Solar modules with bypass diodes will be classified under 8541, hence no custom duty


Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance India has issued a clarification regarding solar modules.

Identifying the function of the bypass diodes in the module, where it protects the solar modules at the time of shading of solar cells and not to control the direction of the current, the board has opinionated that solar modules equipped with bypass diode merits classification under customs tariff headings (CTH) 8541.

Dharmendra Kumar, a solar analyst at IHS Markit India, told pv magazine that classification of modules with bypass diodes under section 8541, will make the PV module fall under 0% customs duty.

Moreover, the board concerning the decisions of World Customs Organizations in the matter has stated that the most common feature of the diode is to allow an electric current to pass only in forward direction, i.e., forward biasing. Therefore, depending on diodes position in the module, it is referred as bypass or blocking diode.

Thus, solar module equipped with blocking diodes are classified under 8501, and modules equipped with both bypass and blocking diodes are categorized under CTH 8501. Therefore, such modules continue to incur 7.5% basic customs duty.

Kumar outlined that since the bulk of module imports in India are attached with bypass diodes, this move by the government will bring a big sigh of relief to developers. “This is also going to boost the PV installations in H2 2018, especially those projects that were delayed during Q4 2017, because of module price increase and 7.5% basic customs duty imposition,” he said.

Before this latest classification of diodes, the board had notified in 2016 regarding classification of solar modules equipped with elements which are associated with power supply.

It clarified that solar modules equipped with elements and these elements supply the power to an external load, i.e., a motor, an electrolyzer, are classified under 8501. And, if the element does not supply any power or there is no element equipped, then the solar module falls under the section 8541.

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