CETC Renewable Energy Technology (India) Private Limited Vs Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai held that ‘Diffused Silicon Wafer’ doesn’t have capacity to perform the essential function of a Solar Cell and hence it cannot be classified under specific heading of Solar Cell i.e., CTH 8541 4011. However, ‘Diffused Silicon Wafer’ can be classified under CTH 8541 9000 as parts of semi-conductor device.
Facts- The appellant is a private limited company engaged in manufacture of Solar Cells. The appellant has 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.
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. DRI assumed that the above import warranted imposition of safeguard duty in terms of Notification No. 01/2018-Customs (SG) dated 30.07.2018 which was applicable for the imports of Diffused Silicon Wafers / Blue Wafers since the DRI entertained a belief that the imported items were nothing but Solar Cells.
Thereafter, the commissioner also rejected the declared classification of goods and ordered reclassification. Further, commissioner confirmed the demand of applicable safeguard duty on the imported goods. Being aggrieved, the present appeal is filed.
Conclusion- The imported Diffused Silicon Wafer as such has no capacity to perform the essential function of a Solar Cell. Therefore, the imported item is not classifiable under the specific heading of Solar Cell, i.e., CTH 8541 4011. Also, at the time of import, it has not attained the status of a finished semi-conductor device. It is also noteworthy here that CTH 8541 9000 deals with Parts of Semi-conductor devices. As per the scheme of arrangement of various Headings and Sub-Headings of CTH 8541, it is found that 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.
Held that 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.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed against the Order-in-Original No. 100362/2022 dated 09.12.2022 passed by the Commissioner of Customs, Chennai-II (Import), wherein the adjudicating authority has confirmed the demand, as proposed under Section 28(8) along with applicable interest under Section 28AA of the Customs Act, 1962. He has also inter alia rejected the classification of the declared goods imported by the appellant, ordered confiscation of goods seized, apart from imposing penalty under Section 112(a) ibid.
2.1.1 Brief facts, as could be gathered from the impugned order and the Show Cause Notice, are that the appellant is a private limited company incorporated in 2017 having set up a factory at Sri City, Andhra 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 of Notification No. 01/2018-Customs (SG) dated 30.07.2018 which was applicable for the imports of Diffused Silicon Wafers / Blue Wafers since the DRI entertained a belief that the imported items were nothing but Solar Cells. During its verification / investigation, it appears that samples were drawn and statements were also recorded, in terms of Section 108 of the Customs Act, 1962, from various personnel of the appellant-company.
2.2 It appears that in accordance with the Pre-Notice Consultation process, the DRI, Chennai issued a Pre- Consultative Notice dated 11.11.2020 wherein it was inter alia proposed to reclassify the imported item under CTH 8541 apart from proposing to levy safeguard duty in terms of Notification No. 01/2018 ibid.
2.3 It appears that the appellant filed a detailed reply dated 02.12.2020 and thereafter, also appears to have participated in the personal hearing granted on 11.12.2020.
SHOW-CAUSE NOTICE
2.4 It appears that the DRI, not satisfied with the explanation offered by the appellant, issued a Show Cause Notice dated 08.01.2021, which was answerable to the Commissioner of Customs, Air Cargo Complex, Chennai and the Commissioner of Customs (Import), Custom House, Chennai. In the Show Cause Notice, it was inter alia proposed as under: –
i. Re-classification of the goods imported in bills-of-entry mentioned at column 17 of the Worksheet-I under 85414011 as mentioned in column 23 of Worksheet-I;
ii. The imported product to be held as solar cells not assembled into panels or modules.
iii. Imposition of safeguard duty of Rs.22,13,62,755/-in terms of Notification No. 01/2018-SG as mentioned in column 24 of the Worksheet-I;
iv. To confiscate the goods seized vide seizure memorandum dated 18.04.2020 as mentioned in column 26 of the Worksheet-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 the Worksheet-I, liable for confiscation under Section 111(m) of the Customs Act, 1962;
vii. Imposition of penalty under Section 112 ibid.
A further proposal was also made to: –
i. Re-classification of the goods imported in bills-of-entry mentioned at column 17 of the Worksheet-II under 85414011 as mentioned in column 23 of Worksheet-II;
ii. The imported 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.
2.5It 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 of Finance through the DGFT, in terms of Section 8B of the Customs Tarff Act, 1975, issued a “Notice of Initiation of Safeguard Investigation” dated 19.12.2017 concerning imports of Solar Cells whether or not assembled in modules or panels into India and the same are referred to as ‘Product Under Consideration’ (PUC). The same, apparently, was to protect the domestic producers of like and directly competitive articles (to the PUC) from serious injury / threat of serious injury caused by such increased imports. The said initiation of investigation appears to be based on an application dated 28.11.2017 filed under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 by the Indian Solar Manufacturer’s Association (ISMA) on behalf of five Indian producers namely, (i) M/s. Mundra Solar PV Limited, Gujarat; (ii) M/s. Indosolar Limited, Uttar Pradesh; (iii) M/s. Jupiter Solar Power Limited, Himachal Pradesh; (iv) M/s. Websol Energy Systems Limited, West Bengal; and (v) M/s. Helios Photo Voltaic Limited, New Delhi. It appears that the said applicant had sought for imposition of safeguard duty on imports of PUC into India by claiming that on account of the surge in imports of the PUC, many domestic producers have kept their production facilities almost idle and that heavy losses had crippled the domestic industry. Thus, safeguard duty was sought to be levied as a measure to mitigate their injury.
REPLY TO SCN
4.1 It appears that the appellant filed a detailed reply vide letter dated 19.03.2021, the summary of their submissions have been reproduced by the adjudicating authority at paragraph 84 / page 50 of the impugned order.
For convenience, the gist of the submissions are reproduced hereinbelow: –
