Case Law Details
Commissioner of Customs (Port-Import) Vs Gamesa Wind Turbine Pvt Ltd (CESTAT Chennai)
The case involves an appeal by the Commissioner of Customs (Port-Import) against Gamesa Wind Turbine Pvt Ltd regarding the classification of imported flanges. The primary dispute is whether the flanges should be classified under CTH 73072100, as contended by the department, or under CTH 8503, as upheld by the Commissioner (Appeals). Additionally, the question of eligibility for excise duty exemption under notification no. 12/2012 is addressed.
Key Arguments:
a. Department’s Argument:
- The department argues that the flanges, though used in wind-operated electric generators (WOEG), are items of general use and should be classified under CTH 73072100.
- The contention is that towers, including lattice towers, ferro-concrete towers, hybrid towers, and guyed towers, are parts of WOEG, but flanges are not.
b. Respondent’s Argument:
- Gamesa Wind Turbine Pvt Ltd contends that the flanges are integral and specifically designed for the construction of WOEG towers.
- Reference is made to a CBIC circular clarifying that towers, nacelle, motor, and wind turbine controller are all parts of WOEG and eligible for exemption.
c. Legal Precedent: The respondent cites the decision of the Hon’ble Supreme Court in the case of M/s. Gemini Instratech Vs. CCE, wherein it was held that towers are parts of WOEG and eligible for exemption.
Tribunal Decision – M/s Sew Eurodrive India Pvt. Ltd.:
- The Tribunal’s decision in M/s Sew Eurodrive India Pvt. Ltd. is referenced, where the classification of flanges under CTH 8503 was upheld, and eligibility for exemption was confirmed.
Key Findings:
a. Classification of Flanges:
- The Tribunal relies on its earlier decision in M/s Sew Eurodrive India Pvt. Ltd., emphasizing that flanges are parts of WOEG and should be classified under CTH 8503 based on functionality and end-use.
- The Tribunal rejects the department’s argument that flanges are items of general use and should be classified under CTH 73072100.
b. Eligibility for Exemption: The Tribunal confirms that flanges classified under CTH 8503 are eligible for the benefit of excise duty exemption as per notification no. 12/2012.
c. CBIC Circular and Legal Precedent: The respondent’s reference to the CBIC circular and the Supreme Court’s decision supports the argument that towers and related components are integral parts of WOEG, reinforcing the classification of flanges under CTH 8503.
Conclusion: The Tribunal, after considering the facts and legal precedents, dismisses the department’s appeal, upholding the classification of flanges under CTH 8503 and confirming their eligibility for excise duty exemption. This decision aligns with the interpretation that specific components designed for WOEG should be classified based on their functionality and use in the context of wind energy generation.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the respondents imported ‘Flanges’ with specific part numbers along with the additional information that these flanges are parts required for Wind Operated Electric Generators (WOEG) classifying them under CTH 85030010 and claiming the benefit of notification no.12/2012-CE (at Sl.No.332, List 8). The original authority denied the benefit of exemption holding that these items, namely, flanges cannot be considered as parts of WOEG and being of general use they are to be classified under 730791. Against such order, the respondent filed appeal before the Commissioner (Appeals), who vide order impugned herein allowed the appeal holding that the flanges are classifiable under CTH85030010 as parts of WOEG and are eligible for the exemption as per notification No.12/2012-CE dated 17/3/2012. Aggrieved by such order, the department is now before the Tribunal.
2. The Ld. AR Shri R. Rajaraman appeared and argued for the It is submitted that the flanges are used in the Tubular towers of the WOG. The other parts of such wind power plants are Lattice tower, Ferro-Concrete tower, Hybrid tower and Guyed tower. These towers are nothing but support structure for wind turbines. Though towers are part of WOEG, the flanges cannot be considered as part of WOEG and are just items of general use. These items merit classification under subheading 730791. It is thus argued by Ld. Respondent that the items are not eligible for the benefit of notification No.12/2012-CE dated 17/3/2012.. The Ld. AR prayed that the appeal may be allowed.
3. The counsel Shri Rohan Muralidharan appeared and argued for the respondent. It is submitted that the flanges are integral to and specifically designed for the construction of the towers of WOEGs. The CBIC vide circular no.1008/15/2015-CX dated 20/10/2015 has clarified that the tower, nacelle, motor, wind turbine controller are all parts of WOEG and would be eligible for exemption. The said clarification was based on the decision of the Hon’ble Supreme Court in the case of M/s. Gemini Instratech Vs. CCE in Civil Appeal no. 1218 of 2006 reported in 2015 323 ELT 220 (SC).
4. It is submitted by the Ld. counsel that recently the Tribunal in the case of M/s. Sew Eurodrive India Pvt. Ltd. Vs. Commissioner of Customs (2024-VIL-18-CESTAT-CHE-CU) had analysed the very same dispute with respect of classification of flanges and held that flanges are classifiable under CTH 8503 and eligible for benefit of It is prayed that the appeal may be dismissed.
5. Heard both sides.
6. The issue to be decided is whether the flanges imported by the respondent are classifiable under 73072100 as contended by the department or under 8503 as confirmed by the Commissioner (Appeals).
7. The very same issue was decided by the Tribunal in the case of M/s Sew Eurodrive India Pvt. Ltd. (supra) and after considering the facts the Tribunal has held that the flanges are parts of WOEG and are classifiable under 8503 and not CTH 7307 as claimed by the department. It was also held that the flanges are eligible for the exemption as per notification no. 12/2012. The relevant para reads as under:
“12.3 If every ‘flange’ available in the market could be used in any industry, then perhaps the classification under a single CTH would have served that purpose, but since one size does not fit all, different classifications are provided. The classification thus depends on, inter alia, functionality as well. Hence, when an item is imported for a specific purpose, if the Revenue does not believe in the classification declared by such importer, then the same could be rejected on some palpable evidence and if required, the Revenue could always insist upon further details / explanation in so far as the function / end-use claimed by such importer is concerned, in order to ascertain the chief/primary function, to arrive at the proper classification, otherwise the purpose of having two Customs Tariff Headings loses its significance, which is not the intention of legislature.
13. In view of our above discussions, we do not find any substance or merits in the impugned order, to sustain the re-classification attempt made by the original authority as sustained in the impugned order, for which reason the same deserves to be set aside, which we hereby do.”
8. After appreciating the facts, evidence placed before us and following the decision of the Tribunal discussed above we are of the considered opinion that the appeals filed by the department is without merits.
9. The appeals are therefore dismissed.
(dictated and pronounced in court)
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