2024 (1) TMI 1171 - AT - Customs

Design-specific tower flanges for wind mills classified as WOEG parts under CTH 8503 0010, customs duty exemption upheld

CESTAT Chennai dismissed the revenue's appeal regarding classification of imported tower flanges. The tribunal held that design-specific flanges meant ... Classification of imported goods - Tower Flanges - Benefit of exemption from customs duty - to be classified under Customs Tariff Heading 8503 0010 as Parts of Wind Operated Electricity Generator or not - Notification No. 12/2012--CE (Sl.No. 332) dated 17.03.2012 - HELD THAT:- The issue is no more res integra as flanges imported are design specific and are meant only for use in erection of Wind Mill Towers and are treated as parts of Wind Operated Electricity Generator falling under CTH 8503 and not general purpose flanges falling under 7307. Even, a perusal of the HSN explanatory notes to Heading 7307 indicates that the said heading excludes constructions clearly identifiable as machine parts. The Respondent has relied upon the decisions of the Hon’ble Tribunal in the cases of BHEL [1999 (4) TMI 149 - CEGAT, NEW DELHI], COMMISSIONER OF C. EX., CALCUTTA-II VERSUS TECHNO FAB MANUFACTURING LTD. [2003 (9) TMI 180 - CESTAT, KOLKATA] and Hyundai Unitech Electrical Transmission [2005 (7) TMI 129 - CESTAT, MUMBAI] which held that Wind Mill Tower is a part of WOEG. This Tribunal in the case of Commissioner of Customs (Port--Import) Vs. Gamesa Wind--Turbines [2024 (1) TMI 736 - CESTAT CHENNAI] has held that the imported flanges with specific part numbers are the parts required for Wind Operated Electric Generators (WOEG) classifying them under CTH 85030010 and to be eligible for the benefit of Notification No. 12/2012--CE (Sl.No. 332). The appeal filed by the Department is without merits and as such cannot be sustained - Appeal of Revenue dismissed. Issues Involved:1. Classification of imported flanges.2. Eligibility for exemption under Notification No. 12/2012-CE dated 17.03.2012.Summary:1. Classification of Imported Flanges:The primary issue is whether the flanges imported by the Respondent are classifiable under Customs Tariff Heading (CTH) 8503 as parts of Wind Operated Electricity Generator (WOEG) or under CTH 7307 as general-purpose items. The Revenue contends that the flanges are part of Wind Mill Towers and are of general use, thus should be classified under heading 7308, which covers metal structures and parts of structures. The Revenue cites the Harmonized Commodity Description and Coding System Explanatory Notes (HSN) and various rulings, including the United States International Trade Commission Rulings, to support their claim that the towers and flanges do not provide operational or mechanical interaction with the turbine generator and therefore should not be classified under heading 8503.Conversely, the Respondent argues that the flanges are design-specific and meant only for use with Wind Mill Towers, thus should be classified under heading 8503. They cite previous decisions, including those of the Tribunal in cases like BHEL, Techno Fab Manufacturing Ltd., and Hyundai Unitech Electrical Transmission, which held that windmill towers are parts of WOEG. The Respondent also references the Tribunal's decision in Vestas Wind Technology and the Larger Bench decision in Rakhoh Enterprises, which support the classification of tower sections and parts under heading 8503.2. Eligibility for Exemption under Notification No. 12/2012-CE:The second issue is whether the imported flanges are eligible for the exemption benefit under Notification No. 12/2012-CE (Sl.No. 332) dated 17.03.2012. The Revenue argues that the exemption is meant only for WOEG and its components, not for the entire wind power generation system or power plants. They assert that the towers and flanges do not qualify as parts or components of WOEG and thus are not eligible for the exemption.The Respondent contends that the flanges are integral parts of WOEG and should be eligible for the exemption. They reference various decisions, including those of the Tribunal in the cases of RRB Energy Ltd. and Pushpaman Forgings, which held that flanges used in towers are eligible for exemption as parts of WOEG. The Respondent also highlights the Tribunal's decision in Sew Eurodrive India Pvt. Ltd., which classified imported flanges under heading 8503 and granted the exemption.Judgment:The Tribunal found that the issue is no longer res integra, as flanges imported are design-specific and meant only for use in the erection of Wind Mill Towers, thus classifiable under CTH 8503 and not general-purpose flanges under 7307. The Tribunal relied on previous decisions, including those in BHEL, Techno Fab Manufacturing Ltd., Hyundai Unitech Electrical Transmission, and Vestas Wind Technology, which supported the classification of windmill towers and parts under heading 8503. The Tribunal also noted that the Larger Bench in Rakhoh Enterprises held that windmill towers are parts of WOEG and eligible for exemption.After considering the facts and evidence, the Tribunal concluded that the appeal filed by the Department is without merit and cannot be sustained. The Tribunal dismissed the Department's appeal and disposed of the cross objections filed by the Respondent, affirming that the imported flanges are classifiable under heading 8503 and eligible for the exemption under Notification No. 12/2012-CE.(Order pronounced in open court on 25.01.2024)