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TMI Blog2023 (8) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... I [ 2004 (1) TMI 127 - CESTAT, MUMBAI ] wherein the levy of Anti-Dumping Duty was involved, on the imported Compact Fluorescent Lamp (CFL) with choke or without choke. At the time of import, the product under import was in a semi-finished form and post importation, a few items were procured from the domestic market and subsequently, CFL was manufactured in India. It was the contention of the Revenue that the imported item had attained the essential characteristics of a Compact Fluorescent Lamp and hence, had sought to collect Anti-Dumping Duty in terms of Notification No. 128/2001 dated 21.12.2001. It was inter alia held Since the notification imposes ADD only on CFL, one will have to see whether what is imported is CFL at all. It has been brought out that the importers in addition to the imported parts procured local components up to a certain value to manufacture CFLs. The proposition, therefore, which emerges from the above is that a semi-finished or intermediate product could not be subjected to Anti-Dumping Duty or safeguard duty in a case where a specific complete / finished product is the subject matter of investigation by the Designated Authority and the same is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the product which was imported by the assessee is a Solar Cell in all respects, and hence, the product is the same as under investigation before the competent authority? - HELD THAT:- The silicon in the form of diffused wafers, discs or chips, with or without molybdenum discs, classifiable under Chapter 38/85 are always permitted for import and clearance with concessional rate of duty for the purpose of manufacture of the finished product namely, hybrid micro-circuits or semiconductor devices. Solar Cells, which are otherwise called photovoltaic cells, are one of the semiconductor devices and for the manufacturing of semiconductor devices, silicon in the form of Diffused Wafers/Undiffused Wafers has been recognized by the Government as one of the inputs. The clarity available in the form of notifications continued until the last of such notifications by the Government, dated 30.06.2017 - It is now equally relevant to analyse reports of experts in the field which are placed on record. Admittedly, report of IIT, Madras has alone been considered by the Commissioner in the impugned order whereas, the appellant has relied on the report of NISE. A harmonious reading of the availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intermediate product for manufacture of Solar Cell. Considering the arrangement of Tariff, intermediate / semi-finished product is equated as parts of semi-conductor devices and thus, the contention of the appellant that the same is classifiable under CTH 8541 9000 is acceptable. Thus, the product imported was clearly different and distinct from the Product Under Consideration and therefore, the same did not attract safeguard duty. Hence, the demand of safeguard duty as confirmed in the impugned order and the reclassification of the product imported is unsustainable, for which reason the impugned order is set aside. On the date of import, admittedly, the classification was sought under CTH 3818 and the appellant also availed the benefit of exemption from payment of Basic Customs Duty in terms of Sl. No. 1 of Notification No. 24/2005 (Customs) dated 01.03.2005, as amended. It is also significant to note that the said Notification, as amended, vide Sl. No. 23, also grants exemption from Basic Customs Duty to goods classifiable under CTH 8541. Therefore, on the date of import, the goods classifiable under both CTH 3818 and CTH 8541 were exempt from payment of Basic Customs Dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra Pradesh for manufacture of Solar Cells. The appellant is shown to have been importing various capital goods from overseas, to be used in the manufacture of Solar Cells, from Diffused / Undiffused Silicon Wafers / Blue Wafers. Diffused / Undiffused Silicon Wafer / Blue Wafer is claimed to be the basic input / raw material required for the manufacture of Solar Cells and therefore, it appears that after installing the capital goods, the appellant regularly imported Blue Wafers / Silicon Wafers from China, which were cleared through Custom House, Sea Port, Chennai and also Air Cargo Complex, Chennai. 2.1.2 It appears that at the time of import, the appellant sought for classification of the imported goods under CTH 3818 and paid applicable Basic Customs Duty (BCD) at the above places of import. 2.1.3 It appears that in 2019, the Directorate of Revenue Intelligence (DRI) initiated verification process of the imports made by the appellant on the pretext that the imported items were Solar Cells which were classifiable under Customs Tariff Item No. 8541 4011. Based on the above, it appears that the DRI assumed that the above import warranted imposition of safeguard duty in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported product to be held as solar cells not assembled into panels or modules. iii. Imposition of safeguard duty of Rs.20,30,36,749/- in terms of Notification No. 01/2018-SG as mentioned in column 24 of the Worksheet-II; iv. To confiscate the goods seized vide seizure memorandum dated 18.04.2020 as mentioned in column 26 of the Worksheet-II I under Section 111(m) of the Customs Act, 1962; v. Enforcement of bank guarantee executed for the bills of entry; vi. To hold the imported goods, which were not available for seizure as mentioned in column 26 of Worksheet-II, liable for confiscation under Section 111(m) of the Customs Act, 1962; vii. Imposition of penalty under Section 112 ibid. 2.5 It appears that Notification No. 19/2021-Customs (N.T./CAA/DRI) dated 22.02.2021 was issued whereby a common adjudicating authority was appointed, namely, the Commissioner of Customs, Custom House, Sea Port, Chennai, before whom the appellant filed its detailed reply dated 19.03.2021 to the Show Cause Notice issued. 2.6 Thereafter, it appears that a personal hearing was given on 09.11.2022 wherein the appellant appears to have participated. 3. It appears that the Ministry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Consideration. Report of DG, Safeguards states that imposition of safeguard duty would protect the domestic industry and their company also made substantial investment in India and generated employment. The imported item i.e., Blue Wafer is processed further wherein various high grade metal pastes such as Silver and Aluminium Pastes are used for creation of fingers (horizontal metallic lines) and busbars (vertical metallic lines). This process is called screen printing. The busbars are the backbone of most power applications, providing the critical interfaces between the power modules and the outside world. Busbars wire Solar Cells together to create high voltage; as more busbars are added, the idea is that more electrons are able to pass through and power efficiency increases. After screen printing, sintering process, also called as firing process , is carried out in which the front metal contacts are formed in a Silicon Solar Cell. In this process, the Thick Film Paste is dried at about 150 C to remove much of solvents to avoid cracks and voids. The above two processes result in value addition up to 50%. The imported item was not accepted for testing by MNRE as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: - (i) The classification of the imported goods in India is governed by the General Rules of Interpretation (GRI) and the Harmonized System of Nomenclature (HSN). (ii) CTH 3818 covers such crystals, polished or not, whether or not root coated with a uniform epitaxial layer. (iii) Those more extensively worked devices (e.g., by selective diffusion) fall in heading 85.41 as semiconductor. (iv) Undiffused Silicon Wafer is covered under Customs Tariff Item 38180010. Doped chemical elements of Chapter 28 and chemical compounds containing additives in the forms mentioned in HSN 2017 (other than Undiffused Silicon Wafer) fall under the remaining category of Other under Customs Tariff Item 38180090. (v) The appellant had imported products which had been doped with both Boron and Phosphorus and had undergone extensive work, including diffusion. (vi) The words extensively worked and selective diffusion indicate the type of goods which are out of the scope of CTH 3818. CTH 3818 covers doping of the order of parts per million alone; that those extensively worked are beyond the scope of CTH 3818. (vii) CTH 3818 allows processes up to doping of the silicon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t electrical connections. (iii) In the test report of IIT, Madras dated 15.10.2020, it has been clearly observed that the imported Blue Silicon Wafer exhibited photovoltaic effect which is sufficient to hold that the impugned goods fall under the definition of Solar Cells for imposition of safeguard duty. 5.2.2 He has recorded the request of the appellant for referring the matter to the Tax Research Unit (TRU), but however, finds that the imported goods have already been tested at IIT, Madras and thus there was no need for any further reference to the TRU. 5.2.3 In view of the above, he finds that the goods imported satisfy the only criteria for imposition of safeguard duty i.e., exhibition of photovoltaic effect and hence, the said goods cannot be held to be intermediate products. 5.3 Thus, the Ld. Commissioner has: - (a) Rejected the declared classification of the goods imported and ordered reclassification, as proposed in the Show Cause Notice; (b) Held the imported product as Solar Cells not assembled into panels or modules and covered by the Product Under Consideration as per the DGTR Notification F.No.22/1/2018-DGTR dated 16.07.2018, as amended, for le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, a substantial process of manufacturing in the form of screen printing and sintering process are to be carried out in India and these important aspects have been completely overlooked and in a mechanical and arbitrary manner the original authority has decided the issue, which is contrary to the provisions of the Customs Act, 1962 and also against the Safeguard Duty Regulations. Ground No.5 : Under the International Trade Law, more specifically, as per the guidelines of WTO / GATT, the PUC in the investigation by the DGTR and the product under import should be one and the same or like article for levy of safeguard duty and this is the vital element for levy of safeguard duty. The impugned order has been passed in direct conflict with the basic framework of the International Trade Law. Ground No.6 : Various judicial decisions and Notifications issued by the Department of Revenue are referred to by the appellant to establish that the imported item is only an intermediate product and also a semi-finished product or an un-finished product. The original authority has failed to consider the decisions of the quasi-judicial / judicial authorities and thus the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF APPELLANT 10.1 The contentions of the Ld. Advocate, taken out during the hearing, could be summarized, as below: - The investigation of the Directorate General of Trade Remedies was based on a complaint made by the domestic manufacturers of a complete Solar Cell and hence, the PUC was a complete Solar Cell and not a Diffused Silicon Wafer, which is only an intermediate product. A member country of the WTO is empowered to initiate emergency remediate measures as per Article XIX of GATT, 1994, against import of a particular product and in the domain of International Trade Law, the product, which is subject to investigation by the authorities, is the Product Under Consideration (PUC). The scope and ambit of the definition of PUC is to be determined taking into account many factors like technical and scientific characteristics of the product, identification of the product in the technical and market parlance, fungibility of the product and the interchangeability, substitutability of the similar or like article in the technical and market parlance. Product Under Consideration (PUC), as defined in the Notice of Initiation of Safeguard Investigation dated 19.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of photons. 10.2.3 Ld. Advocate, while referring to the report of IIT, Madras, further submitted that the said report is incomplete in all respects and thereafter, took us through the observations recorded, which read as under: - a. The sample of Solar Cell does not have printed gridlines (busbars and fingers). b. Screen printing is not completed. c. Since the grid lines are not there for collection of all the electrons generated on the solar cell, the multimeter probes record the voltage/current parameters in the immediate vicinity of the probes on the Solar Cell. d. Hence, the observed values cited in the test report will be on the much lower side than the voltage/current parameters than that of the same Solar Cell with grid lines. 10.2.4 He would also submit that the appellant had also forwarded two samples i.e., one containing Diffused Silicon Wafer and another one, which was a finished Solar Cell to NISE, but however, NISE had declined to test the Diffused Silicon Wafer and they only tested the finished Solar Cell. 10.2.5 Ld. Advocate drew our attention to the test report of NISE, which is at pages 702 to 706 of Vol.III of the appeal paper-book, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India:- I. Feeder II. Screen Printing (i) Printing Machine 1: Silver Slurry(Back Electrode Slurry) (ii) Printing Machine (iii) Flipper (iv) Printing Machine 4: Silver Slurry (Busbar Slurry) (v) Printing Machine 5: Silver Paste (Finger Slurry) III. Sintering Furnace IV. Testing Sorting V. EL Inspection VI. Manual Inspection VII. Packing Process 10.3.3 He would also refer to the written synopsis filed during the course of arguments wherein each of the above processes has been explained along with pictorial depiction of the initial product and the product at the end of each of the above mentioned processes. 10.3.4 He would again refer to the report of IIT, Madras where there is an observation that the imported item does not have screen printing and also lacks busbars and fingers, to submit that busbars are the backbone of most power applications providing the critical interfaces between power modules and the outside world; busbars are the vertical lines within Solar Cells which are nothing but metallic wires which carry cumulative current of fingers and interconnect others to develop modules; fingers are the horizontal thin lines within So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functions of a Solar Cell are conversion of heat or light into electricity, collecting generated current without loss and transmitting / conducting the so collected electricity through busbars and that market parlance is very relevant since it should be recognized as such in the market and capable of being sold / used as such. He also contended that the item that was imported could at best be called as Parts of Semi-conductor Devices ; semiconductor device is a finished and functional product in all respects whereas the imported Diffused Silicon Wafer is only an intermediate product which can only be classified as parts of semi-conductor device, but nevertheless, the classification has no relevance in determining the scope and ambit of levy of safeguard duty. 10.4.4 He further submitted that determination of classification and levy of duty based upon Notification are two independent processes in the eye of law. Though not mutually exclusive, the Notification has to be applied based on the language without imparting external meaning to the description of the product as described in the Notification. 10.5.1 Ld. Advocate would submit that the appellant had placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted Silicon Wafer can never perform the function of collection of electricity or conduction of the same and thus lacks the essential characteristic of Solar Cell. 10.6.5 In the absence of any specific entry for intermediate products which do not contain all the essential characteristics, the product under import was sought to be classified as Parts of Semi-conductor Devices and since the issue was highly technical in nature, it is contended that there could be no mala fides attributable to the appellant just for the sake of confiscation of the imported goods and imposition of penalty. 10.7. Ld. Advocate would further contend that the issue on hand is on interpretation of notification and also classification and hence, no mens rea could be alleged to levy penalty under Section 112 of the Customs Act. 11. In view of the above submissions, Ld. Advocate would request for setting aside the impugned order and thereby the various demands, confiscation, redemption fine and penalty levied on the appellant as confirmed therein. SUBMISSIONS ON BEHALF OF REVENUE 12.1 Per contra, Ld. Assistant Commissioner would submit, at the outset, that the appellant had resorted to mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission filed by the Revenue. 13. We have heard the rival contentions, we have carefully gone through the documents placed on record as well as the literature referred to during the course of arguments and we have also gone through the judgements / orders referred to during the course of arguments. The preliminary point of dispute appears to be the classification, whether under CTH 3818 or CTH 8541. The Revenue re-classified under CTH 8541, allegedly on the ground of mis-classification by the appellant and consequently, has ordered for confiscation of the imported goods apart from levy of penalty and fine. 13.1 In the above factual background, we find that the impugned order mainly deals with two major issues, namely: - i. That the product under import and the Product Under Consideration are one and the same; and ii. The imported products are appropriately classifiable under CTH 8541 4011 under the category of Finished Solar Cells , liable for safeguard duty, with interest, fine and penalty. ISSUES 14. After hearing both sides, we find that the following issues arise for our consideration: - (1) Whether the product under import was classifiable under CTH 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, the common element is the determination of the definition of Product Under Consideration (PUC). Normally, a Notification is interpreted based on the text / language employed therein and since the issue involved in the case on hand is relating to a Notification issued under Section 8B ibid. read with the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, the literature available in determining the meaning of PUC would be very handy. 15.3 We note that PUC has been a subject matter of interpretation / examination both by courts of law as well as various clarifications available as issued by the Central Board of Indirect Taxes. 16. At this juncture, it is useful to refer to a Circular issued by the Central Board of Indirect Taxes dated 08.05.2012 (F. No. 354/5/2012-TRU) relating to Anti-Dumping Duty whereby a clarification was sought as to whether stainless steel circles of various sizes imported and assessed to Anti Dumping Duty on actual width / diameter was a subject matter, to levy Anti-Dumping Duty. The Central Board of Indirect Taxes issued the following clarification: 3. The issue has been examined. DA in the preliminary finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). As such, even if stainless steel circles are classifiable as cold rolled flat products of stainless steel falling under CTH 7219, the same would not attract any anti-dumping duty in terms of Notification No. 14/2010-Cus., dated 202-2010. It is requested that all field formations under your jurisdiction may be advised accordingly and all pending disputes, if any, may be decided accordingly. PRODUCT UNDER CONSIDERATION [PUC] 17.1 From the above, it is clear that the specific product described as Product Under Consideration alone is subject to levy of duty and not any other product, even though classifiable under the same Tariff Heading. In order to understand the meaning of PUC mentioned in the Notification, the provisional findings, final findings and review findings of the Designated Authority are required to be referred to. Hence, in the case on hand, the PUC, as specified in the Notification, is Solar Cells whether or not assembled in modules or panels . To determine the scope and ambit of the meaning of the PUC, we have to consider primarily four important documents, namely: - i. Notification for Initiation of Safeguard Investigation dated 19.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /68/2017 dated 05.01.2018, the said authority issued a Preliminary Findings, perhaps based on the investigation that was initiated, the relevant portion of which is extracted below:- 5.1 The Product Under Consideration (PUC) 5.1.1 The PUC is Solar Cells whether or not assembled in modules or panels classifiable under Tariff Heading 8541 and Tariff Item 85414011 of the Customs Tariff Act, 1975. Solar Cells are also known as Photovoltaic Cells in the market parlance. Photovoltaic technology enables direct conversion of sunlight intro electricity at the atomic level and Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. (Emphasis supplied) and thereafter, recommended for levy of provisional safeguard duty on the import of the PUC. 19. The Final Findings / report of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. The Customs tariff classification is, however, indicative only and is in no way binding on the scope of the product under consideration . (Emphasis supplied) 20.4 A final recommendation to extend the safeguard duty for one more year was made. 21. It appears that after the final investigation report, there was a visit by the DRI to the factory premises of the appellant on 11.03.2020, on which date a mahazar was drawn, during which time it appears that the appellant had submitted Flow Process Chart . 22. Consequently, a notice dated 11.11.2020 was issued by the Additional Director General, DRI wherein it was indicated that the classification of the imported product was CTH 8541 as Solar Cell and not under CTH 3818 as Undiffused Silicon Wafe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the DGTR. PUC, as defined in the original investigation as well as the final report, are reproduced below for convenience: - The product under consideration in the original investigation was defined as follows: Solar Cells whether or not assembled in modules or panels classifiable under Tariff Heading 8541 and Tariff Item 85414011 of the Customs Tariff Act, 1975. Solar Cells are also known as Photovoltaic Cells in the market parlance. Photovoltaic technology enables direct conversion of sunlight intro electricity at the atomic level and Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. . Taking into account the change in the customs tariff headings, the PUC is defined as follows: Solar Cells whether or not assembled in modules or panels classifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts procured local components up to a certain value to manufacture CFLs. 28.3 We find that the above ratio was adopted / followed in M/s. Anchor Daewoo Industries Ltd. v. Commissioner of Customs, Kandla [2007 (214) E.L.T. 230 (Tri. Ahmd.)] which was subsequently upheld by the Hon ble Delhi High Court in the case of M/s. Plaza Lamps and Tubes Ltd. v. Commissioner of Customs [2007 (209) E.L.T. 182 (Del.)]. 28.4 The order in the case of M/s. Anchor Daewoo Industries Ltd. (supra) was challenged before the Hon ble Supreme Court by the Revenue which was thereafter dismissed by the Hon ble Apex Court as reported in 2016 (331) E.L.T. A138 (S.C.). 29.1 The proposition, therefore, which emerges from the above is that a semi-finished or intermediate product could not be subjected to Anti-Dumping Duty or safeguard duty in a case where a specific complete / finished product is the subject matter of investigation by the Designated Authority and the same is defined as the Product Under Consideration. 29.2 In the case on hand, we find that the appellant has established its factory in India, installed capital goods and is undertaking substantial manufacturing process and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e: After the Positive Electrode line is formed, the Blue Wafer is further moved to the next printing process BSF (Aluminium Back Surface Field). Printing BSF Purpose: After applying the BSF Slurry on the back side of Blue Wafer, such as re-doping, removing PN junction on the back of the cell, reduce carrier recombination, increase the voltage. Further, the Blue Wafer is again moved to drying oven. Drying Oven #2: To protect BSF from damage when the Positive Electrode is printed. (iii) Flipper Flipper Process: This process helps the Blue Wafer to flip another side, from back side to front side printing process. (iv) Printing Machine 4: Silver Slurry (Busbar Slurry) In this, the Blue Wafer is further moved to another printing process to form Negative Electrode on the Blue Wafer. Printing Busbar Paste: The Busbar Slurry will be applied on the front side of the Blue Wafer to print the main grid lines on wafer which will help in collecting photoelectric current and provide a Negative Electrode of the cell. Further the Blue Wafer is moved to drying oven. Drying Oven #3 : Wafer is dried to ensure that the printed busbar lines are prote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est, namely, as to whether it is a completely new item. Raw material of a manufactured product has to be distinguished from the manufactured product. The distinction between processing and manufacturing is well known. 29.5 In the case on hand, admittedly, what is imported is Diffused Silicon Wafer / Blue Wafer, which is claimed to be a semi-finished / intermediate processed product and not a finished product. If it is to be assumed to be the final product, then it has to be sold as such in the open market. The burden is on the person who claims that it is a solar cell, to discharge the same by establishing that fact. But the revenue having alleged that what was imported was solar cell, has not discharged their initial burden to establish that the same could be sold as such in the open market and could be used as such, by the end user. The processes of screen printing and sintering carried out in India assume significance in the manufacturing process, thereafter transforming the semi-finished / intermediate product into a finished functional product capable of performing essential functions as a Solar Cell which could be sold in the market as a Solar Cell. 30. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration (PUC): The product under consideration is Solar Cells whether or not assembled in modules or panels classifiable under Tariff Heading 85414011 of Chapter 85 of the Customs Tariff Act, 1975. Photovoltaic Solar Cells are also known as Photovoltaic Cells in the market / trade parlance. Photovoltaic technology enables direct conversion of sunlight into electricity at the atomic level. Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. To make practical use of the Solar Cells, these are placed in panels or modules. In other words, a solar panel / module is a packaged, connected assembly of Solar Cells. The electrical connections are made to the Solar Cells in series to achieve the desired output wattage and / or in parallel to provide the desired current capability. The Customs tariff classification is indicative only and is in no way binding on the scope of the present investigation. As per the Final Findings of review investigation dated 18.07.2020 (paragraph 45): 45. Taking into account the change in the customs tariff headings, the PUC is defined as follows: Solar Cells whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert sunlight directly into electricity by the photovoltaic effect. 33.4 The last part of the definition reads as under: The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. 33.5 The cumulative effect of the above sentences is that the photovoltaic cells which converts sunlight into electricity are connected so that purported object could be achieved. That means to say the Solar Cell, which has achieved or exhibited the photovoltaic effect, alone is not sufficient, the same should be able to give the desired result for which electrical connections are made. So, it should not just be exhibiting photovoltaic effect, but the same should be capable of carrying into electrical connections with transmitting the electricity so produced in order to achieve the desired object. 34. From the above, it could be understood that the PUC, which was the subject matter of investigation by the competent authority, was finished Solar Cell in all respects and known and recognized in the market parlance as such. 35. Now we have to analyse: whether the product which was impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrode slurry is applied on the back side of the Blue Wafer, which results in the formation of Positive Electrode line. Then, Silver slurry is applied and thereafter, the Blue Wafer is moved to the drying oven where the wafer is dried to ensure that the printed electrode is protected from damage during the further steps of printing. 37.2.2 Once Positive Electrode line is found, the Blue Wafer is further moved to the next process called Aluminium BSF. After applying the BSF slurry on the backside of blue wafer such as re-doping-removing PN junction on the back of the cell, thereby to reduce carrier recombination and increase the voltage. The same is thereafter again dried. 37.2.3 The Blue Wafer is thereafter moved to the next process to form Negative Electrode on the Blue wafer. Busbar slurry is then applied on the front side of the wafer to print the main gridlines on the same, which is essential for collection of photoelectric current and provide a Negative Electrode of the cell and thereafter, the same is again moved into the drying oven. 37.2.4 After the process of applying Silver paste i.e., finger slurry, the Blue Wafer is subjected to the process of sintering. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover minimum area consistent with the ability to collect the electricity produced by the Solar Cells. 41. With the above background, it is essential now to look into the various notifications issued by the Board right from the year 1987 wherein concessions/rebates were extended: - i. Notification No. 83/87-Cus. dated 01.03.1987 ii. Notification No. 98/91-Cus. dated 25.07.1991 iii. Notification No. 88/94-Cus. dated 01.03.1994 iv. Notification No. 58/95-Cus. dated 16.03.1995 v. Notification No. 64/95-Cus. dated 16.03.1995 vi. Notification No. 13/97-Cus. dated 01.03.1997 vii. Notification No. 25/99-Cus. dated 28.02.1999 viii. Notification No. 21/2002-Cus. dated 01.03.2002 ix. Notification No. 12/2012-Cus. dated 17.03.2012 x. Notification No. 12/2016-Cus. dated 01.03.2016 xi. Notification No. 50/2017-Cus. dated 30.06.2017 41.1 The relevant portion of Notification No. 83/87-Cus. dated 01.03.1987 is extracted below: - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in the corresponding entry in column (3) of the said Table . TABLE S. No. Notification No. and date Amendment (1) (2) (3) 6. 123/87-Customs, dated the 1st March, 1987 In the said notification, in the opening portion, for the words non-conventional forms of energy , the words non-conventional forms of energy or silicon ingots/ wafers used in the manufacture of solar cells or solar cells or Photovoltaic modules shall be substituted. (Emphasis supplied) 41.4 The relevant portion of Notification No. 64/95-Cus. dated 16.03.1995 is also reproduced hereunder: - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of the Table annexed and falling within one or more Chapters of First Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) (4) 24. 38 Silicon in the form of undiffused wafers, discs or chips Semiconductor devices. 25. 38, 85 Silicon in the form of diffused wafers, discs or chips (with or without molybdenum disc) Hybrid microcircuit or semiconductor devices. (Emphasis supplied) 42.1 From the above, we find that there have been numerous notifications, with the first one clearly indicating granting exemption to the imports of silicon in the form of diffused wafers, discs or chips, falling either under Chapter 38 or Chapter 85, which are used in the manufacture of semi-conductor devices. This also gives us a hint of the understanding of the Government that items like Diffused Silicon Wafer / Blue Wafer are only parts which are used in the manufacture of products like semiconductor devices or Solar Cells. 42.2 The common takeaway from the above notifications is that silicon in the form of diffused wafers, discs or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf what the report of NISE revealed and its importance. They have clearly indicated that the said authority did not test the Blue Wafer samples since the same did not qualify as a Solar Cell, referred to the multi-crystalline Solar Cell and the test report showing results for Voltage (open circuit) as 0.63 V, Cell Efficiency as 17.42% and Pmax as 4.28 W (power at maximum power point). The increase in cell efficiency is clearly the result of printing of busbars and formation of fingers which are essential to call the product as a complete Solar Cell. It thus justifies the fact of rejection of Blue Wafers for testing by the NISE since the same was just an intermediate product and not a Solar Cell. The above is placed on record at page 704 of the appeal paper book. 45. We see that as of now, there are two reports available on record: one clearly in favour of the importer, and the other, which is incomplete and inconclusive and apparently testing process was not carried out in terms of international standards, which merely says that the product in question exhibited photovoltaic effect. 46. Not being satisfied, it appears that the importer also approached for a third report from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icon Wafer is an incomplete, intermediate product which cannot be sold as a Solar Cell in the market and as such, it has no use. 48.1 In the Show Cause Notice, the authority has referred to various technical reports about the Solar Cell technology. The importer has also referred to another set of technical report on the very same subject in order to draw clear difference between the imported Diffused Blue Wafer and a complete Solar Cell. As a response letter of DRI CZU, which is placed on record, reveals that there was a doubt in the minds of the adjudicating authority and therefore, the said authority sought for clarification from the competent authority DGTR for classification of the imported product. 48.2 The clarification sought for from the DGTR, has been extracted in the earlier paragraphs of this order, but however, the same are repeated for the sake of convenience: - i. whether any interested party sought inclusion/exclusion of blue silicon wafers/blue wafers from the ambit of safeguard duty? ii. whether the understanding of this office (DRI) with regard to the leviability of safeguard duty on silicon wafers was in variance with opinion of DGTR, and if so, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two products in question are different and it is only a prima facie view. In such a scenario and having approached the competent authority - DGTR for clarifications, the Commissioner should have approached the Tax Research Unit as well as suggested, since any levy of safeguard duty would have wider implications/ramifications thereby affecting the business as well, of the importer and their stakeholders. 50.2 Hence, we have to accept the following factual aspects: a. The essential function of the Solar Cell is in threefold i.e., firstly, conversion of heat or light into electricity, which is otherwise called as photovoltaic effect. b. Secondly, collecting the generated current without loss through fingers and lastly, transmitting the collected electricity through busbars. c. As per the technical inputs available and as admitted in the Show Cause Notice itself, the last two processes i.e., the collection of electricity and conduction of electricity are two important and vital functions and such functions are created through the manufacturing process undertaken in India. d. Therefore, it is the submission of the appellant that the item can be called as Parts of Sem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a finished product. 2. Essential character It is a diffused wafer and only capable of converting sunlight into electricity and in the absence of screen printing, it is dumb without any essential character. It has all the essential characteristics such as, capable of converting sunlight into electricity, collecting the electricity through fingers and conducting the electricity through busbars. 3 Ability to perform essential functions It cannot perform any essential function in the absence of gridlines and electrodes. It is capable of performing all essential functions of Solar Cells. 4 Processes carried out Diffused with anti-reflecting coating and no screen printing / no sintering process carried out. No process is required, since it is a manufactured product. Upon importation, the processes such as screen printing and sintering are carried out. Testing and inspection are also done prior to packing the manufactured Solar Cell. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a panel since it is a manufactured and finished product. 12 Is it a photovoltaic device It is not a device since it is incomplete / semi-finished and it is only an intermediate product. It is a device capable of performing all the essential functions of Solar Cell. 13 Is it marketable Cannot be marketed for making solar panel or solar module. It can be marketed as such since it has all technical elements and functional utility. 14 Customs Tariff Heading of the Item 8541 90 00 Since it is not a finished semi-conductor device and it is a processed and intermediate product and not a manufactured Solar Cell, which lacks the capacity to perform essential functions. 8541 40 11 under the category of finished Solar Cells semiconductor device. Judicial Precedents: 52.1.1 In the case of M/s. Keltron Power Devices Ltd. v. Collector of Customs, Cochin [1987 (28) E.L.T. 93 (Tribunal)], it has been observed as under: - 20. It is pertinent to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down in M/s. Keltron Power Devices Ltd. (supra) has been followed by the Tribunal, New Delhi in the cases of M/s. Semi-Conductors Ltd. v. Collector of Customs [1989 (42) E.L.T. 236 (Tribunal)] and M/s. Bharat Heavy Electricals Ltd. v. Collector of Customs, Bombay [2002 (149) E.L.T. 79 (Tri. Del.)]. The order in the case of M/s. Semi-Conductors Ltd. (supra) was appealed before the Hon ble Supreme Court, but the same was dismissed by the Hon ble Supreme Court as reported in 1997 (93) E.L.T. A131 (S.C.). In the order of M/s. Semi-Conductors Ltd., the order in the case of M/s. Keltron Power Devices Ltd. (supra) was followed and hence by the doctrine of merger the order in M/s. Keltron Power Devices Ltd. has thus attained finality. We also find that it has been clearly demonstrated by documentary evidence that substantial value addition has been made in India by the appellant on the semi-finished / intermediate product and due to such intricate manufacturing process, the Solar Cell has emerged, which is a new product that could be sold / marketed as such. 52.3 In the case of In Re: Purbachal International and Another [1985 (21) E.L.T. 673 (Cal.)], the Hon ble High Court has obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued not in their scientific or technical sense, but as understood in commercial parlance. Reference may be made in this connection to the decisions of Supreme Court of India in Ramavatar Budhai Prasad v. Assistant Sales Tax Officer, Akola, AIR 1961 S.C. 1325: M/s. Motipur Zamindary Company v. State of Bihar. AIR 1962 S.C. 660 and State of West Bengal v. Washi Ahmed, AIR 1977 S.C. 1638 and Porritia and Spencers (Asia) Limited v. State of Haryana, reported in 1983 E.L.T. 1607 (S.C ) = AIR 1979 S.C. page 300. In view of the above decision of the Supreme Court and in view of the statutory definitions of cement under the Imported Cement (Control) Order, 1978 and the booklets issued by the Indian Standard Institution it is no longer open for the Collector of Customs to ignore such definition and to contend that the cement in the market parlance also includes white cement. Such a view taken by the Collector of Customs is without any basis or materials on record and such a finding on the face of it is perverse. A perverse view taken contrary to the view prevailing in the market parlance and commercial parlance in the facts and circumstances of the case cannot be accepted. 52.4 In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r further notes that Revenue has produced no material to show that the impugned goods are marketed or marketable as felt at the stage at which they are removed from the respondents factory, while respondents have produced technical and trade opinions from I.I.T., Delhi and from traders to show that they are not recognised as felt technically or commercially. 53.1 The first issue is with regard to the determination of classification. In the impugned order, the Commissioner has held that the imported Diffused Silicon Wafer has to be classified under CTH 8541 4011 under the specific entry of Solar Cells. The adjudicating authority has reached the said conclusion with the aid and support of Rule 2(a) of the General Rules of Interpretation. It was the observation of the Commissioner that the imported Diffused Silicon Wafer has the capacity to convert sunlight into electricity, which is otherwise called photovoltaic effect and hence, held that it has the essential characteristics of Solar Cells. On the contrary, it was the submission of the appellant that the imported product is only an intermediate product and not a finished product. In the context of the manufacturing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t CTH 8541 deals with finished goods and also parts of semiconductor devices and covered under CTH 8541 90. There is no specific entry for an incomplete or an intermediate product. Though in a conventional sense, the imported Diffused Silicon Wafer is not a part of Solar Cell, for the purpose of classification, it has to be dealt as a product other than a finished Solar Cell. The imported item cannot be equated with a finished Solar Cell. A Solar Cell is manufactured from diffused Silicon Wafer and hence, the imported item is only a raw material or a base material or can be considered as a part or intermediate product for manufacture of Solar Cell. Considering the arrangement of Tariff, intermediate / semi-finished product is equated as parts of semi-conductor devices and thus, the contention of the appellant that the same is classifiable under CTH 8541 9000 is acceptable. 53.5 We also emphasize here, that in the definition of Product under Consideration , the competent authority in its findings, had given importance and significance only to the description of the product and the Tariff Heading of the product is only for reference and indicative purposes. Therefore, change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issuance of the Show Cause Notice. 55.3 It is the settled position of law that in cases where classification of goods is involved, confiscation by re-classifying the same is not possible, that too alleging mala fide intention, since, in our view, the same amounts to a different view adopted by the authorities. Hence, it becomes necessary for the Revenue to establish mala fide intention on the part of an importer for classifying the goods under import and in the absence of any proof, there will be no scope to suspect the bona fides of an importer. We find support from the decision of the Hon ble Supreme Court in the case of Union of India v. M/s. Garware Nylons Ltd. [1996 (87) E.L.T. 12 (S.C.)] wherein, at paragraph 15, it has been categorically held as under: - 15. In our view, the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mare assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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