2024 (5) TMI 1063 - AT - Customs

Exemption of Additional Duty under Notification No.12/2012-CE - Whether Grid-Tied Solar Inverter can be considered as Solar Power Generating System for claiming the benefit of exemption - HELD THAT - The Solar Power Generating System primarily consists of (1) Solar Photovoltaic Module (2) Mounting Structure for Solar Photovoltaic Module (fixed tilt or tracking type) and (3) Solar Inverter. Undoubtedly the item imported item Grid Tied Solar Inverter is used to convert solar DC power to AC power and forms part of a solar system but cannot be construed to be the Solar System itself. The respondent had imported the product vide Bill of Entry No.6067001 and claimed exemption from Additional duty of customs under the amended Notification No. 12/2012 which clearly allows parts of the solar system only if condition 2 is satisfied and since the respondent had not satisfied the condition laid down in the Notification the question of extending the benefit of the notification did not arise. The Commissioner (Appeals) s view that the exemption Notification should be liberally interpretated and the burden of prove that the Respondent is not eligible for the benefit lies on the Revenue falls flat in view of the above observations of the Hon ble Supreme court in the case of Dilip Kumar and Company 2018 (7) TMI 1826 - SUPREME COURT . The impugned order is set aside and the appeal is allowed.

Issues Involved:
1. Classification of 'Grid-Tied Solar Inverter' under Notification No. 12/2012-CE.
2. Interpretation of exemption notifications.
3. Procedural fairness in the appellate process.
4. Burden of proof in claiming exemption benefits.

Detailed Analysis:

1. Classification of 'Grid-Tied Solar Inverter' under Notification No. 12/2012-CE:
The primary issue was whether the 'Grid-Tied Solar Inverter' imported by the respondent qualifies as a "Solar Power Generating System" under Sl. No. 332 of Notification No. 12/2012-CE, dated 17/03/2012. The adjudicating authority initially denied the benefit of the notification, arguing that the imported goods did not fall under the category of Solar Power Generating System. The Commissioner (Appeals) reversed this decision, stating that no evidence was produced by the Revenue to demonstrate multiple uses of the solar inverter and that the exemption notifications should be construed liberally in favor of the assessee. However, the Tribunal, upon remand from the High Court, held that the 'Grid-Tied Solar Inverter' could not be construed to be the Solar System itself, but only a part of it. Therefore, the benefit of the notification was denied as the respondent did not satisfy the conditions laid down in the notification.

2. Interpretation of Exemption Notifications:
The Tribunal emphasized that exemption notifications should be interpreted strictly. The decision in the case of Commissioner of Cus. (Import), Mumbai vs. Dilip Kumar & Company was pivotal, which held that any ambiguity in an exemption notification must be interpreted in favor of the Revenue. The burden of proving eligibility for exemption lies on the assessee. The Tribunal also referenced the case of M/s. Raydean Industries, which supported the strict interpretation of exemption notifications and denied benefits for parts not consumed within the factory of production.

3. Procedural Fairness in the Appellate Process:
The Department's appeal to the High Court of Kerala was based on the ground that a reasonable opportunity was not extended to the Departmental Representative (DR) since the appeal was disposed of while considering the stay petition. The High Court found this to be a material irregularity and remanded the matter to the Tribunal for reconsideration. The Tribunal subsequently posted the appeal for hearing and considered submissions from both sides before delivering its judgment.

4. Burden of Proof in Claiming Exemption Benefits:
The Tribunal reiterated that the burden of proof lies on the assessee to demonstrate that their case falls within the parameters of the exemption notification. The respondent's reliance on the case of Belectric Photovoltaic India Pvt. Ltd. was deemed irrelevant as it dealt with a different context and notification. The Tribunal concluded that the Commissioner (Appeals)'s view that the exemption notification should be liberally interpreted was incorrect, and the burden of proof lies on the respondent, aligning with the Supreme Court's observations in the case of Dilip Kumar and Company.

Conclusion:
The Tribunal, adhering to the strict interpretation of exemption notifications and the burden of proof principles established by the Supreme Court, set aside the Commissioner (Appeals)'s order and denied the exemption benefit for the 'Grid-Tied Solar Inverter'. The appeal by the Department was allowed, reinforcing the necessity for strict compliance with exemption notification conditions.

← Previous Next →