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TMI Blog2024 (9) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... llary functions which enhance their utility. For instance, they sense when there is a power cut in the grid and start converting the direct current from the battery into alternate current and supplying it for household use. When the power is restored, the inverter senses it and reverses the system and starts charging the battery using the power from the grid. High quality inverters used at home also ensure that the sine wave quality of the power is good and there is no adverse affect on the devices at home or their performance. Many inverters used at home also have displays which indicate the voltage, level of charge, etc. All these intelligent functions of the domestic inverters are because of the semi-conductors embedded in them. However, they do not cease to be inverters because of these additional functions. Likewise, the Solar pump Inverter VFD imported by the appellant continues to be an inverter and must be classified as such - the correct classification of the imported goods is as inverter under CTI 8504 40 90 and not as other semi-conductor devices under CTI 8541 50 00 as claimed by the appellant. When the assessment is finalized through the order-in-original, can a demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment. The demand under section 28, interest under section 28AA and penalty under section 114A of the Customs Act are set aside. The appeal is party allowed. - HON BLE JUSTICE MR. DILIP GUPTA , PRESIDENT And HON BLE MR. P. V. SUBBA RAO , MEMBER ( TECHNICAL ) Shri T. Viswanathan , Shri Akhilesh Kangria and Ms. Madhura Khandekar , Advocates for the appellant Shri Rakesh Kumar , Authorized Representative for the Department ORDER P. V. SUBBA RAO M/s Shakti Pumps India Limited appellant filed this appeal to assail the order-in-appeal dated 19.06.2019 impugned order passed by the Commissioner (Appeals), Central Goods and Service Tax and Central Excise, Indore, whereby he upheld the order-in-original dated 21.12.2018 passed by the Joint Commissioner and dismissed the appeal filed by the appellant. The Joint Commissioner had decided proposals made in the show cause notice SCN dated 21.09.2020. The operative part of this order is as follows :- (i) I order that the Bill of Entry No. 8655149 dated 19.03.2015 should be finally assessed, classifying the above referred imported goods under Chapter Head 85044010. (ii) I order for denial of the benefits under Notification 24/ 2005-Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g personal hearing, resisted the proposals in the show cause notice. However, the Joint Commissioner passed the order-in-original as indicated above, which decision has been upheld by the Commissioner (Appeals) in the impugned order. 3. Aggrieved, the appellant filed this appeal before us. 4. Learned counsel for the appellant made the following submissions :- (i) The demand could not have been confirmed under section 28 of the Customs Act before finalizing of provisional assessment and, therefore, the entire demand is bad in law. (ii) The imported goods are correctly classifiable under CTI 8541 50 00 because Heading 8541 covers semi-conducted devices into photo sensitive devices. Solar Power Generating Systems convert sunlight into electricity, which however, produce any form of direct current and under low voltage. The Solar Pump Inverter VFD maintains the output frequency which is necessary for successful operation of water pumping systems. (iii) This is not just an inverter, but it also modulates the frequency of the electricity and for this reason it is also known as frequency inverter. Thus, the imported VFD are not conventional inverters and are not classifiable under CTH 850 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not just an inverter but it also modulates the frequency of the electricity. Therefore, it cannot be called an inverter and it should only be called a semi-conductor device because it functions using a semi-conductor. 9. We have considered submissions on both sides on question of classification. 10. The functions of the imported goods are not in dispute. Solar Panels generate electricity in the form of direct current at low voltage. The Solar Pump Inverters convert this low voltage direct current received from the solar panels into alternate current of the requisite voltage. This is similar to the inverters which are used in homes as a back up in case of power cuts. When the main power is on, the inverter uses it to charge the 12-voltage battery. When the power is off, it supplies the electricity from the battery to the home converting it into alternating current of the required voltage. This function of the inverter in the imported goods is not in dispute. The submissions by the learned counsel for the appellant is that the Solar Power inverter also has certain other functions including monitoring and ensuring that the correct frequency of the electricity is generated. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chips and semi-conductors and also perform several ancillary functions which enhance their utility. For instance, they sense when there is a power cut in the grid and start converting the direct current from the battery into alternate current and supplying it for household use. When the power is restored, the inverter senses it and reverses the system and starts charging the battery using the power from the grid. High quality inverters used at home also ensure that the sine wave quality of the power is good and there is no adverse affect on the devices at home or their performance. Many inverters used at home also have displays which indicate the voltage, level of charge, etc. All these intelligent functions of the domestic inverters are because of the semi-conductors embedded in them. However, they do not cease to be inverters because of these additional functions. Likewise, the Solar pump Inverter VFD imported by the appellant continues to be an inverter and must be classified as such. 14. For these reasons, we find that the correct classification of the imported goods is as inverter under CTI 8504 40 90 and not as other semi-conductor devices under CTI 8541 50 00 as claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant under section 114A of the Customs Act. This section reads as follows : 114A. Penalty for short-levy or non-levy of duty in certain cases. - Where the duty has not been levied or has been short-levied or the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (2) of section 28 shall also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (2) of section 28, and the interest payable thereon under section 28-AB, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available subject to the condition that the amount o ..... 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