2022 (7) TMI 1495 - AAR - Customs

Project Import - Classification of imported goods - solar power project would fall within the ambit of a power plant/transmission project or not - eligibility for concessional rate of customs duty under N/N. 230/1986-Cus., dated 03.04.1986, as amended - HELD THAT - The applicant is in the business of generating electricity using PV cells and modules, therefore, they contend that the proposed solar plant projects to be setup in the state of Maharashtra would squarely fall within the purview of term 'power plant' and would be eligible for benefit under heading 98.01 of the first schedule to Customs Tariff Act read with Project Import Regulations subject to fulfilment of the prescribed conditions and procedure therein. The applicant has also stated that the benefit of project import regulations has been extended to many private sector undertakings who have executed power projects. The law doesn't restrict the concessional rate of import duty on project imports to any specific power plant. Electrical power can be obtained from different sources, e. g., hydro-electric, thermal, nuclear, wind, solar etc. The entry at sr. no. 3 of the table annexed to the notification no. 230/86-Cus., dated 03.04.1986 only shows that the sponsoring authority in case of power plants and transmission projects would be the secretary to the government of the state/union territory dealing with the subject of power or electricity. Therefore, the clear language of the notification is that the exemption would be available to all power plants. An interpretation to restrict such benefit to any particular type of power plant would therefore, be perverse. The applicant, being a private undertaking and engaged in setting up of solar power plants is eligible to import goods at concessional rate of duty under sub-heading 98010013 of the first schedule to the Customs Tariff Act, 1975 (51 of 1975) read with project Import Regulations, 1986 subject to fulfilment of conditions prescribed therein.

Summary

Issues involved:
1. Eligibility of a private undertaking engaged in setting up solar power plants to import goods at concessional rate of duty under sub-heading 98010013 of the Customs Tariff Act, 1975 read with Project Import Regulations, 1986.

Analysis:
The applicant, M/s. Aquila Solar Power Pvt. Ltd., sought an advance ruling to determine if they, as a private undertaking setting up solar power plants, are entitled to import goods at a concessional rate of duty under specific provisions. The applicant planned to import various equipment and raw materials for setting up solar power plants in Maharashtra. The application was forwarded to the Commissioner of Customs, Nhava Sheva V for comments, but no response was received. The applicant aimed to avail the concessional rate of duty under the project import scheme, citing relevant provisions under the Customs Tariff Act and Project Import Regulations.

The key question for determination was whether a solar power project falls within the scope of a power plant/transmission project eligible for concessional customs duty. The applicant argued that there were no restrictions on the type of entity eligible for project import benefits and that a solar power project should be considered a power plant. The term 'power plant' was analyzed to include various components and processes involved in setting up a solar power plant, converting sunlight into electricity for sale. The applicant's contention was supported by precedents and the broad language of the relevant notification.

The ruling authority agreed with the applicant's interpretation, emphasizing that the law did not limit concessional import duty benefits to specific types of power plants. The notification specified the sponsoring authority for power plants and transmission projects without restricting the benefit to particular types of power sources. Therefore, the authority concluded that the applicant, as a private undertaking engaged in setting up solar power plants, was indeed eligible to import goods at a concessional rate of duty under the specified provisions, subject to fulfilling the prescribed conditions and procedures outlined in the regulations.

In light of the detailed analysis and legal interpretations provided, the ruling was made in favor of the applicant, affirming their eligibility to import goods at a concessional rate of duty under the relevant provisions of the Customs Tariff Act and Project Import Regulations for setting up solar power plants.