photovoltaic Cells/Solar Cells to be covered under Entry 234 of Schedule-I of Notification No. 1/2017-Integrated Tax (Rate), dated 28-6-2017 or not? Held that - It is clear from the whole manufacturing process that silicon wafer is the most important input for the manufacture of solar cells which is treated with the various chemicals during the different steps of texturization, diffusion, junction edge isolation anti-reflection coating, etc. The various chemicals used during the manufacturing process have been specified in Table A from Sr. No. 2-13. These chemicals, though used in the process, yet get consumed & lose their independent identity . To qualify as being part of the product for the purpose of aforesaid notification, the item should maintain substantial independent physical identity as when it is used in the final product. All these items mentioned in Table A from Sr. No. 2-13, instead of being treated as parts for the purpose of Entry 234 of the Notification No. 1/2017-IGST (Rate), can only be treated as inputs and do not qualify as parts for the manufacture of Photovoltaic/ solar cells. Ruling - The items used for manufacture of solar cells as listed in Table A, procured by the applicant do not qualify to be termed as Parts for the manufacture of Photovoltaic/ Solar cells for the purpose of Entry 234 of Schedule-I of Notification No. 1/2017-lntegrated Tax (Rate), dated 28-6-2017.

Summary

Issues:
Interpretation of whether items used for manufacturing solar cells qualify as parts for the purpose of Entry 234 of Schedule-I of Notification No. 1/2017-Integrated Tax (Rate), dated 28-6-2017.

Analysis:
1. Admission and Hearing Process:
The application filed under section 97 of the Central Goods & Services Act, 2017 and Himachal Pradesh Goods & Services Act, 2017 by M/s. Jupiter Solar Power Ltd. was admitted after scrutiny. The applicant sought an advance ruling on the applicability of a notification under the provisions of the Act.

2. Facts and Question for Ruling:
The applicant, engaged in manufacturing solar photovoltaic cells, procures essential components listed in Table A. The main issue was whether these items qualify as parts for the manufacture of photovoltaic cells under the relevant notification.

3. Applicant's Interpretation:
The applicant argued that the items listed in Table A, especially silicon wafers, are crucial for solar cell manufacturing. They contended that these items should be considered parts for solar cells' manufacture to qualify for a lower IGST rate of 5%.

4. Observation and Decision:
The Authority analyzed the manufacturing process and the nature of the items. It was observed that while the items in Table A are used in the manufacturing process, they do not maintain substantial independent physical identity in the final product. The Authority cited the Customs Tariff Act and relevant headings to support its decision.

5. Ruling:
The Authority ruled that the items listed in Table A, procured by the applicant for manufacturing solar cells, do not qualify as 'Parts for the manufacture of Photovoltaic/Solar cells' under Entry 234 of Schedule-I of the notification.

This detailed analysis of the judgment provides insight into the interpretation of the relevant provisions and the decision-making process of the Authority for Advance Ruling in Himachal Pradesh.