2007 (5) TMI 76 - AAR - Customs

Two issue arises (i) Classification of the components and parts of wind operated electricity generator imported in accordance with Project Import Regulation (ii) Exemption of additional duty - Held that (i) the said components and parts fall under Heading 98.01 (ii) Exemption allowable whole of duty leviable u/s 3(1) of CTA

Summary

Issues Involved:
1. Classification under Customs Tariff Heading 9801.
2. Eligibility for exemption from basic customs duty under Serial No. 399 (iv) of Customs Notification No. 21/2002-Cus.
3. Eligibility for exemption from the whole of the additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975.
4. Eligibility for exemption from the whole of the additional duty of customs under Section 3(5) of the Customs Tariff Act, 1975.

Issue-wise Detailed Analysis:

1. Classification under Customs Tariff Heading 9801:
The applicant, Enercon (India) Limited, intends to import components and parts for setting up wind-energy-based independent power projects and seeks to classify these under Customs Tariff Heading 9801. The Commissioner of Customs argued that Heading 9801 applies only to specified projects with detailed itemized lists of goods approved by sponsoring authorities. The Authority ruled that compliance with Project Import Regulations, including obtaining clearance from the sponsoring authority and registering contracts, is mandatory. The applicant's willingness to comply with these requirements was noted, and it was concluded that the goods required for power generation projects, if imported in accordance with the Project Import Regulations, will be eligible for classification under Tariff Heading 9801.

2. Eligibility for Exemption from Basic Customs Duty:
The applicant sought exemption from basic customs duty in excess of 5% under Serial No. 399 (iv) of Customs Notification No. 21/2002-Cus. The Authority confirmed that goods required for power generation projects, imported under Heading 9801 and in accordance with Project Import Regulations, are eligible for this exemption. The notification specifies a 5% basic duty rate for such goods, and anything above this rate stands exempted.

3. Eligibility for Exemption from Additional Duty under Section 3(1):
The applicant argued that no additional duty under Section 3(1) is payable on components and parts of wind-operated electricity generators, citing Central Excise Notification No. 6/2006, which exempts such components from excise duty. The Authority agreed, stating that Section 3(1) of the Customs Tariff Act is an independent charging provision, and if excise duty on similar goods manufactured in India is nil, no additional customs duty is payable on the imported goods. Therefore, components and parts of wind-operated electricity generators imported under Chapter 9801 are exempt from additional duty under Section 3(1).

4. Eligibility for Exemption from Additional Duty under Section 3(5):
The applicant sought exemption from the whole of the additional duty under Section 3(5) of the Customs Tariff Act by virtue of Serial No. 11 of Custom Exemption Notification No. 20/2006-Cus. The Authority confirmed that goods required for power generation projects, imported under Heading 9801, are exempt from additional duty under Section 3(5). This exemption applies to goods specified in item (iv) and item (vi) against Sl. No. 399 of the Table annexed to Notification No. 21/2002-Cus.

Conclusion:
The Authority ruled affirmatively on all questions, subject to compliance with Project Import Regulations. Goods required for power generation projects, if imported under Heading 9801 and in accordance with the regulations, are eligible for classification under 9801, and for exemptions from basic customs duty in excess of 5%, additional duty under Section 3(1) for components and parts of wind-operated electricity generators, and additional duty under Section 3(5). The application was disposed of accordingly.