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2022 (6) TMI 528 - AAR - GSTClassification of goods - PV DC Cables manufactured and supplied by Leoni Cable Solutions (India) Pvt Ltd to its Customers (who are into business of manufacturer of Solar Power Generating System or EPC Company setting up a solar power plant) - classifiable under Entry number 234 of Schedule I of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017 liable to CGST at 2.5% or under Entry number 395 of Schedule III of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017 liable to CGST at 9%? Whether the impugned cables which connect the solar modules inverters in a photovoltaic system and are used to carry electricity from the SPGS to the inverters can be treated as parts of the SPGS? - HELD THAT - The applicant is clearly stating that the impugned cables are not a part of the SGPS i.e. the actual System which generates electricity from Sunlight. The impugned cables as per the application have no part to play in the generation of Solar Power which is the function of SGPS. These cables only transfer the electrical energy generated by the SGPS, to the Inverters where such electrical energy is stored for further use - the SGPS generates electrical energy from sunlight and the impugned cables, as any cables, just carries the generated electricity from the SGPS to the Inverters. Further as per Notes to Section XVI of GST Tariff, in Note 2 referring rules for classification of parts of machines, the parts of the articles of heading 8544 have been excluded. The applicant has not been able to bring clearly out as to how the impugned cables can be considered as parts of the SGPS. In fact, the submissions clearly show that it the impugned cables just carry electricity to the inverters and in our opinion the subject cables cannot be considered as a parts of the SGPS and therefore cannot be covered under Sr. No. 234 mentioned above. Another fact to understand is that the said Sr. No. 234 has been totally omitted from Schedule I of Notification No. 01/2017 dated 28.06.2017, vide Notification No. 08/2021 - CTR dated 30.09.2021. Whether the impugned cables can be covered under Sr. No. 395 of Schedule III of Notification No. 01/2017 dated 28.06.2017? - HELD THAT - The description of goods at Sr. No. 395 of Notification No. 01/2017 CTR dated 28.06.2017 is Insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors. - From a reading of para nos 5.7, 5.7.1 and 5.7.2 it is observed that the description of goods in Sr. No. 395 exactly tallies with the Tariff Entry 85.44 which goes to show the intention of the government to classify the impugned goods under Sr. No. 395 of Schedule III of Notification No. 01/2017 CTR dated 28.06.2017 as amended from time to time. Notification No. 41/2017 - CTR dated 14.11.2017 is effective from 14.11.2017. Prior to this date Sr.No. 395 of Notification No. 01/2017 - CTR dated 28.06.2017 covered only Winding wires; coaxial cables; Optical Fiber (Chapter 85.44) and there was another Heading at Sr. No. 161 of Notification on No. 01/2017 - CTR dated 28.06.2017 which covered the impugned cables - the impugned cables are covered under Sr. No. 395 of Schedule III to Notification No. 01/2017 dated 28.06.2017. Sr. No. 395 (taxable @ 18% GST) as amended by Notification No. 41/2017 - CTR dated 14.11.2017. Therefore Sr. No. 395 is applicable in the instant case only with effect from 14.11.2017.
Issues Involved:
1. Classification of PV DC Cables under the appropriate GST tariff entry. 2. Determination of applicable GST rate for PV DC Cables. Comprehensive, Issue-wise Detailed Analysis: 1. Classification of PV DC Cables under the appropriate GST tariff entry: Applicant's Argument: - The applicant, M/s Leoni Cable Solutions (India) Pvt Ltd, manufactures and supplies solar cables known as photo-voltaic DC cables (PVDC cables). - These cables are made from copper conductor with Cross-linked Polyolefin (XLPO) insulation and are used between solar modules and inverters in a photovoltaic system. - The applicant contends that these cables should be classified under Entry number 234 of Schedule I of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017, which covers renewable energy devices and parts for their manufacture, thereby attracting a lower GST rate of 5% (2.5% CGST and 2.5% SGST). Authority's Observations: - The cables are classified under Chapter Heading 8544 of the Customs Tariff Act (CTA). - The specific question is whether these cables can be considered as parts of the Solar Power Generating System (SPGS) and thus be covered under Entry No. 234. - The authority noted that the cables are used to carry electricity from the SPGS to the inverters and not directly involved in the generation of solar power. - The cables do not form an integral part of the SPGS itself but are used for the transmission of electricity generated by the SPGS to inverters. - The authority concluded that the cables cannot be considered as parts of the SPGS and thus cannot be classified under Entry No. 234. Conclusion: - The PV DC Cables cannot be classified under Entry No. 234 of Schedule I of Notification No. 1/2017- Central Tax (Rate) as they are not parts of the SPGS. 2. Determination of applicable GST rate for PV DC Cables: Applicant's Argument: - The applicant also identified Entry number 395 of Schedule III of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017, which covers insulated (including enamelled or anodised) wire, cable, and other insulated electric conductors. - The applicant argued that the PV DC cables should be classified under Entry No. 234 as it is more specific to renewable energy devices, while Entry No. 395 is more generic. Authority's Observations: - The authority examined the description of goods under Sr. No. 395 of Schedule III, which includes insulated (including enamelled or anodised) wire, cable, and other insulated electric conductors. - It was noted that the description of goods under Sr. No. 395 exactly matches the tariff entry 8544, indicating the intention of the government to classify the impugned goods under this entry. - The authority confirmed that the PV DC Cables fall under Sr. No. 395 of Schedule III, attracting a GST rate of 18% (9% CGST and 9% SGST). Conclusion: - The PV DC Cables manufactured and supplied by Leoni Cable Solutions (India) Pvt Ltd are classified under Entry number 395 of Schedule III of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017, liable to GST at 18%. Order: Final Decision: - The PV DC Cables manufactured and supplied by Leoni Cable Solutions (India) Pvt Ltd to its customers will be classified under Entry number 395 of Schedule III of Notification No. 1/2017- Central Tax (Rate) (as amended) dated 28 June 2017, liable to CGST at 9% and SGST at 9%, totaling 18% GST.
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