In re Rain CII Carbon (Vizag) Limited (CAAR Mumbai)
Customs Authority for Advance Ruling (CAAR) in Mumbai has rejected an application filed by M/s. Rain CII Carbon (Vizag) Limited, seeking an advance ruling on the customs duty payable on electricity generated as a by-product in its Special Economic Zone (SEZ) unit and transferred to the Domestic Tariff Area (DTA). The rejection was primarily based on the determination that the activity of transferring this electricity does not fall under the definitions of “import” or “export” as per the relevant customs and SEZ laws, thereby stripping the CAAR of its jurisdiction to issue a ruling.
Applicant’s Submission:
Rain CII Carbon (Vizag) Limited operates an SEZ unit in Vishakhapatnam, Andhra Pradesh, primarily engaged in the manufacture of calcined petroleum coke (CPC). The company imports Raw Petroleum Coke (RPC) as raw material, which, as recognized by the Supreme Court in its 2018 SC Order in W.P. No. 13029/1985, is used as feedstock for CPC production, not as fuel.
During the calcination process, hot flue gas is generated as a waste product. To comply with environmental regulations and mandates from bodies like the Commission for Air Quality Management (CAQM Order dated February 15, 2024), this hot flue gas must be cooled and treated. The applicant utilizes the heat released during this cooling process, via a Waste Heat Removal Boiler (WHRB), to generate electricity. This electricity generation is an incidental process, and the Letter of Permission (LOP) from the Development Commissioner, APSEZ, explicitly labels electricity as a by-product.
