Case Law Details
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
The above MA has been filed by the petitioner-appellant seeking to amend the cause title from “M/s. Gamesa Wind Turbines Private Limited.” to “M/s. Siemens Gamesa Renewable Power Private Ltd.”. Copy of Incorporation Certificate issued by the Registrar of Companies, Chennai is placed on record. The request is allowed. MA for change of cause title is allowed. Registry is directed to amend the cause title accordingly.
2. The SCN dated 12.03.2012 issued by the DRI reveals that the assessee – importer had imported and cleared two consignments of tower by classifying the same under CTH8503, the details/descriptions as per the relevant Bills of Entry have been reproduced in Table-1 of the SCN. The description of the items imported is thus very clear. It is the case of the DRI that on verification of the declaration made by the importer insofar as the classification is concerned, the importer had misclassified the said Towers under CT Item 8503 0090, availed benefit of 7.5% of Basic Customs Duty and ‘Nil’ rate of duty under Central Excise Notification No. 06/2006, Serial No. 84. The DRI appears to have investigated into the issue during the course of which, they appear to have summoned general manager of the importer to record his statement, including some of the other employees of the importer-company. Upon analysis of the statements in the context of the classification admitted by the importer, the DRI appears to have felt that the goods in question were appropriately classifiable under CTH 7308 as according to them, there is a specific heading for classification of towers.
3. It was thus alleged that the importer had misclassified the goods in question and, consequently, it was proposed vide show cause notice dated 12.03.2012 to re-classify the as Tariff Item 7308 2020 of Customs Tariff Act, 1975. The differential duty along with applicable interest was also proposed to be recovered, apart from proposal to confiscate the goods in question under Section 111(m) ibid and penalty under Section 112(a) ibid.
4. It appears that the importer filed a detailed reply along with relevant documentary evidences in response to the above SCN, but however, not satisfied with the same, the Original Authority vide OIO No.20027/2013 dated 31.12.2012 rejected both the explanation as well as the classification declared by the importer and confirmed the proposed demands for the normal period. In the impugned order, the commissioner has inter alia observed that the goods in question were not the actual working parts of the turbine generator; do not provide any operational or mechanical interaction with the generator, CTI 73082019 specifically covered towers and hence, the classification adopted by the importer cannot be accepted. It was also found that the towers in question cannot be considered as either the parts are components of the WOEG set and therefore cannot be classified under heading 8503.
5. It is against this order that the present appeal has been filed before us, however, since the Commissioner has dropped the demand for the larger period, the scope of the appeal as explained by the ld. Advocate is restricted to the normal period alone.
6. Heard Ms. Shobhana Krishnan, Ld. Advocate for the Importer–Appellant and Shri N. Satyanarayana, Ld. Assistant Commissioner for the Commissioner-Respondent.
7. We have carefully considered the documents placed on record and we have also considered the judicial precedents relied upon during the course of arguments before us. Upon considering the rival contentions, the only issue to be decided by us is, “Whether the Revenue is justified in reclassifying the Towers in question under CTI 7308 as against that declared by the appellant under CTH 8503 ?”
8. The CTI 7308 refers to “Structures and parts of structure, (for example bridges and bridge-sections, lock-gates, towers, lattice masts, roofs, roofing frame-works, doors and windows and their frames and thresholds for doors, shutters, balustrades, pillars and columns), of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of Iron or Steel). Further, Notes to Section XVI under 2 (b) indicates that other parts, if suitable for use solely or principally with a particular kind of machine or with a number of machines of the same heading are to be classified with machines of that kind or in Heading 8503. It is the case of the importer that the towers in question were for specific use as could be seen from the very description in the Bill of Entry, which says that the towers are exclusively used as parts of WOEG, we have perused the copy of the Bills of Entry placed on record and we find that the description as explained by the appellant is correct. Against this, the Revenue is of the view that the ‘Tower’ is specifically and more appropriately classifiable under 7508 since there is a specific Heading under the same. Further, the Chapter Heading 8503 specifically refers to parts suitable for use solely or principally with the machines of Heading 8501 or 8502.
9. CTH 8502 specifically refers to Electric Generating Sets and Rotary Converters and 8502 3100 refers to ‘wind powered’. CTI 7308, as indicated by us in the above paragraphs refers to ‘structures or parts of structures (including towers, etc.) and hence, the structure is more a General Term [civil in nature], but what makes the difference is the reference to ‘Wind Power Generator’. There is no doubt that right from the importation, the import was clear that the goods in question were used solely and exclusively as ‘Tower’ part of WOEG. In fact, from Circular No. 1008/15/2015–CX dated 20.10.2015 which is relied upon by Ms. Shobhana Krishnan refers to a decision of the Hon’ble Apex Court in the case of M/s. CCE Nagpur Vs Hyundai Unitech Electrical Transmission Ltd.– 2015 (323) ELT 220 (SC) wherein, it has been held clearly that the ‘Tower’ is a part of the Generator and hence, door thereof has to be necessarily a ‘part of the Generator’. The said Board’s circular reads as under: –
10. From this, it is clear that the ‘tower’ in question, as understood by the Board is clearly a part of the Wind Electric Generator and not a General/Civil Structure as understood by the Commissioner in the impugned order. The Commissioner is clearly in error in misunderstanding that the ‘tower’ in question is not a part of Wind Energy Generator, nor do we see any justification for generalizing the ‘tower’ in question. The conclusion drawn is therefore bereft of any merits and hence, the said finding cannot sustain, which we set aside. Further, the ld. Advocate has relied upon various decisions which support the contentions of the appellant. In one of the cases, viz. CC Chennai Vs Suzlon Towers and Structures Limited, Chennai Bench vide Final Order No.40093/2024 dated 25.01.2024 (in Appeal No. C/41383/2014) has even considered the classification of ‘tower flanges’ against rival tariffs vis-à-vis the eligibility for exemption benefit of Notification No.12/2012. The Bench has after a detailed analysis, concluded that the tower flanges are clearly parts of WOEG classifiable under 8503. Further, the other orders of the Benches are on the same line. In view of the above, therefore, we are of the view that the classification declared by the importer is correct and hence, the Revenue has erred in re-classifying the same. Accordingly, we set aside the impugned order and allow the appeal with consequential benefits, if any as per law.
(Order pronounced in the open court on 12.03.2025)
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