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TMI Blog2023 (2) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (c) supplying electricity to the in-built LEDs as well as for charging mobiles and running electrical devices. Principal Function - HELD THAT:- Evidently, their heart is the storage which can be done by five different means, one of which is charging using in-built solar panel. The power so generated can be used for several purposes and not only for using the LED lamps built into it the goods. Thus, they have multiple inputs and multiple output options. The imported goods can be used regardless of which input source is used or what the output purposes are but they cannot be used without the accumulator. Therefore, in our considered view, they deserve to be classified as accumulators under CTH 8507. Whether the classification of the imported goods under IGST. S. No. 234 of Schedule I of the IGST Notification 1/2017 covers solar power based devices is correct? - HELD THAT:- The notification does not place any restriction of the Customs Tariff Heading and it applies so long as such devices fall under Chapter 84 or 85 of the Customs Tariff. Evidently, the goods falling under 8507 would also be entitled to classification under Schedule I at S. No. 234 if they are solar power based. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with interest under Section 28AA. Penalty of Rs. 22,60,000/- was imposed under Section 112 and penalty of Rs. 1,00,000/- was imposed under Section 117 of the Act. 2. The facts of the case, in brief, are that the appellant imported goods described as "Portable Solar Home Electric Light - HANS 300 and HANS 150", imported goods under five bills of entry classifying them under CTH 85131010 and S. No. 234 of Schedule I of IGST Notification No. 1/2017. At this stage, it needs to be pointed out that a vast majority of the goods which are imported into the country are cleared on the basis of self assessment of duty by the importer under Section 17(1) while some goods are re-assessed to duty under Section 17(5). If the goods are cleared on the basis of self assessment, the bills of entry are audited after clearance and this process is commonly referred to as Post Clearance Audit. 3. CTH 85131010 reads as follows: "85.13 - Portable electric lamps designed to function by their own source of energy (for example, dry batteries, accumulators, magnetos), other than lighting equipment of heading 85.12. 851310 - Lamps; 85131010 - Torch…………. 85139000 - Parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule I of this notification. 8. A show cause notice dated 7.2.2020 was issued to the appellant and after considering the reply submitted by the appellant the impugned order was passed. 9. In its reply, the appellant took the stand that not only are the goods are classifiable under S. No. 234 of Schedule I of the IGST notification but they are liable to be classified under CTH 85013120 and, therefore, not only was the appellant not liable to pay the IGST at higher rate but it was also eligible for refund of the excess basic customs duty paid by wrongly classifying the imported goods under 85131010. The reason for this assertion is that, according to the appellant, the main function of the imported goods is that of solar generator and neither are they solar lamps nor are they accumulators. Having generated solar power, it has to be stored and it is being stored in the battery. The other means of charging the battery are only alternative means of charging provided in them. The imported goods are, therefore, to be classified as electric generators under 8501. 10. The prayer in the appeal before us is as follows: (i) Set aside the impugned OIO dated 14.08.2020 passed by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The essential feature of the goods is generation of DC power using solar energy which can be used to charge mobiles or run other electrical appliances such as computers and televisions in addition to using the LED lights. Therefore, the essential feature of the imported goods being that of the generator, appropriate CTH is 85013120 which reads as follows:- Tariff Item Description Unit Rate of Duty Preferential Area Rate 85013120 DC generators U 10% (v) Revenue has mis-construed the imported goods as accumulators. Their main function of the product is that of solar power generation and storage of the power so generated is incidental to the generation. (vi) The adjudicating authority has relied on the Chartered Engineer's opinion which is not correct and no opportunity for cross-examination has been given to the appellant and the statement of the Chartered Engineer could not have been used without following procedure prescribed under Section 138B of the Act which reads as follows: "138B. Relevancy of statements under certain circumstances.- (1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veral electrical appliances. Thus, the heart of the imported goods is the accumulator and the solar panel which generates the electricity and the LED lights which emit light are not the main features. In case of composite machines, classification under Customs Tariff Heading should be done as per that portion of the machine which gives it the essential characteristics. In the imported goods, the solar panel is only one of the five means of charging and the light is one of several uses to which they can be put to. They are also sold based on capacity of storage of electricity of 300 watt hours or, as the case may be, 150 Watt hours. Therefore, the imported goods cannot be classified as solar lamps as the appellant had initially done nor classified as solar generators as the appellant now claims. They are correctly classifiable as accumulators under CTH 8507; (iii) Consequently the appropriate heading under which they should be classified under the IGST Notification 139 of Schedule-IV; (iv) The differential IGST must, therefore, be recovered from the appellant and the entire demand was within the normal period of limitation and extended period of limitation was not invoked; (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hours max 4) AC Charger (3A.50W) - 7-8 hours 5) Solar - 66 hrs (4.5w integrated solar panel) 7-10 hrs (Integrated-60W optional solar Briefcase) 6) Lifecycles - 1000 Cycles to 80% 6) Rated Capacity - 1000-Cycles to 80% 7) Cell Type - Lithium-ion 16. The three competing entries for classification under the Customs Tariff are: 85131010 - Torch 85076000 - Lithium-ion accumulator 85013120 - DC Generators 17. In other words, as per the original classification in the bills of entry etc., the imported goods in question are solar lamps. If Revenue's contention is accepted they are accumulators and if the submission by the appellant is accepted they are DC generators. Each of these three features - the lamp, the accumulator and the generator-explains part of the imported goods. Section Notes 3 and 4 of Section XVI covering the chapters 84 and 85 read as follows: "Note 3 : Unless the context otherwise requires, composite machinery consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solar power" but says "solar based devices". It does not in any way forbid the alternative sources of power to support them. Simply because there are four other alternative means through which they can be charged, it does not mean that the imported goods are not solar power based devices. Therefore, the imported goods merit classification under 234 of Schedule I of Notification 1/2017. Consequently, the demand for IGST differential duty along with interest cannot be sustained. 20. As we have held that the essential nature of the imported goods to be that of accumulators, the appellant's contention that they should be classified under CTH 85013120 as DC generators cannot be accepted and consequently no refund of customs duty is admissible to the appellant. 21. As we have found that the demand for differential IGST itself is not sustainable, the question of interest or imposition of penalty under Section 112 or 117 also do not arise. 22. In view of the above, the impugned order confirming the demand for differential IGST along with interest under Section 112 & 117 on the appellant is set aside and the appeal is allowed to this extent. 23. The miscellaneous application filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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