TaxTMI 
TaxTMI 
2021 (4) TMI 614
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....n a phased manner from 2005 to 2007. The applicant now caters to a wide cross section of industrial segments from utility to renewable energy sector and to individual retail customers across the globe. 3. The applicant submitted that they provide an extensive range of Linear Transformers from R-core to EI and Toroidal to Current transformers. These transformers can be supplied according to customer specific requirement in terms of thermal insulation, cut-offs, static-magnetic shielding, special mounting, epoxy moulding, vacuum impregnation, etc. 4. The applicant submitted that they manufacture Telecom and Data Transformers of highest quality standards to satisfy customer requirements. With engineering support from Custom Magnetics, USA they design the most efficient and cost effective solutions for their customers. All Telecom Transformers are tested for QA both during production and before shipping. Incoming quality control tests are conducted on all raw materials. The quality control department of Applicant is equipped with the latest computerized equipment available. Each shipment is provided with a full quality control report and certificate of compliance (COC). Applicant....
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....mits as under based on the best of the belief and understanding: (i) The Applicant has received an Order from M/s. Adani Green Energy Limited (PO: 4500315135 dated 08.11.2019), the copy of which is enclosed herewith for the kind consideration for supply of 25MVA ONAN/ONAF 33/0 8/0 8KV Aluminium Foil Type Winding Inverter Duty Transformers, Mandatory Spares for Transformers which also includes Packing and Forwarding, Freight and Insurance charges up to the Site of the customer. (ii) The product to be supplied falls under Chapter Heading 8504 to the best belief and understanding of the Applicant as the Applicant since years classifies the product under the said Chapter Heading. (iii) As per the indemnity / undertaking given by the counter recipient of supply i.e. M/s. Adani Green Energy Private Limited, the recipient of supply is developing and setting up a 75MW Solar Project at Chitrakoot, Uttar Pradesh (UPNEDA Project) for which an approval has been granted to the recipient of supply from the Ministry of New & Renewable Energy. (iv) For the above initial setting of the Solar Project, the recipient of supply of the applicant require machine, equip....
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.... SUPPLY & SERVICES: 2.1.0 The Scope of Supply Shall Cover Design, Engineering, Manufacture, Assembly and Testing at Works, Packing / Dispatch, Transportation to Site with Transit Insurance and Supervision of erection, testing & commissioning of the transformer complete with all fittings and accessories. 2.2.0 The scope of supply shall also include the following. a) First fill of consumables. b) Spare parts required for successful commissioning. c) Mandatory spare parts for three years trouble free operation & maintenance. O&M spares shall be considered for evaluation of bid. It shall not be binding on the owner to procure all of the O&M spares. 2.3.0 Scope of Services a) Preparation and submission of drawings & document in soft and hard form as per the drawing/document submission schedule. b) Supervision of erection, testing & commissioning of transformer. c) Submission of progress report. d) Participation in project review /Technical Coordination meetings. 2.4.0 Exclusion a) Civil works. b) Fire Fighting Equipments. c) Receipt, Unloading & Storage ....
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.... devices. This was implemented vide Notification No.24/2018-Central Tax (Rate), which came into force on 31st December 2018, and it added an explanation to entry 234: "If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the table mentioned in the notification No. 11/2017-Central Tax (Rate), dated 28 June 2017 the value of supply of goods for the purposes of this entry shall be deemed as 70% of the gross consideration charged for all such supplies, and the remaining 30% of the gross consideration charged shall be deemed as value of the said taxable service." 13. The applicant submitted that further, a new entry 38 has been added in the Notification No. 11/2017-Central Tax (Rate) pertaining to rate of services vide Notification No. 27/2018-Central Tax (Rate) dated 31st December, 2018 read with similar Notification issued under the provisions of the Gujarat GST Act,2017 which prescribes an 18% GST rate for services under chapter 9954, which pertains to construction services, or 9983, which pertains to other professional, technical and b....
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....gments from utility to renewable energy sector and to individual retail customers across the globe. Their standard line transformers are available for 9/18V output, 12/24V output and isolation transformers for 115/230V output. The input for all the above transformers is 115 V/230V. The standard line transformers of Applicant meet CSA and CE standards as well as class B insulation system. 20. The Applicant further submitted that they are capable of manufacturing 25MVA, 66KV Class Power Transformer. The said transformer manufactured under stringent stage wise Quality Checks till dispatch. The state-of-the-art facility accompanied by a team of qualified and experienced professionals adds reliability to each product. They have an annual manufacturing capacity of 600MVA. All the transformers of Applicant are type tested at NABL certified laboratory. They had type tested power transformers from 3.15MVA, 33KV Class to 15MVA, 66KV Class. 21. The Applicant has received an Order from M/s. Adani Green Energy Limited (PO: 4500315135 dated 08.11.2019), for supply of 25MVA ONAN/ONAF 33/0 8/0 8KV Aluminium Foil Type Winding Inverter Duty Transformers, Mandatory Spares for Transformers which....
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....red for their manufacture are covered under the aforesaid Entry No. 234 and are liable to be taxed at 5%. Thus to avail the benefit of said notification entry as above applicant has to satisfy two conditions namely, that the goods must be covered by Chapter Heading 84, 85 or 94 and secondly the goods shall satisfy the description "renewable energy devices & parts for their manufacture i.e. Solar Power Generating System. 25.1 Now we examine the classification of Aluminum Foil Type Winding Inverter Duty Transformer and their parts as per CTH and see whether the goods are covered under Chapter Heading 84 or 85 or 94 of the Custom Tariff code. 25.2 The tariff code 8504 of Customs Tariff Act, 1975 covers the "ELECTRICAL TRANSFORMERS, STATIC CONVERTERS (FOR EXAMPLE, RECTIFIERS) and INDUCTORS". The impugned product i.e. Inverter Duty Transformer is classifiable under Tariff Heading 8504. CTH 85049010 of Customs Tariff Act, 1975 covers the "parts of Transformer". Thus applicant satisfies first condition that the goods i.e. Inverter Duty Transformer and their parts are covered Chapter 85 of Customs Tariff Act, 1975. 25.3 Now we turn to the next aspect of the notification to find ou....
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....ormer consists of an input connection, an output connection, windings or coils and the core. When the input voltage is applied to the primary winding, AC flows in the primary winding direction and a changing magnetic field is set up in the core. As this magnetic field cuts across the secondary winding, alternating voltage is produced in the secondary winding. The ratio between the output voltage and the input voltage is the same as the ratio of the number of turns between the two windings. There are different configurations for both single-phase and three-phase systems. The ratio between the number of actual turns of the wire in each coil determines the output voltage and hence the type of transformer. With no distinction with regard to shape or size, a transformer converts electrical power from one type to another. Some of the major types of transformers used in UPS systems and inverters are mentioned below. • Inverter transformers or electronic transformers: These are commonly used for small power conversion or to get the desired voltage. It can be said that all inverter transformers are power transformers but not all power transformers are inverter transformers. ....
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.... the denial of benefit of notification by the adjudicating authority is not sustainable. The impugned order is set aside and the appeals are allowed'. (ii) Further, in the case of Bangalore Tribunal in the case of B.H.E.L. v. Commissioner of Central Excise, Hyderabad [2008 (223) E.L.T. 609 (Tribunal)] it was held that "In the present case, the appellants have claimed exemption in respect of "inverter charger card" as solar power generating system. The appellants actually manufactured SPV lantern. The above lantern required electricity for its working. It is possible to convert solar energy to electricity with the help of inverter charger manufactured by the appellants. The Dy. General Manager has certified that the inverter merger constitutes solar power generating system as it performs the function of generating the required high frequency AC power from Sunlight with the help of SPV module and supplying it to the compact fluorescent lamp of a solar lantern. In view of the above expert opinion, we hold that the impugned item can be considered as solar power generating system and is entitled for the benefit of the exemption Notification. Therefore, we allow the appeal with ....
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..../plants Explanation : If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S. No. 38 of the Table mentioned in the Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017 [G.S.R. 690(E)], the value of supply of goods for the purposes of this entry shall be deemed as seventy per cent. of the gross consideration charged for all such supplies, and the remaining thirty per cent. of the gross consideration charged shall be deemed as value of the said taxable service. The explanation to the entry was added by Notification No. 24/2018-Central Tax (Rate), dated 31-12-2018 w.e.from 01.01.2019. 28. Further vide Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, an amendment was carried out and Serial No. 38 was inserted in Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 in respect of services related to setting up of solar power plants. The entry at Serial No. 38 is as follows: Sl.No. Chapter, Section or Heading Description of Service Rate (%) Condition 38 9954 or 9983 or 9987 Service by way of constr....
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....f supply. The main clauses of Goods Purchase Order No. 4500315135 dated 08.11.2019 are reproduced here under: 1.0 Scope of Works/ Facilities 1.1 The scope of work under this contract broadly covers complete Design, engineering, manufacture, assembly, inspection and testing at manufacturer's works, packing & forwarding, Dispatch/ Transformer along with transit insurance charges on FOR Site basis of Inverter Duty Transformer along with Accessories (5/6 25MWA, ONAN/ONAF, 33/0.8/0.8kv Aluminium Foil Type Winding Inverter Duty Transformer (IDT)) for the above mentioned subject Project. 1.2 The detailed Scope of supply shall be as per, "Technical Specification" subsequent clarification issued on Tender Document (if any) & various correspondences exchanged as referred above. In case of any ambiguity in the documents the later document shall prevail. 1.4 Contractor has to comply short circuit test of transformer as per our technical requirements, it shall not absolve the contractor from performing his obligation under this contract and it shall in no way limit the liabilities and responsibilities of the contractor. In respect of the agreed param....
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....testing & commissioning of the transformer complete with all fittings and accessories. 2.2 The scope of supply shall also include the following : a) First fill of consumables. b) Spare parts required for successful commissioning c) Mandatory spare parts for three years trouble free operation & maintenance 2.3 Scope of Services a) Preparation and submission of drawings & document in soft form as per the drawing/document submission schedule. b) Supervision of erection, testing & commissioning of transformer. c) Submission of progress report. d) Participation in project review / Technical Coordination meetings. 2.4 Exclusion a) Civil Works. b) Fire Fighting Equipments. c) Receipt, Unloading & Storage d) Erection, Testing and Commissioning 29.1 On going through the clauses of both the purchase order and technical Specification it is observed that recipient of supply of goods and service i.e. M/s. Adani Green Energy Ltd. have given two Purchase order to the applicant one for supply of goods and second for supply of Service whereas the Technical Specification R....
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....e Winding Inverter Duty Transformers as a whole, by devising certain clauses, it is sought to bring about a splitting up of the intended purchase of the Transformer, as a one whole, into a purchase of goods and a purchase of services. However, the intended purpose to present the agreement as a contract for supply of goods ONLY has not achieved the desired purpose. The agreement is for supply of an effectively running Transformer. The clauses mentioned in Technical Specification reveal that the Supplier is involved in the process right from the early engineering period to procurement and implementation stage. In fact, we find that the applicant has tried to bifurcate the works contract of setting up of a Aluminium Foil type Winding Inverter Duty Transformers into contract for supply of goods and supply of services. We see that both the Purchase Order tendered are for setting up of Aluminium Foil type Winding Inverter Duty Transformers. 31. Thus, from the above it is seen that the supply of the goods and the supply of service are inextricably linked with each other. It is not that the applicant has been assigned with the work of supply of goods only. But the applicant has been giv....
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....te Purchase Order one for supply of goods and other for supply of service but it is specifically mentioned that, "if goods specified under entry No. 234 of Not. No. 01/2017-CT (Rate) along with supply of service and one is taxable service specified in the entry at S. No. 38 of Not. No. 11/2017-CT (Rate) then value of supply of goods shall be deemed 70% and remaining 30% shall be deemed value of the taxable service". In the case hand to cover under the said entry the applicant should satisfy the two conditions one the supplying the goods should be taxable and specified under entry No. 234 of Not. No. 01/2017-CT (Rate) and second there should also be supply of service alongwith the goods and said service should be taxable in terms of Entry No. 38 of Not. No. 11/2017-CT (Rate). The applicant is supplying the goods Aluminium Foil type Winding Inverter Duty Transformers and covers under CTH No. 85 of Custom Tariff Act, 1975, which are specified under Entry No. 234 of Not. No. 01/2017-CT (Rate) and taxable. Hence first condition is satisfied. The applicant is supplying the service i.e. design, engineering, inspection, testing and supervision of erection & Commissioning etc. which is dire....