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2022 (11) TMI 1418 - AAR - CustomsClassification of goods proposed to be imported - PV Modules, PV Cells, Inverter, Solar Cable, Power Cable, Transformers, Aluminium Frame, Solar Glass, Steel Structure, etc. for setting up of solar power plants - to be classified under Chapter Heading 9801 00 13 of First Schedule to Customs Tariff Act, 1975 or not - applicability for concessional rate of duty - HELD THAT - The Notification No. 54/2022-Customs dated 19th October, 2022 is absolutely clear on the fact that the benefit of the PIR, 1986 cannot be extended to Solar Power Projects. The Central Board of Indirect Taxes and Customs issued Project Import (Amendment) Regulations, 2022 vide the aforesaid Notification, whereby, In the Project Import Regulations, 1986, against Sr. No. 2, in column2, and in Sr. No. 3, in column 2, for the words 'All Power Plants and Transmission Projects', the words 'All Power Plants and Transmission Projects, other than solar power plants or solar power projects' shall be substituted . Further, vide notification No. 2/2022- Customs, dated 1st February 2022, 'New power projects' registered after 30th September 2022 under project imports will attract 7.5% BCD rate. S. No. 1(155 to 163) and IV (vii) of notification No. 2/2022-Customs, dated 1st February 2022 read with Clause 97(b) of the Finance Bill, 2022 refers . However, there is no mention of whether any 'Power Project' would include 'Nuclear or Solar Power' as argued in the instant case. As per the current case, the inclusion of 'Nuclear and Solar Power' do not find any mention under the term 'Power Projects' under the Notification issued in context to the Project Import Tariffs or under extant Project Import Regulations, 1986. Thus, solar power plant transmission projects have been excluded from the purview of PIR, 1986 thereby machinery, raw material, components etc. required for setting up of solar power plants are not covered under heading 9801 read with PIR, 1986.
Issues Involved:
1. Eligibility of a private undertaking to import goods at a concessional rate of duty under Chapter Heading 9801 00 13 of the Customs Tariff Act, 1975 read with Project Import Regulations, 1986 (PIR, 1986). 2. Interpretation of the term "Power Project" and its applicability to solar power projects under the Customs Tariff Act and PIR, 1986. 3. Amendments made by Notification No. 54/2022-Customs and their impact on the eligibility of solar power projects for concessional duty rates. Issue-wise Detailed Analysis: 1. Eligibility of a Private Undertaking to Import Goods at Concessional Rate: The applicant, a private company engaged in setting up solar power plants, sought an advance ruling on whether it could import various equipment and raw materials at a concessional rate under Chapter Heading 9801 00 13 of the Customs Tariff Act, 1975, read with PIR, 1986. The applicant argued that as per Chapter Heading 9801 00 13, machinery and raw materials required for the initial setup of a power project are eligible for concessional duty rates, provided they comply with PIR, 1986. The applicant contended that their solar power plant qualifies as a "power project" and should be eligible for the concessional rate. 2. Interpretation of the Term "Power Project": The applicant argued that the term "Power Project" is not defined under the Customs Act, and thus, its dictionary meaning should be considered. They cited previous rulings and policies, including a recent ruling by CAAR, Mumbai, which supported the inclusion of solar power projects under the term "power project." The applicant also referred to various state policies and tenders that classify solar power plants as power projects. They further argued that the exclusion of solar power projects from the list of sponsoring authorities in the recent amendment (Notification No. 54/2022-Customs) does not imply their exclusion from the definition of power projects under Chapter Heading 9801 00 13. 3. Impact of Notification No. 54/2022-Customs: The applicant highlighted that Notification No. 54/2022-Customs amended the table of sponsoring authorities in PIR, 1986, to exclude solar power projects from the list of power plants and transmission projects. They argued that this exclusion should not affect the eligibility of solar power projects for concessional duty rates under Chapter Heading 9801 00 13. The applicant contended that the exclusion from the list of sponsoring authorities does not override the provisions of the Customs Tariff Act, which still includes solar power projects under the term "power project." Judgment: The Authority for Advance Rulings (AAR) examined the application, supporting arguments, and comments from the concerned Commissioner of Customs. The AAR noted that Notification No. 54/2022-Customs explicitly excludes solar power projects from the purview of PIR, 1986. The AAR emphasized that the Central Board of Indirect Taxes and Customs (CBIC) issued the Project Import (Amendment) Regulations, 2022, which clearly stated that solar power plants and projects are excluded from the benefits of PIR, 1986. The AAR also highlighted that the Explanatory Memorandum to the Finance Bill did not include solar power projects under the term "Power Projects" in the final notifications or the Finance Act. The AAR concluded that the amendments carried out in Notification No. 54/2022-Customs are clear and unambiguous in excluding solar power projects from the benefits of PIR, 1986. As a result, machinery, raw materials, and components required for setting up solar power plants are not covered under Chapter Heading 9801 read with PIR, 1986. The AAR ruled that the applicant is not eligible to import goods at a concessional rate of duty under Chapter Heading 9801 00 13 for setting up solar power plants. Conclusion: The AAR ruled that solar power plants and projects are excluded from the benefits of PIR, 1986, as per Notification No. 54/2022-Customs. Consequently, the applicant is not eligible to import goods at a concessional rate of duty under Chapter Heading 9801 00 13 for setting up solar power plants. The ruling emphasized the clear intent of the amendments to exclude solar power projects from the concessional duty benefits provided under PIR, 1986.
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