The court held that the classification of goods should be determined by the 'user test'; since the solar cells were exclusively for satellites, the appellant was granted a remand to argue for classification under CTH 8803 instead of CTH 8541.

PER : DR. D.M. MISRA

This appeal is filed against Order-in-original No.01/2021 dated 15.01.2021 passed by the Principal Commissioner of Customs, Airport & Air Cargo Complex, Bangalore.

2. Briefly stated the facts of the case are that the appellant are engaged in conceptualising, design, development, fabrication, integration and testing of satellite technology and also engaged in the research and development in the area of Advanced State-of-Art technologies, total management of all satellite missions. They are also established with facilities for fabrication and testing of mechanical and electronic hardware / subsystems and integrated satellite. During the period July 2018 to July 2019, they had imported solar cells / solar cell assemblies along with other items / accessories against 10 Bills of Entry from Germany and USA declaring the classification of the said products under CTH 85414011, 85414019 and 85414090 claiming benefit of Notification No.24/2005(Customs) and discharged ‘NIL’ BCD. Also, they had cleared the same goods classifying under CTH 85437099 discharging BCD @ 5% and claiming exemption under Sl.No.539A of the Notification No.50/2017-Cus dated 30.06.2017. Alleging that the appellant had failed to declare the correct classification of the imported goods under CTH 85414011 and thereby failed to discharge Safeguard Duty as levied under Notification No.01/2018(SG) dated 30.07.2018, investigation was initiated by retrieving documents and recording statements of various officials of the appellant. On conclusion of the investigation, show-cause notice was issued to the appellant on 20.07.2020 proposing classification of the imported goods under CTH 85414011 and differential duty of Rs.31,65,79,59/- was demanded with interest. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal.

3. At the outset, the learned advocate for the appellant has fairly submitted that there has been an inadvertent error in declaring the classification of the imported goods under various CTHs viz. 85414019; 85437099; 85404019; 85414090 and 85414011. They have submitted that the solar cells imported by the appellant are used and meant exclusively for the spacecraft and is a part and accessory of the spacecraft; hence, the correct classification should be under CTH 8803 as parts of goods of Chapter Heading 8802. In support, they have placed the certificate issued by on Mr. M. Sankaran, Distinguished Scientist & Director of the appellant indicating the use of the said solar cells in Satellites. Also, it is submitted that the learned Commissioner in the impugned order nowhere disputed the principal and only use of the imported solar cells in the satellites; therefore, the correct classification of the product should be under Chapter sub-heading 88039000. In support, they have referred to the judgment of the Hon’ble Supreme Court in the case of Westinghouse Saxby Farmer Ltd. Vs. CCE, Calcutta [2021(376) ELT 14 (SC)] and judgment of this Tribunal in the case of Hindustan Aeronautics Limited Vs. The Principal Commissioner of Customs [Final Order No.2030/2026 dated 02.03.2026]. Further, he has fairly admitted and submitted that inadvertently, the said issue has not been raised and argued before the learned Commissioner during the course of hearing. It is his contention that since it is a pure question of law and the decision would be based on the existing records of the case in determination of correct classification; therefore, they should be given an opportunity to plead the said classification before the learned Commissioner. In supp