2019 (1) TMI 484 - AAR - GST

Classification of goods - Solar Evacuated Tube Collector (ETC) - whether the goods fall under CETH 8419 19 or otherwise? - benefit of Sl.No.234, Schedule-I of Notification No.1/2017 Integrated Tax (Rate) dated 28.06.2017 - Held that - The solar water heater and system (domestic type) has been classified under heading 8419 19 20 and the parts of instantaneous or Storage Water heaters (domestic type) are covered under heading 8419 90 10 - The product in the instant case is part of the solar water heater system, which basically comprises of the said tubes and an insulated tank - the instant product merits to be a part of solar water heater systems under the chapter heading 8419. Whether the product of the applicant is entitled for concessional rate under SL.No.234 of the Notification supra or not? - Held that - The solar water heater in question does not appear to be a Solar Power Based Device . Solar Power based Devices would be such a devices which are operated by electricity generated out of solar energy. In such devices first the solar energy. gets converted to electric energy and then the electricity so generated runs the appliance / device - In the instant case the product ETC does not generate electricity at any stage and hence can not be construed as either Solar Power based device or part thereof. Therefore the product ETC is not entitled for concessional rate of 5% IGST under SI.No.234 of Schedule-I of the Notification 01/2017-lntegrated Tax (Rate) dated 28.06.2017, effective from 01.07.2017. Ruling - The product Evacuated Tube Collector (ETC) though falls under Chapter 84 heading 19 but is not covered under SL.No.234 of Schedule-I of the Notification 01 (2017-lntegrated Tax (Rate) dated 28.06, 2017, effective from entitled for concessional rate of 5% IGST.

Summary

Issues: Classification of Evacuated Tube Collectors under Chapter 84 and eligibility for concessional rate under Notification No. 1/2017 Integrated Tax (Rate)

Classification Issue Analysis:
The Applicant, a Private Limited Company, sought an advance ruling on whether Evacuated / Vacuum Tube Collectors (VTC) fall under Chapter 84 of the Harmonized System of Nomenclature (HSN). The Applicant argued that the ETC tubes are essential components of Solar Power based devices, specifically Solar Water Heaters, and should be classified under Chapter 84 heading 19. They contended that the ETC tubes are part of the solar water heater system and should be classified accordingly. The Authority considered the submissions and noted that the product in question, the Evacuated Tube Collector, is indeed a crucial component of solar water heater systems, which operate based on the absorption of solar energy to heat water. Therefore, the Authority concluded that the ETC tubes should be classified under Chapter 84 heading 19 of the Customs Tariff Act 1975.

Concessional Rate Eligibility Analysis:
Regarding the eligibility for the concessional rate under Notification No. 1/2017 Integrated Tax (Rate), the Applicant claimed that the ETC tubes qualify as Solar Power based devices and should be charged at a reduced rate of 5% IGST under Sl.No.234 of the Notification. The Authority analyzed the nature of the product, the Evacuated Tube Collector, which functions by absorbing solar energy to heat water without involving the generation of electricity. The Authority delved into the definition of 'Power' as per The Electricity Act 2003, which clarified that 'Power' refers to electricity. Since the ETC tubes do not generate electricity but directly heat water using solar energy, they do not meet the criteria of being a 'Solar Power Based Device' as defined in the Notification. Therefore, the Authority ruled that the ETC tubes are not entitled to the concessional rate of 5% IGST under Sl.No.234 of the Notification.

In conclusion, the Authority determined that while the Evacuated Tube Collector falls under Chapter 84 heading 19, it does not qualify for the reduced IGST rate under Sl.No.234 of Schedule-I of Notification No. 1/2017 Integrated Tax (Rate) dated 28.06.2017.