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TMI Blog2024 (10) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly 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. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted goods were rightly classifiable under CTH 8541. The said certificate also contains a remark classifying the said item under CTH 85414030 of the China HS Code, which covers Bular Cells 2.3 Basis the apparent information that the Appellant has wrongly claimed the benefit of Notification 24/2005, the Custom Department subjected the said goods to examination and drew a representative sample from the consignment of BOE No. 8672135 dated 24.02.2017. Pursuant to which, the Appellant on 01.03.2017 made submission to substantiate the classification adopted by them wherein it was stated that they had classified the said goods as per supplier's invoice and as per custom tariff. The Appellant also submitted the Independent Chartered Engineer Certificate i.e. No. Ch.Engg/PDPL/Mar/02/2016-17 dated 02.03.2017 to substantiate their claim (hereinafter referred to as the said Certificate ). 2.4 However, since the Customs Department was reluctant to consider Appellant's submission and the Appellant was in dire need of the said goods they requested the Customs Department to release the same on provisional assessment basis. Accordingly, all the consignments were released provisionally on fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant filed a detailed reply vide letter dated 14.12.2018. 2.9 However, the Respondent has passed the impugned order dated 29.03.2019 wherein it is ordered as under: the said goods are to be classified under CTH 8501; confiscation of the said goods under Section 111 (m) and 111 (o) of the Act with an imposition of fine of Rs. 20,00,00,000/- in lieu of confiscation under Section 125(1) of the Act; the duty demand of Rs. 12,34,66,642/- was confirmed under Section 28 along with applicable interest under Section 28AA; imposed penalty of Rs. 1,50,00,000/- under Section 112(a) of the Act; and ordered for finalization and appropriation of the Bonds and the Bank Guarantee submitted by the Appellant at the time of provisional release of the goods, 2.10 Being aggrieved by the impugned order, the Appellants have filed the captioned appeals before this Tribunal. 3. The issue in the present appeals relates to classification of Poly Crystalline Silicon (C-Si), Solar Photovoltaic Modules ( Solar Modules ) imported by the Appellants. The Appellants in all appeals have classified the Solar Modules under CTH 85414011 whereas the department proposes to classify the same under CTH 8501 of the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply power directly to the external load. As per HSN explanatory note if the solar module is not equipped with element, which can supply power directly to an external load then the same is classifiable under CTH 8541. On the other hand, if the solar module is equipped with element which can supply power directly to an external load then the same is classifiable under CTH 8501. (b) The solar modules/the goods in dispute contain a junction box with bypass diodes and MC4 connectors and after explaining their function it was submitted that neither bypass diodes nor MC4 connectors are capable of supplying power from the module to an external load. The fact that the imported solar modules are not equipped with any elements that can regulate the wattage/voltage of the module or can allow for the storage of power so that the module can function as a generator, has been admitted in paragraph 3 of the IIT Kanpur Test Report, as well, which has been relied heavily by the Department. (c) the issue is clarified in favour of CBIC vide letter dated 22.09.2016 and Instruction No. 8/2018 Cus dated 06.04.2018 clarifying that for the solar modules to supply power directly to the external load, it req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by the Department and was placed on record before the Adjudicating authority. It was incumbent on the Commissioner to follow the said decision to maintain uniformity in the decisions. However, he took the contrary stand. (h) SCN under Section 28 of the Customs Act, 1962 can be issued only after finalization of the provisional assessment and since in the present case the SCN is issued without finalizing the provisional assessment, the same is premature and unsustainable. 8. The Learned Authorized Representative for the Revenue justified the impugned order by reiterating the findings of the Adjudicating Authority. 9. Heard both the sides and perused the appeal records. 10. We find that the issue under dispute relates to classification of solar modules under CTH 8501 vis-a-vis CTH 8541. The Customs Tariffs are based on the Harmonious System of Nomenclature [HSN] and therefore reference is made to the relevant explanatory notes of HSN for CTH 8501 and 8541. The relevant portion of HSN are reproduced below: The explanatory notes (HSN) for CTH 8501 clarify that the heading also covers photovoltaic generators consisting of panels of photocells combined with apparatus, example sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th blocking diodes and bypass diodes are classifiable in heading 8501. 14. The classification in the present case is to be decided on the basis of three elements (i) HSN for CTH 8501 and CTH 8541, (ii) CBEC letter dated 22.09.2016 and (iii) CBEC instruction dated 06.04.2018. On a conjoint reading of these documents, we are of the view that the determining factor in the matter is whether the elements of solar module supply power to an external load or not and whether it is equipped with bypass diodes, blocking diodes or both. 15. The Appellant before us has argued that: a. It is the case of the Appellant that solar modules are not equipped with any elements that supply power directly to an external load. The solar modules contain a junction box with bypass diodes and MC4 connectors, neither of which are capable of supplying power from the module to an external load. The purpose of the bypass diodes and MC4 connectors are explained in the ensuing paragraphs, from which it will be evident that neither bypass diodes nor MC4 connectors supply power directly to an external load. b. The presence of bypass diodes in solar modules is essential for the safety and reliability of the said modu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped with any type of convertor/regulator for trolling the generated power. In addition, there is no storage device integrated with the solar panel. 18. Basis the submissions made by the Learned Advocates for the Appellant and perusing the literature provided during the hearing we find that typical V-I characteristics of the solar panel testing is done only for the purpose of determining the efficiency of photovoltaic conversion of the solar module and the maximum power output. The said test does determine whether the solar module is equipped with elements, or whether those elements are capable of supplying power directly to an external load. In fact we note that the said report nowhere specifies whether the solar modules are equipped with bypass diodes or blocking diodes or both. The said determination in terms of the circulars issued by CBIC is condition precedent to determine if the Solar Modules are equipped with elements that can directly supply power to external load or not. Infact from Para E8 and E9 of the order it becomes clear that IIT Kanpur did not have the facility to determine the above. Paragraph E.8 reads as under: E. 8 Therefore, in view of the said clarification an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proaching 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. Without the same classification of impugned goods under CTH 8501 is not possible. Curiously the Adjudicating authority has recorded that the order is being passed basis available records however we are unable to see the records which lead him to confirm the classification suggested by the department inasmuch as the sole document viz. the Test Report of IIT Kanpur was not conclusive to show that the goods were capable of transferring power to external load. No other evidence has been relied upon supporting the case of the department. 19. While the Department argued that the solar modules are classifiable under CTH 8501, they have not provided any evidence to substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case of IIT Kanpur Test Report they have themselves admitted that they were not equipped to determine if the Sample has bypass diodes or blocking diodes or both. Further we note that the Appellants, right from the start of investigations were of the view that the imported goods only possessed bypass diodes which made it impossible for the module to transfer power on its own to an external load. The said stand of the Appellants has been approved by the CBIC Circular. The CBIC vide Instruction issued under F. No. 528/90/2016 STO (TU) dated 06.04.2018 has clarified as under The issue has been examined by the Board with reference to the decisions of World Customs Organizations in the matter and in this regard it is stated that the most common function of a diode is to allow an electric current to pass in one direction (in forward biasing), while blocking it in the opposite direction (in reverse biasing). Depending on its position in the solar module/panel, it is referred as bypass diode or blocking diode. Bypass diodes : These are commonly connected in parallel across pairs of solar cells or linear interconnected strands of cells, and prevent damage to solar coils when one or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t right through had contended that the Modules imported by it had bypass diodes. In support of the said contention reliance was placed on certificate of the Chartered Engineer dated 01.03.2017, Test Report dated 13.09.2016 issued by TUV Rheinland, Shanghai and certificate dated 02.05.2018 issued by PI Photovoltaic Institute (Suzhou) Co Ltd. In such scenario the burden was on the department to show that the imported solar modules has blocking diodes through which power could be transferred/supplied to an external load, which they have failed to do so. The actions of the department to proceed contrary the clarification provided by CBIC is contrary to the law settled by the Hon ble Supreme Court in Paper Products Limited as reported in 1999 (112) ELT 765 (SC). 23. In view of the aforesaid, 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. 24. Also, the contention of the Appellants that the department has accepted classification of similar Solar Modules under 8541, needs to be considered. We note that in relations to imports made by M/s Wardha S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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