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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 ..... 149 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-Customs dated 01.03.2015, Notification 12/2012-CE dated 17.03.2012 (Sl. No. 332 read with item No. 11 of list 8) and Notification 21/2012-Cus (Sl. No. 1) dated 17.03.2012. (iii) I confirm the demand of total Customs duty of Rs. 11,64,417/- (Eleven Lacs, Sixty four Thousand, Four Hundred and Seventeen only) in terms of the provisions of section 28 of the Customs Act, 1962. The customs duty of Rs. 8,52,939/- is already paid by the party, against the above demand. I order for appropriation of the same. (iv) I order for recovery of interest on differential duty from the party under section 28 AA of the Customs Act, 1962. (v) I impose a penalty of Rs. 11,64,417/- (Eleven Lacs, Sixty four Thousand, Four Hundred and Seventeen only) upon the party under provisions of Section 114A of the Customs Act, 1962". 2. The facts which led to the issue of the impugned order are that the appellant filed the Bill of Entry dated 19.03.2015 to clear goods described as "Solar Pump Inverter - VFD". It cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 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 8504. (iv) The appellant is eligible for complete exemption from payment of duty as the goods fall under Heading 8541. (v) The original authority passed the order finalizing the assessment after issuing a show cause notice calling upon the appellant to explain why the Bill of Entry should not be finalized in a manner. No penalty is imposable in cases involving finalization of provisional assessment under Section 18 of the Customs Act and the consequential demand of duty. (vi) The conditions for imposing penalty under Section 114A of the Customs Act are the same as the conditions for invoking extended period of limitation under Section 28 of the Customs Act namely, collusion, wilful mis-statement or suppression of facts with an intent to evade payment of duty. The appellant did not withhold any information from the department. Therefore, it is evident the appellant acted in a bonafide manner and even for this reason, no penalty can be imposed upon the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted 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. Therefore, according to the learned counsel, it cannot be called an inverter. Since it uses semi-conductors it should be classified as "other semi-conductor device". 11. Goods are to be classified based on their use. Often, there can be more than one use for the same good or machine. What needs to be seen is what is the intended use of the good although it may have additional functions as well. 12. One of the components which are used in most modern goods are the semi-conductors devices (such as chips). Semi-conductor, by definition, is one which allows the electricity to pass in one direction but not in the other. The earliest semi-conductors were in the form of vacuum tubes, such as diodes and triodes. These were then replaced with solid state semi-conductors or transistors which revolutionised electronics. Millions of transistors are incorporated into a very small chip such as a chip of the mobile phone, a memory card of a computer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant 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 the appellant. 15. The appellant's claim of the benefit of Notification No. 24/2005-CUS dated 01.03.2015, Notification No. 12/2012-CE and Notification No. 21/2012-CUS are all based on their claim of this classification. Having decided the classification in favour of the revenue, we cannot hold that the appellant will be entitled to the benefit of these notifications. 16. The next question is whether the Joint Commissioner was correct in confirming the demand under section 28 of the Customs Act. As is evident from the show cause notice and the order-in-original, the goods were assessed provisionally because there was a dispute regarding the classification of the goods. The appellant had also executed a provisional duty bond. The show cause notice proposed to finalize the assessment. The order-in-original finalized the assessment. Once the assessment is finalized, the amount of duty payable is to be determined and necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that where the duty or interest determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the duty or interest as reduced of increased, as the case may be, shall be taken into account: Provided also that in a case where the duty or interest determined to be payable is increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, the benefit of reduced penalty under the first proviso shall be available if the amount of the duty or the interest so increased, along with the interest payable thereon under section 28-AB, and twenty-five per cent. of the consequential increase in penalty have also been paid within thirty days of the c ..... 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