IN RE: JUPITER SOLAR POWER LTD.
GST
2018 (11) TMI 401 – AUTHORITY FOR ADVANCE RULING HIMACHAL PRADESH – 2018 (18) G. S. T. L. 53 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING HIMACHAL PRADESH – AAR
Dated:- 25-7-2018
Order No. EXN-JCSTE/ARA-PLP/2018-19-01-04
GST
Shri Hitesh Sharma, Member (SGST) And Dr. Ravindra Kumar, Member (CGST)
ORDER
Proceedings: Present application has been filed u/s 97 of the Central Goods & Services Act, 2017 & similar provisions under Himachal Pradesh Goods & Services Act, 2017 (hereinafter referred to as CGST Act, 2017 & HPGST Act, 2017). The Applicant M/s. Jupiter Solar Power Ltd. Baddi is a registered taxpayer & is engaged in manufacture of solar photovoltaic cells in its factory located at Baddi, Distt. Solan (H.P.).
2. For admission & hearing u/s 98 of the CGST Act, 2017/HPGST Act, 2017, notice was issued to the applicant on dated 10-7-2017 directing him to appear on 16-7-2017. However, on 16-7-2017, Mr. Daman Thakur, representativ
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lity of Notification issued under the provisions of the Act', which is specified under Section 97(2)b of the Act. So, in view of the above, the application of the Applicant was admitted. Thereafter, the arguments of the Applicant were heard & ruling was reserved which is released today i.e. on dated 25-7-2018.
3. Statements of facts
(a) As per the Annexure-I appended to the application, the Applicant is engaged in manufacturing of Solar Photovoltaic cells. For the manufacture of solar photovoltaic cells, the Applicant procures (imported as well as indigenous) following items/ parts/ materials which are essential components of Solar Photovoltaic Cells. Out of these items Silicon Wafers is the most important item which absorbs the photons & in turn generates electricity.Table A-List of inputs for manufacture of Solar Photovoltaic Cells:
Sr. No.
Description
Classification
1.
Undiffused polycrystalline silicon wafers
3808 00 10
2.
Aluminum paste
3212 90 30
3.
Hydrofluoric
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ed
The Applicant wants the Advance Ruling on the issue that whether the items used for manufacture of Solar Cells as listed in table above procured by Applicant can qualify as parts for manufacture of Photovoltaic Cells/Solar Cells to be covered under Entry 234 of Schedule-I of Notification No. 1/2017-Integrated Tax (Rate), dated 28-6-2017 or not.
5. Interpretation of the Applicant
(a) As per the Applicant, Silicon wafer is the most important part for the manufacture of solar cells. Silicon wafer combines with the product & makes up whole of the solar/photovoltaic cells. It is contained in the solar cell & visible in it. However, when it is taken out, major damage shall be caused because it is fitted in somewhat permanent way. Without wafer the functional value of the photovoltaic cell becomes NIL because the wafers help in creating electricity by absorbing photons from the sunlight.
(b) The expression used in Entry 234 of Schedule-I of Notification above is not “Part of Photovolta
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with others, makes up whole of something”.
So, the items mentioned in Table A complete the product i.e. Photovoltaic cells & are to be treated as parts in terms of Entry 234 of schedule-I of the said notification.
(d) Further, accepting these items as parts is revenue neutral exercise because 100% credit is admissible to solar cell manufacturers on account of inverted tax structure. The manufacturers are eligible for refund of excess credit. Charging higher IGST on parts leads to blockage of working capital.
(e) Therefore the applicant is of the view that the products mentioned in table A should be ruled as pail for the manufacture of Photovoltaic cells & therefore shall be charged 5% of IGST on procurement.
6. Observation
(1) Table A specifies various items which are procured for the manufacturing of Photovoltaic/ Solar cells. These items are used in the manufacturing process as under :-
(a) During the process of manufacturing of solar cells, the Silicon wafers are cleaned wit
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painted with the help of silver paste. Aluminium paste & Printing Screens for electrical contacts & these contacts are further dried through high temperature furnaces for penetrating the anti-reflective coating (ARC) & contact the emitter near the highly doped surface in order to get low contact resistance.
(f) In the last stage, the silicon wafers which have been converted along with some other apparatus/ items/ parts into solar cells are tested for electrical parameters of the solar cells like efficiency, short circuit current, open circuit voltage, fill factor, shunt resistance etc.
(2) It is clear from the whole manufacturing process mentioned above that silicon wafer is the most important input for the manufacture of solar cells which is treated with the various chemicals during the different steps of texturization, diffusion, junction edge isolation anti-reflection coating, etc. The various chemicals used during the manufacturing process have been specified in Table A from Sr.
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wafers
(2.2) Further, Rule 3(a) of the general rules of interpretation (The Customs Tariff Act, 1975) states that heading which provides the most specific description shall be preferred to a heading providing a more general description. Here, silicon wafer falls 'specifically' in chapter Heading 3818, which is most specific entry whereas solar photovoltaic cell falls in chapter Heading 8541; moreover, machines and apparatus for the manufacture of wafers falls under chapter Heading 8486. In this case silicon wafer falls specifically in chapter heading 3818 that is why duty rate thereof will be applicable.
(2.3) Furthermore, along with some other inputs/ items, silicon wafers, as specified at Sr. No. 1 of Table A, is the most important input for the manufacturing of Photovoltaic cells & makes up almost the whole of Photovoltaic cells. It is contained in the solar cell & visible in the solar cell. It is also clear that without the Silicon wafer, the functional value of the Phot
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hing should remain after the part is taken out of the whole. So in the present case, though the Silicon wafer has substantial physical & independent identity, yet when it is taken out of the solar cell, nothing remains & secondly, it cannot be used in another cell as it gets totally damaged. This fact has been admitted by the Applicant also. A photovoltaic cell can at best be termed as chemical treated 'Silicon wafer' along with other items so as to infuse it with the properties of a solar cell'. That is why it cannot be termed as the 'Part of the Photovoltaic Cell' for the purpose of Entry-234 of Schedule-I of the aforesaid notification.
7. Advance Ruling u/s 98 of the Act
In view of the above observations, it is ruled that –
(1) The items used for manufacture of solar cells as listed in Table A, procured by the applicant do not qualify to be termed as 'Parts for the manufacture of Photovoltaic/ Solar cells' for the purpose of Entry 234 of Schedule-I of
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