9911796707
TMI Blog2023 (8) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 2.5 It 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * Report of DG, Safeguards states that imposition of safeguard duty would protect the domestic industry and their company also made substantial investment in India and generated employment. * The imported item i.e., Blue Wafer is processed further wherein various high grade metal pastes such as Silver and Aluminium Pastes are used for creation of fingers (horizontal metallic lines) and busbars (vertical metallic lines). This process is called screen printing. * The busbars are the backbone of most power applications, providing the critical interfaces between the power modules and the outside world. Busbars wire Solar Cells together to create high voltage; as more busbars are added, the idea is that more electrons are able to pass through and power efficiency increases. * After screen printing, sintering process, also called as 'firing process', is carried out in which the front metal contacts are formed in a Silicon Solar Cell. In this process, the Thick Film Paste is dried at about 150° C to remove much of solvents to avoid cracks and voids. The above two processes result in value addition up to 50%. * The imported item was not accepted for testing by MNRE as they do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods in India is governed by the General Rules of Interpretation (GRI) and the Harmonized System of Nomenclature (HSN). (ii) CTH 3818 covers such crystals, polished or not, whether or not root coated with a uniform epitaxial layer. (iii) Those more extensively worked devices (e.g., by selective diffusion) fall in heading 85.41 as semiconductor. (iv) Undiffused Silicon Wafer is covered under Customs Tariff Item 38180010. Doped chemical elements of Chapter 28 and chemical compounds containing additives in the forms mentioned in HSN 2017 (other than Undiffused Silicon Wafer) fall under the remaining category of 'Other' under Customs Tariff Item 38180090. (v) The appellant had imported products which had been doped with both Boron and Phosphorus and had undergone extensive work, including diffusion. (vi) The words "extensively worked" and "selective diffusion" indicate the type of goods which are out of the scope of CTH 3818. CTH 3818 covers doping of the order of parts per million alone; that those extensively worked are beyond the scope of CTH 3818. (vii) CTH 3818 allows processes up to doping of the silicon wafer with P type or N type dopants, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of IIT, Madras dated 15.10.2020, it has been clearly observed that the imported Blue Silicon Wafer exhibited photovoltaic effect which is sufficient to hold that the impugned goods fall under the definition of Solar Cells for imposition of safeguard duty. 5.2.2 He has recorded the request of the appellant for referring the matter to the Tax Research Unit (TRU), but however, finds that the imported goods have already been tested at IIT, Madras and thus there was no need for any further reference to the TRU. 5.2.3 In view of the above, he finds that the goods imported satisfy the only criteria for imposition of safeguard duty i.e., exhibition of photovoltaic effect and hence, the said goods cannot be held to be "intermediate" products. 5.3 Thus, the Ld. Commissioner has: - (a) Rejected the declared classification of the goods imported and ordered reclassification, as proposed in the Show Cause Notice; (b) Held the imported product as 'Solar Cells not assembled into panels or modules' and covered by the Product Under Consideration as per the DGTR Notification F.No.22/1/2018-DGTR dated 16.07.2018, as amended, for levy of safeguard duty; (c) Confirmed the demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... printing and sintering process are to be carried out in India and these important aspects have been completely overlooked and in a mechanical and arbitrary manner the original authority has decided the issue, which is contrary to the provisions of the Customs Act, 1962 and also against the Safeguard Duty Regulations. * Ground No.5: Under the International Trade Law, more specifically, as per the guidelines of WTO / GATT, the PUC in the investigation by the DGTR and the product under import should be one and the same or like article for levy of safeguard duty and this is the vital element for levy of safeguard duty. The impugned order has been passed in direct conflict with the basic framework of the International Trade Law. * Ground No.6: Various judicial decisions and Notifications issued by the Department of Revenue are referred to by the appellant to establish that the imported item is only an intermediate product and also a semi-finished product or an un-finished product. The original authority has failed to consider the decisions of the quasi-judicial / judicial authorities and thus the impugned order is contrary to earlier judicial deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Advocate, taken out during the hearing, could be summarized, as below: - * The investigation of the Directorate General of Trade Remedies was based on a complaint made by the domestic manufacturers of a complete Solar Cell and hence, the PUC was a complete Solar Cell and not a Diffused Silicon Wafer, which is only an intermediate product. * A member country of the WTO is empowered to initiate emergency remediate measures as per Article XIX of GATT, 1994, against import of a particular product and in the domain of International Trade Law, the product, which is subject to investigation by the authorities, is the Product Under Consideration (PUC). * The scope and ambit of the definition of PUC is to be determined taking into account many factors like technical and scientific characteristics of the product, identification of the product in the technical and market parlance, fungibility of the product and the interchangeability, substitutability of the similar or like article in the technical and market parlance. * Product Under Consideration (PUC), as defined in the Notice of Initiation of Safeguard Investigation dated 19.12.2017 (paragraph 3), has been misquoted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Ld. Advocate, while referring to the report of IIT, Madras, further submitted that the said report is incomplete in all respects and thereafter, took us through the observations recorded, which read as under: - a. The sample of Solar Cell does not have printed gridlines (busbars and fingers). b. Screen printing is not completed. c. Since the grid lines are not there for collection of all the electrons generated on the solar cell, the multimeter probes record the voltage/current parameters in the immediate vicinity of the probes on the Solar Cell. d. Hence, the observed values cited in the test report will be on the much lower side than the voltage/current parameters than that of the same Solar Cell with grid lines. 10.2.4 He would also submit that the appellant had also forwarded two samples i.e., one containing Diffused Silicon Wafer and another one, which was a finished Solar Cell to NISE, but however, NISE had declined to test the Diffused Silicon Wafer and they only tested the finished Solar Cell. 10.2.5 Ld. Advocate drew our attention to the test report of NISE, which is at pages 702 to 706 of Vol.III of the appeal paper-book, to contend t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are carried out in India:- I. Feeder II. Screen Printing (i) Printing Machine 1: Silver Slurry(Back Electrode Slurry) (ii) Printing Machine (iii) Flipper (iv) Printing Machine 4: Silver Slurry (Busbar Slurry) (v) Printing Machine 5: Silver Paste (Finger Slurry) III. Sintering Furnace IV. Testing & Sorting V. EL Inspection VI. Manual Inspection VII. Packing Process 10.3.3 He would also refer to the written synopsis filed during the course of arguments wherein each of the above processes has been explained along with pictorial depiction of the initial product and the product at the end of each of the above mentioned processes. 10.3.4 He would again refer to the report of IIT, Madras where there is an observation that the imported item does not have screen printing and also lacks busbars and fingers, to submit that busbars are the backbone of most power applications providing the critical interfaces between power modules and the outside world; busbars are the vertical lines within Solar Cells which are nothing but metallic wires which carry cumulative current of fingers and interconnect others to develop modules; fingers are the horizontal thin lines within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a Solar Cell are conversion of heat or light into electricity, collecting generated current without loss and transmitting / conducting the so collected electricity through busbars and that market parlance is very relevant since it should be recognized as such in the market and capable of being sold / used as such. He also contended that the item that was imported could at best be called as 'Parts of Semi-conductor Devices'; semiconductor device is a finished and functional product in all respects whereas the imported Diffused Silicon Wafer is only an intermediate product which can only be classified as parts of semi-conductor device, but nevertheless, the classification has no relevance in determining the scope and ambit of levy of safeguard duty. 10.4.4 He further submitted that determination of classification and levy of duty based upon Notification are two independent processes in the eye of law. Though not mutually exclusive, the Notification has to be applied based on the language without imparting external meaning to the description of the product as described in the Notification. 10.5.1 Ld. Advocate would submit that the appellant had placed reliance on decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wafer can never perform the function of collection of electricity or conduction of the same and thus lacks the essential characteristic of Solar Cell. 10.6.5 In the absence of any specific entry for intermediate products which do not contain all the essential characteristics, the product under import was sought to be classified as 'Parts of Semi-conductor Devices' and since the issue was highly technical in nature, it is contended that there could be no mala fides attributable to the appellant just for the sake of confiscation of the imported goods and imposition of penalty. 10.7. Ld. Advocate would further contend that the issue on hand is on interpretation of notification and also classification and hence, no mens rea could be alleged to levy penalty under Section 112 of the Customs Act. 11. In view of the above submissions, Ld. Advocate would request for setting aside the impugned order and thereby the various demands, confiscation, redemption fine and penalty levied on the appellant as confirmed therein. SUBMISSIONS ON BEHALF OF REVENUE 12.1 Per contra, Ld. Assistant Commissioner would submit, at the outset, that the appellant had resorted to mis-declaration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue. 13. We have heard the rival contentions, we have carefully gone through the documents placed on record as well as the literature referred to during the course of arguments and we have also gone through the judgements / orders referred to during the course of arguments. The preliminary point of dispute appears to be the classification, whether under CTH 3818 or CTH 8541. The Revenue re-classified under CTH 8541, allegedly on the ground of mis-classification by the appellant and consequently, has ordered for confiscation of the imported goods apart from levy of penalty and fine. 13.1 In the above factual background, we find that the impugned order mainly deals with two major issues, namely: - i. That the product under import and the Product Under Consideration are one and the same; and ii. The imported products are appropriately classifiable under CTH 8541 4011 - under the category of 'Finished Solar Cells', liable for safeguard duty, with interest, fine and penalty. ISSUES 14. After hearing both sides, we find that the following issues arise for our consideration: - (1) Whether the product under import was classifiable under CTH 3818, as declared by the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of the definition of Product Under Consideration (PUC). Normally, a Notification is interpreted based on the text / language employed therein and since the issue involved in the case on hand is relating to a Notification issued under Section 8B ibid. read with the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, the literature available in determining the meaning of PUC would be very handy. 15.3 We note that PUC has been a subject matter of interpretation / examination both by courts of law as well as various clarifications available as issued by the Central Board of Indirect Taxes. 16. At this juncture, it is useful to refer to a Circular issued by the Central Board of Indirect Taxes dated 08.05.2012 (F. No. 354/5/2012-TRU) relating to Anti-Dumping Duty whereby a clarification was sought as to whether stainless steel circles of various sizes imported and assessed to Anti Dumping Duty on actual width / diameter was a subject matter, to levy Anti-Dumping Duty. The Central Board of Indirect Taxes issued the following clarification: "3. The issue has been examined. DA in the preliminary findings dated 27th March, 2009 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel circles are classifiable as cold rolled flat products of stainless steel falling under CTH 7219, the same would not attract any anti-dumping duty in terms of Notification No. 14/2010-Cus., dated 202-2010. It is requested that all field formations under your jurisdiction may be advised accordingly and all pending disputes, if any, may be decided accordingly." PRODUCT UNDER CONSIDERATION [PUC] 17.1 From the above, it is clear that the specific product described as 'Product Under Consideration' alone is subject to levy of duty and not any other product, even though classifiable under the same Tariff Heading. In order to understand the meaning of PUC mentioned in the Notification, the provisional findings, final findings and review findings of the Designated Authority are required to be referred to. Hence, in the case on hand, the PUC, as specified in the Notification, is "Solar Cells whether or not assembled in modules or panels". To determine the scope and ambit of the meaning of the PUC, we have to consider primarily four important documents, namely: - i. Notification for Initiation of Safeguard Investigation dated 19.12.2017 issued by the Directorate General of Safeguard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Findings, perhaps based on the investigation that was initiated, the relevant portion of which is extracted below:- "5.1 The Product Under Consideration (PUC) 5.1.1 The PUC is "Solar Cells whether or not assembled in modules or panels" classifiable under Tariff Heading 8541 and Tariff Item 85414011 of the Customs Tariff Act, 1975. Solar Cells are also known as Photovoltaic Cells in the market parlance. Photovoltaic technology enables direct conversion of sunlight intro electricity at the atomic level and Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. ..." (Emphasis supplied) and thereafter, recommended for levy of provisional safeguard duty on the import of the PUC. 19. The Final Findings / report of the said authority is also placed on record, which is dated 16.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability. The Customs tariff classification is, however, indicative only and is in no way binding on the scope of the product under consideration"." (Emphasis supplied) 20.4 A final recommendation to extend the safeguard duty for one more year was made. 21. It appears that after the final investigation report, there was a visit by the DRI to the factory premises of the appellant on 11.03.2020, on which date a mahazar was drawn, during which time it appears that the appellant had submitted "Flow Process Chart". 22. Consequently, a notice dated 11.11.2020 was issued by the Additional Director General, DRI wherein it was indicated that the classification of the imported product was CTH 8541 as 'Solar Cell' and not under CTH 3818 as 'Undiffused Silicon Wafer' and if the appellant was agreeable, then the appellant could make payment of full safeguard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow for convenience: - "The product under consideration in the original investigation was defined as follows: "Solar Cells whether or not assembled in modules or panels" classifiable under Tariff Heading 8541 and Tariff Item 85414011 of the Customs Tariff Act, 1975. Solar Cells are also known as Photovoltaic Cells in the market parlance. Photovoltaic technology enables direct conversion of sunlight intro electricity at the atomic level and Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. For practical use, Solar Cells are packaged and connected into an assembly and such an assembly of Solar Cells is referred to as a Solar Panel or Solar Module. The electrical connections are made to the Solar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability." .... "Taking into account the change in the customs tariff headings, the PUC is defined as follows: Solar Cells whether or not assembled in modules or panels" classifiable under Tariff Heading 854140 and Tariff Items 85414011 and 85414012 of the Customs Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the above ratio was adopted / followed in M/s. Anchor Daewoo Industries Ltd. v. Commissioner of Customs, Kandla [2007 (214) E.L.T. 230 (Tri. - Ahmd.)] which was subsequently upheld by the Hon'ble Delhi High Court in the case of M/s. Plaza Lamps and Tubes Ltd. v. Commissioner of Customs [2007 (209) E.L.T. 182 (Del.)]. 28.4 The order in the case of M/s. Anchor Daewoo Industries Ltd. (supra) was challenged before the Hon'ble Supreme Court by the Revenue which was thereafter dismissed by the Hon'ble Apex Court as reported in 2016 (331) E.L.T. A138 (S.C.). 29.1 The proposition, therefore, which emerges from the above is that a semi-finished or intermediate product could not be subjected to Anti-Dumping Duty or safeguard duty in a case where a specific complete / finished product is the subject matter of investigation by the Designated Authority and the same is defined as the Product Under Consideration. 29.2 In the case on hand, we find that the appellant has established its factory in India, installed capital goods and is undertaking substantial manufacturing process and on this fact, we do not find any disputes by either of the parties. MANUFACTURING PROCESS BY THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process - BSF (Aluminium Back Surface Field). * Printing BSF Purpose: After applying the BSF Slurry on the back side of Blue Wafer, such as re-doping, removing PN junction on the back of the cell, reduce carrier recombination, increase the voltage. * Further, the Blue Wafer is again moved to drying oven. * Drying Oven #2: To protect BSF from damage when the Positive Electrode is printed. (iii) Flipper * Flipper Process: This process helps the Blue Wafer to flip another side, from back side to front side printing process. (iv) Printing Machine 4: Silver Slurry (Busbar Slurry) * In this, the Blue Wafer is further moved to another printing process to form Negative Electrode on the Blue Wafer. * Printing Busbar Paste: The Busbar Slurry will be applied on the front side of the Blue Wafer to print the main grid lines on wafer which will help in collecting photoelectric current and provide a Negative Electrode of the cell. * Further the Blue Wafer is moved to drying oven. * Drying Oven #3: Wafer is dried to ensure that the printed busbar lines are protected from damage during the further steps of printing process. (v) Printing Machine 5: Silver Paste (Finger Slurry) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product. The distinction between 'processing' and 'manufacturing' is well known." 29.5 In the case on hand, admittedly, what is imported is Diffused Silicon Wafer / Blue Wafer, which is claimed to be a semi-finished / intermediate processed product and not a finished product. If it is to be assumed to be the final product, then it has to be sold as such in the open market. The burden is on the person who claims that it is a solar cell, to discharge the same by establishing that fact. But the revenue having alleged that what was imported was solar cell, has not discharged their initial burden to establish that the same could be sold as such in the open market and could be used as such, by the end user. The processes of screen printing and sintering carried out in India assume significance in the manufacturing process, thereafter transforming the semi-finished / intermediate product into a finished functional product capable of performing essential functions as a Solar Cell which could be sold in the market as a Solar Cell. 30. The Commissioner has held that it is the process of diffusion that results in the formation of PN junction, which is sufficient for the purposes of conversi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chapter 85 of the Customs Tariff Act, 1975. Photovoltaic Solar Cells are also known as Photovoltaic Cells in the market / trade parlance. Photovoltaic technology enables direct conversion of sunlight into electricity at the atomic level. Solar Cells are solid state electrical devices that convert sunlight directly into electricity by the photovoltaic effect. To make practical use of the Solar Cells, these are placed in panels or modules. In other words, a solar panel / module is a packaged, connected assembly of Solar Cells. The electrical connections are made to the Solar Cells in series to achieve the desired output wattage and / or in parallel to provide the desired current capability. The Customs tariff classification is indicative only and is in no way binding on the scope of the present investigation." * As per the Final Findings of review investigation dated 18.07.2020 (paragraph 45): "45. Taking into account the change in the customs tariff headings, the PUC is defined as follows: "Solar Cells whether or not assembled in modules or panels" classifiable under Tariff Heading 854140 and Tariff Items 85414011 and 85414012 of the Customs Tariff Act, 1975. Solar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar Cells in series to achieve desired output wattage and / or in parallel to provide a desired current capability." 33.5 The cumulative effect of the above sentences is that the photovoltaic cells which converts sunlight into electricity are connected so that purported object could be achieved. That means to say the Solar Cell, which has achieved or exhibited the photovoltaic effect, alone is not sufficient, the same should be able to give the desired result for which electrical connections are made. So, it should not just be exhibiting photovoltaic effect, but the same should be capable of carrying into electrical connections with transmitting the electricity so produced in order to achieve the desired object. 34. From the above, it could be understood that the PUC, which was the subject matter of investigation by the competent authority, was finished Solar Cell in all respects and known and recognized in the market parlance as such. 35. Now we have to analyse: whether the product which was imported by the assessee is a Solar Cell in all respects, and hence, the product is the same as under investigation before the competent authority? 36.1 It is the claim of the importer th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the drying oven where the wafer is dried to ensure that the printed electrode is protected from damage during the further steps of printing. 37.2.2 Once Positive Electrode line is found, the Blue Wafer is further moved to the next process called Aluminium BSF. After applying the BSF slurry on the backside of blue wafer such as re-doping-removing PN junction on the back of the cell, thereby to reduce carrier recombination and increase the voltage. The same is thereafter again dried. 37.2.3 The Blue Wafer is thereafter moved to the next process to form Negative Electrode on the Blue wafer. Busbar slurry is then applied on the front side of the wafer to print the main gridlines on the same, which is essential for collection of photoelectric current and provide a Negative Electrode of the cell and thereafter, the same is again moved into the drying oven. 37.2.4 After the process of applying Silver paste i.e., finger slurry, the Blue Wafer is subjected to the process of sintering. The slurry on the wafer is dried to burn the organic components of the slurry, in order to form a good ohmic contact between the slurry and the wafer. 37.2.5 The final process is the packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Board right from the year 1987 wherein concessions/rebates were extended: - i. Notification No. 83/87-Cus. dated 01.03.1987 ii. Notification No. 98/91-Cus. dated 25.07.1991 iii. Notification No. 88/94-Cus. dated 01.03.1994 iv. Notification No. 58/95-Cus. dated 16.03.1995 v. Notification No. 64/95-Cus. dated 16.03.1995 vi. Notification No. 13/97-Cus. dated 01.03.1997 vii. Notification No. 25/99-Cus. dated 28.02.1999 viii. Notification No. 21/2002-Cus. dated 01.03.2002 ix. Notification No. 12/2012-Cus. dated 17.03.2012 x. Notification No. 12/2016-Cus. dated 01.03.2016 xi. Notification No. 50/2017-Cus. dated 30.06.2017 41.1 The relevant portion of Notification No. 83/87-Cus. dated 01.03.1987 is extracted below: - "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts (Silicon, in the form of diffused wafers, discs or chips, falling under Chapter 38 or Chapter 85) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f energy or silicon ingots/wafers used in the manufacture of solar cells or solar cells or Photovoltaic modules" shall be substituted. ..." (Emphasis supplied) 41.4 The relevant portion of Notification No. 64/95-Cus. dated 16.03.1995 is also reproduced hereunder: - "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of the Table annexed and falling within one or more Chapters of First Schedule to the Customs Tariff Act, 1975, specified in the corresponding entry in column (2) of the said Table, when imported into India, for the purpose of manufacture of goods specified in the corresponding entry in column (4) of the said Table (hereinafter referred to as the said finished goods) from so much of that portion of the duty of customs leviable thereon which is specified in the said First Schedule, as is in excess of amount calculated at the rate of 15% ad valorem, subject to the condition that in case of import of goods covered by List B of the said Table, the importer furnishes, at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout molybdenum discs, classifiable under Chapter 38/85 are always permitted for import and clearance with concessional rate of duty for the purpose of manufacture of the finished product namely, hybrid micro-circuits or semiconductor devices. Solar Cells, which are otherwise called photovoltaic cells, are one of the semiconductor devices and for the manufacturing of semiconductor devices, silicon in the form of Diffused Wafers/Undiffused Wafers has been recognized by the Government as one of the inputs. The clarity available in the form of notifications continued until the last of such notifications by the Government, dated 30.06.2017. 43. It is now equally relevant to analyse reports of experts in the field which are placed on record. Admittedly, report of IIT, Madras has alone been considered by the Commissioner in the impugned order whereas, the appellant has relied on the report of NISE. 44.1 From the reply filed by the importer to the Show Cause Notice, we find that since the importer was clear that the report of IIT-M was inconclusive inasmuch as the same was issued not in conformity with international standards i.e., IEC 60904, as amended, which was also a recognized sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, Solar Energy Research Institute of Singapore, which is a specialised research institute in the Solar Cell industry, and sought for testing and a report on the comparison of imported Blue Wafers and the finished Solar Cells. From their reply, we see that even the report of the said Solar Energy Research Institute of Singapore has also been placed on record before the lower authority, but however, the lower authority has not bothered to look into the same at least for the sake of academic interest. The said report of the Solar Energy Research Institute of Singapore has been summarized as under: 1. The finished Solar Cells and Blue Wafers are different in many ways. Finished Solar Cells have front H-pattern metallization grid contact and rear full area metallization contact. The Blue Wafers have no metallization contacts on either of the sides. 2. PL images of the finished Solar Cells have higher PL counts and the front H-pattern grid contact is visible in PL images whereas, in the case of Blue Wafers, they only have lower PL counts and the front contact is not visible in PL images. 3. Effective carrier lifetime could only be measured for the Blue Wafers and not for the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate substantiation. 48.3 It also appears from the record that the DGTR responded to the above communication vide Office Memorandum dated 28.12.2020 per e-mail wherein they have inter alia asked the DRI to seek comments / views of TRU. 48.4 It is surprising to note that when diverse opinion of experts in the field are available, and the authority has also entertained a serious doubt as to the classification of the imported product, had also sought for clarification from the competent authority and the said competent authority had, in turn, asked the Commissioner to seek clarification from the TRU, but however, no such attempt appears to have been made. 48.5 Had there been a sincere attempt in this regard, perhaps the Tax Research Unit would have definitely issued clarification since there were enough and substantial materials already available on record to be looked into by the Tax Research Unit. 48.6 It is also surprising that the adjudicating authority has also not bothered to refer to any of the reports of other experts like NISE or Solar Energy Research Institute of Singapore, but however, proceeded to ignore the same, which is not expected. The authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor Devices'. e. In both the dictionary meaning and technical meaning, semi-conductor device means 'capable of conducting electricity'. Semi-conductor device is a finished and functional product in all aspects, whereas the imported Diffused Silicon Wafer is only an intermediate product and as such, it can only be classified as parts of semi-conductor devices. f. Nevertheless, it is submitted that the classification has no relevance in determining the scope and ambit of levy of safeguard duty. g. In the eye of law, determination of classification and levy of duty based upon notification are two independent processes. Though it is not mutually exclusive, in reality, the notification has to be applied based on the text of the language without any import of external language or meaning to the description of the product as described in the notification. h. In the impugned issue, for the purpose of aid and construction to interpret the words of the Notification, necessarily reliance on the investigation report of the DGTR has to be placed, which gives a complete and unambiguous factual position that the Product Under Consideration was only about a finished product and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is carried out. As such it is more fragile than a finished product. It is a manufactured product with diffusion, screen printing and sintering. These processes make the Solar Cell as a complete finished product capable of performing its essential function. 7 Importance of inspection and packing To market, product testing and inspection and packing are vital and the imported product cannot be inspected since it is an intermediate product which has to undergo manufacturing process on post importation basis. The finished Solar Cell is inspected and packed for easy transportation and also for safety. 8 Creation of fingers through gridlines Fingers is a process of creation of horizontal line through intricate manufacturing process by applying silver paste and this process is carried out in India Finished Sola r Cell has fingers and hence, no further processing is required. 9 Creation of busbars with metal paste and metal slurry Similarly, busbars are created with metallized lines through vertical lines which ensures that the collected current is transmitted without any loss and this process is carried out in India. Finished Solar Cell has busbars and hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious intricate and technical processes to reach the stage of 'semi conductor devices', and which have been certified by the Department of Electronics (DGTD) to have been only in the nature of 'raw material' or components for manufacture of 'semi conductor devices'. 21. We have already observed that the respondent has not placed any material before us to show them otherwise. We, therefore, in the result hold the appellants entitled to benefit of Notification No. 172/77-Cus dated 38-1977, in all these cases, in respect to the said goods while holding them classifiable under T.I. 85.18/27(1) of the CTA." 52.1.2 In the above referred case, two issues apparently were considered: first one was about the classification of 'diffused chips' and the second one was whether the diffused chip was an intermediate product or a semi-finished product or a raw material. The Ld. co-ordinate Bench has categorically held that the diffused chips are only in the nature of raw material or component for the manufacture of semi-conductor devices and various intricate and technical processes have been carried out to reach the stage of semi-conductor device. It, therefore, denotes that a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try. In the instant case, in view of the definition of cement as provided in paragraph 2(a) of the Import Cement (Control) Order, 1978 read with a Press Note issued by the Central Government and the authoritative publication made in the Indian Standard Institution treating while portland cement as a different commercial commodity to that of ordinary low heat portland cement, it must be held that in commercial parlance the two commodities are known as two different commercial commodities and that there is no scope for contending merely on the basis of some chemical test contrary to the chemical analysis published by the Indian Standard Institution to hold that white cement and ordinary cement are same commodity. The important test for determining whether white cement and ordinary cement is one commercial commodity or not. is that if a customer asks for cement from a cement dealer, whether, the cement dealer will give him or offer white cement, or not, certainly, a cement dealer will not offer white cement in such a case. The value of the two commodities are different, its chemical composition and uses arc quite different. In commercial world it is treated as two different commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance, the Hon'ble Supreme Court upheld the decision of the CEGAT and observed that: - "22. The Tribunal in both the appeals had taken into consideration all relevant and material factors, and market parlance and borne in mind the correct legal principles. The decision of the Tribunal, therefore, cannot be assailed." In the present case also, the technical characteristics and the common market parlance have to be given primacy for the purpose of determination as to whether it is a Solar Cell or not. We have held in the previous paragraphs that the product in import is neither a complete functional product nor accepted as a Solar Cell in the market by consumers. 52.5 In the case of Collector of Central Excise, New Delhi v. M/s. United Felt & Carpet [1999 (111) E.L.T. 807 (Tribunal)], the issue was as to whether to classify and tax a semi-finished floor covering felt as finished goods or not. It was held by the Tribunal, on the basis of market parlance, that semi-finished goods are not finished goods and observed as under: - "4. As against the above contentions of the Revenue, the impugned order has held that the item in question does not satisfy the requirements for class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not capable of performing essential function of a Solar Cell. It was also explained that Rule 2(a) of the General Rules of Interpretation deals with determination of classification of an incomplete or sem-ifinished article which is capable of performing essential function. 53.4 In the report of IIT, Madras and in the documentary evidence furnished by the appellant, it is an unambiguous fact that the imported item has neither fingers nor busbars and thus, it lacks the capacity to collect electricity and conduct electricity. Solar Cell as a device, in technical parlance and market parlance, should have the capacity to convert sunlight intro electricity, collect the converted electricity through fingers and, ultimately conduct the electricity through busbars. Only upon completion of the post importation activity in India by way of screen printing, that the collection of electricity and conduction of electricity becomes possible, thereby achieving the desired result. Hence, 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., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solar Cell'. On the ground of mis-classification, confiscation of the imported goods was ordered and penalty was also imposed along with redemption fine. In the peculiar facts, we have to see whether the change of classification from CTH 3818 to CTH 8541 will have any adverse impact on the interests of the Revenue. 55.2 On the date of import, admittedly, the classification was sought under CTH 3818 and the appellant also availed the benefit of exemption from payment of Basic Customs Duty in terms of Sl. No. 1 of Notification No. 24/2005 (Customs) dated 01.03.2005, as amended. It is also significant to note that the said Notification, as amended, vide Sl. No. 23, also grants exemption from Basic Customs Duty to goods classifiable under CTH 8541. Therefore, on the date of import, the goods classifiable under both CTH 3818 and CTH 8541 were exempt from payment of Basic Customs Duty and as such, no motive is found on the part of the appellant to avail any undue benefit or to cause any revenue loss. Moreover, it is also ascertained that as on the date of import, the goods classifiable under CTH 3818 attracted 12% I.G.S.T. whereas, the goods classifiable under CTH 8541 attracted 5% I.G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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