2024 (10) TMI 1189 - AT - Customs

Classification of imported goods - Poly Crystalline Silicon (C-Si), Solar Photovoltaic Modules (Solar Modules) - to be classified under CTH 85414011 or under CTH 8501 of the Customs Tariff Act? - burden to prove - HELD THAT - The fact that the Solar Modules imported by the Appellant did contain bypass diodes has not been disputed by the Adjudicating Authority or before us during the hearing. It is settled law that burden to prove classification is on the revenue and the department has tried to discharge the same burden by placing reliance on the test report provided by IIT Kanpur Test Report. As per the said report it is certified that the sample of solar panel is equipped with simple elements (for example, diodes to control direction of the current) which can supply electric power directly to an external DC load. Further the said report clarifies that the supporting field test reports of the panel was to illustrate the typical V-I characteristics of the solar panel and the panel is not equipped with any type of convertor/regulator for trolling the generated power. In addition, there is no storage device integrated with the solar panel. This clearly shows that the test report is not conclusive and cannot be relied upon for determining classification in the present case in as much as the expert agency has admitted that the required test to find out if the solar modules had passing diodes is not possible at the laboratory. Further despite approaching Department of Electrical Engineering, IIT Kanpur the department was informed that the test could not be carried out due to non availability of samples. It can therefore be stated that the imported goods were not tested on vital parameters as clarified in circular issued by the board and accordingly the contention of the Appellant that the test report of IIT Kanpur cannot be taken as a conclusive document to determine whether the solar modules were capable of transferring power to external load merits acceptance. While the Department has failed to substantiate its stand of classifying imported solar modules under CTH 8501, the Appellant has submitted evidence in favour of classification under CTH 8541. In the present case having accepted the classification of similar goods, the department cannot be permitted to take a contra stand more so in absence of any evidence in support of the purported different stand. The said stand further appears to be contrary to the clarification issued by CBIC which was binding on the department. The demand under Section 28 cannot be confirmed in absence of finalisation of assessment, and are of the view that the same is settled in their favour in view of various decisions placed in compilation filed during the hearing. The Solar Panel imported by the Appellants merit classification under CTH 8541 and as a result the impugned orders in the captioned Appeals are set aside - appeal allowed.

Summary

Issues Involved:
1. Classification of imported "Poly Crystalline Silicon (C-Si), Solar Photovoltaic Modules" under CTH 85414011 versus CTH 8501.
2. Validity and conclusiveness of the IIT Kanpur Test Report.
3. Burden of proof for classification and reliance on expert opinions.
4. Consistency in classification decisions across different jurisdictions.
5. Issuance of Show Cause Notice (SCN) before finalization of provisional assessment.

Issue-wise Detailed Analysis:

1. Classification of Imported Solar Modules:
The central issue in the appeals was the classification of "Poly Crystalline Silicon (C-Si), Solar Photovoltaic Modules" (Solar Modules) imported by the Appellant. The Appellant classified the modules under CTH 85414011, claiming exemption from customs duty under Notification No. 24/2005-Cus. The Customs Department, however, proposed reclassification under CTH 8501, which would negate the exemption. The classification hinged on whether the solar modules were equipped with elements that supply power directly to an external load. The Tribunal found that the solar modules contained bypass diodes, which do not supply power directly to an external load, thus supporting classification under CTH 8541 as per the Harmonized System of Nomenclature (HSN) and CBEC clarifications.

2. Validity and Conclusiveness of the IIT Kanpur Test Report:
The Customs Department relied on a test report from IIT Kanpur, which was inconclusive regarding the presence of blocking diodes, crucial for classification under CTH 8501. The Tribunal noted that IIT Kanpur admitted its inability to test for blocking diodes. The report was deemed insufficient to support the Department's classification claim, as it did not conclusively establish that the modules were capable of supplying power directly to an external load.

3. Burden of Proof for Classification and Reliance on Expert Opinions:
The Tribunal emphasized that the burden of proof for reclassification lies with the Department. The Appellant provided a Chartered Engineer's Certificate and other evidence indicating the absence of blocking diodes, which was not adequately countered by the Department. The Tribunal criticized the Adjudicating Authority for dismissing expert opinions without justification, highlighting the necessity for the Department to provide conclusive evidence when challenging an assessee's declared classification.

4. Consistency in Classification Decisions Across Different Jurisdictions:
The Tribunal noted that similar solar modules imported by a sister concern of the Appellant were classified under CTH 8541 by another Commissionerate, a decision accepted by the Department. The Tribunal stressed the need for uniformity in classification decisions, citing Supreme Court precedents that prohibit contradictory stances by the Department on identical issues. The Tribunal found the Department's contrary position in the present case unjustifiable.

5. Issuance of Show Cause Notice Before Finalization of Provisional Assessment:
The Appellant argued that the SCN was issued prematurely, as the provisional assessment had not been finalized. Although the Tribunal did not delve deeply into this procedural argument, it acknowledged the settled legal position that demands under Section 28 should follow the finalization of assessments. However, the Tribunal's decision on the merits rendered this issue moot.

Conclusion:
The Tribunal concluded that the Solar Modules imported by the Appellant were correctly classifiable under CTH 8541, thereby entitling the Appellant to the claimed customs duty exemption. The impugned orders were set aside, and the appeals were allowed, granting consequential relief to the Appellant.