Import Of Inverter Component Without Photo-Voltaic Cell Not Eligible For Customs Duty Exemption: Kerala High Court

“Inasmuch as the import was only of the inverter component, without the photo-voltaic cell - a component that was essential for harnessing solar energy, which could then be routed through the inverter system for the supply of electrical energy to the grid, the assessee cannot be seen as eligible for the benefit of the exemption notification……” stated the Division Bench of Justices A.K. Jayasankaran Nambiar and P.M. Manoj.

In this case, the assessee/appellant had imported “Grid Tied Solar Inverters” by claiming the exemption of additional duty of customs under Notification No.12/2012 CE. The claim for exemption of duty was rejected by the original authority, who was of the view that the goods imported by the assessee could not merit categorisation as a Solar Power Generating System.

The assessee filed an appeal before the First Appellate Authority. The First Appellate Authority found that no evidence had been adduced by the revenue to demonstrate multiple uses of the solar inverter and inasmuch as the exemption notification had to be construed liberally in favour of the assessee, the goods imported by the assessee would be entitled to the benefit of the exemption notification.

In a further appeal carried by the Customs Department before the Appellate Tribunal, the Appellate Tribunal found that, in as much as the assessee had imported only the inverter component of the Solar Power Generating System and had not imported the photo-voltaic cell necessary for the capture of solar energy along with the inverter, they had not imported a solar power generating system for the purposes of the notification.

The Appellate Tribunal found that the assessee had not satisfied the condition for exemption under the notification aforementioned and allowed the appeal preferred by the Customs Department. The assessee has challenged the order passed by the Appellate Tribunal.

The assessee submitted that the reasoning of the Appellate Tribunal is flawed since the Appellate Tribunal considered the imported item as only a part of the system and not of the entire system that was entitled to the benefit of the exemption notification.

The bench stated that it is the admitted case of the assessee that what they had imported was only the inverter component of the Solar Power Generating System since they had not imported, as a composite unit, both the photo-voltaic cell as well as the inverter. Had they imported both the above components together as an integral unit, then perhaps they could have obtained the benefit of the notification that granted an exemption in respect of Solar Power Generating Systems.

In view of the above, the bench dismissed the appeal.

Case Title: M/s Solgen Energy Pvt. Ltd. v. Commissioner of Customs

Case Number: CUS.APPEAL NO. 2 OF 2024

Citation: 2025 LiveLaw (Ker) 314

Counsel for Appellant/ Assessee: M. Balagopal, R. Devika and Anjali Menon

Counsel for Respondent/ Department: Suvin R Menon

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