Siemens Gamesa Renewable Power Private Limited Vs Commissioner of Customs (Seaport-Import) (CESTAT Chennai)
In a significant ruling for the renewable energy sector, the Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that wind turbine towers are to be classified as parts of wind electric generators under Customs Tariff Heading (CTH) 8503, rather than as general structures under CTH 7308. The decision, pronounced on March 12, 2025, provides clarity on the customs classification of these essential components of wind power projects.
The case involved Siemens Gamesa Renewable Power Private Limited (formerly Gamesa Wind Turbines Private Limited), which had imported wind turbine towers classifying them under CTH 8503 0090. Under this classification, the importer had availed a concessional Basic Customs Duty rate of 7.5% and ‘Nil’ Central Excise Duty based on Notification No. 06/2006.
However, the Directorate of Revenue Intelligence (DRI) initiated an investigation, contending that the towers should be more appropriately classified under CTH 7308, which covers “Structures and parts of structure… towers… of iron or steel.” The DRI’s view was that CTH 7308 was a specific heading for towers and that these towers were not actual working parts of the turbine generator, lacking operational or mechanical interaction with the generator itself. Based on this, a show cause notice was issued proposing to re-classify the imported towers under Tariff Item 7308 2020, recover the differential duty, interest, and impose penalties, along with confiscation of the goods.
The importer contested this re-classification, arguing that the towers were specifically designed and used solely and exclusively as a part of Wind Electric Generators (WOEG). They highlighted that the description in the Bills of Entry clearly indicated this specific use.
The Original Authority, however, rejected the importer’s arguments and confirmed the proposed demands for the normal period, agreeing with the revenue’s stance that the towers were not working parts of the generator and CTH 7308 specifically covered towers. The matter then reached the CESTAT.
Before the tribunal, the core issue was the correct classification of the wind turbine towers. The assessee reiterated that despite CTH 7308 specifically mentioning towers as structures, the crucial aspect was the specific use of these towers solely with wind power generators. They referred to the Notes to Section XVI of the Customs Tariff, particularly Note 2(b), which stipulates that parts suitable for use solely or principally with a particular kind of machine are to be classified with those machines or under Heading 8503 (which covers parts suitable for use solely or principally with machines of Heading 8501 or 8502; 8502 specifically includes electric generating sets, including wind-powered ones). The assessee argued that since the towers are exclusively for WOEGs (covered under 8502), they qualify as parts classifiable under 8503.
The CESTAT, after considering the arguments and examining the relevant tariff headings and notes, found merit in the assessee’s submissions. The tribunal noted that while CTH 7308 refers to ‘structures or parts of structures’, describing them as a “General Term [civil in nature]”, the key differentiator was the specific reference to ‘Wind Power Generator’ under CTH 8502.
The CESTAT placed significant reliance on a Circular from the Central Board of Excise and Customs (CBEC, now CBIC) No. 1008/15/2015–CX dated October 20, 2015. This circular, in turn, referred to a decision of the Hon’ble Supreme Court in the case of CCE Nagpur Vs Hyundai Unitech Electrical Transmission Ltd. [2015 (323) ELT 220 (SC)]. Although this Supreme Court judgment specifically dealt with towers as parts of generators in a different context, the CBEC circular interpreted this to mean that a ‘tower’ is clearly a part of a Wind Electric Generator and not merely a general/civil structure. The CESTAT found that the Commissioner had erred in concluding that the tower was not a part of the Wind Energy Generator and in treating it as a general structure.
Further supporting its conclusion, the CESTAT referred to various other decisions of its own benches which aligned with the assessee’s contention. Notably, a recent order of the Chennai Bench in the case of CC Chennai Vs Suzlon Towers and Structures Limited, dated January 25, 2024, had also concluded that tower flanges (parts of wind turbine towers) were clearly parts of WOEG classifiable under 8503.
Based on the specific use of the towers solely with wind power generators, the relevant tariff notes, the CBEC circular interpreting the Supreme Court’s view, and consistent decisions of the tribunal, the CESTAT held that the classification declared by the importer under CTH 8503 was correct. The tribunal concluded that the revenue had erred in re-classifying the towers under CTH 7308.
Accordingly, the CESTAT set aside the order of the Original Authority and allowed the appeal, with consequential benefits to the assessee as per law. The ruling clarifies that for customs purposes, wind turbine towers are to be treated as specialized parts of wind electric generators, reflecting their dedicated function within a renewable energy system, rather than generic structural components. This decision is expected to provide certainty for importers and the wind energy industry regarding the customs duty applicable to these towers.
FULL TEXT OF THE CESTAT CHENNAI ORDER
