2025 (3) TMI 696 - AT - Customs

Classification of imported goods - imported towers - to be classified under Customs Tariff Item (CTI) 7308 or under Customs Tariff Heading (CTH) 8503 - whether the towers are parts of Wind Operated Electricity Generators (WOEG) and thus eligible for specific tariff classification and exemption benefits? - HELD THAT - The tower in question as understood by the Board is clearly a part of the Wind Electric Generator and not a General/Civil Structure as understood by the Commissioner in the impugned order. The Commissioner is clearly in error in misunderstanding that the tower in question is not a part of Wind Energy Generator nor do we see any justification for generalizing the tower in question. The conclusion drawn is therefore bereft of any merits and hence the said finding cannot sustain which was aside. In one of the cases viz. CC Chennai Vs Suzlon Towers and Structures Limited Chennai Bench 2024 (1) TMI 1171 - CESTAT CHENNAI has even considered the classification of tower flanges against rival tariffs vis- -vis the eligibility for exemption benefit of Notification No.12/2012. The Bench has after a detailed analysis concluded that the tower flanges are clearly parts of WOEG classifiable under 8503. Further the other orders of the Benches are on the same line. Conclusion - The towers imported by the appellant were indeed parts of WOEG and thus should be classified under CTH 8503. The impugned order set aside - appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in the judgment was whether the Revenue was justified in re-classifying the imported towers under Customs Tariff Item (CTI) 7308 instead of the classification declared by the appellant under Customs Tariff Heading (CTH) 8503. This issue involves determining whether the towers are parts of Wind Operated Electricity Generators (WOEG) and thus eligible for specific tariff classification and exemption benefits.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

CTI 7308 pertains to "Structures and parts of structures, of iron or steel," which includes towers. CTH 8503 covers parts suitable for use solely or principally with machines of Heading 8501 or 8502, which includes electric generating sets and rotary converters. The legal framework also includes Central Excise Notification No. 06/2006 and Notification No. 12/2012, which provide exemptions for parts of WOEG.

The court referred to Circular No. 1008/15/2015-CX and the Supreme Court decision in M/s. CCE Nagpur Vs Hyundai Unitech Electrical Transmission Ltd., which clarified that towers are parts of generators and eligible for exemption under the relevant notifications.

Court's Interpretation and Reasoning

The Tribunal examined whether the towers were indeed parts of WOEG and thus should be classified under CTH 8503. It considered the description in the Bills of Entry, which indicated that the towers were used solely as parts of WOEG. The Tribunal found that the Revenue's classification under CTI 7308 was inappropriate as it generalized the towers as civil structures rather than parts of generators.

Key Evidence and Findings

The Tribunal reviewed the Bills of Entry and the Circular No. 1008/15/2015-CX, which supported the appellant's position that the towers were parts of WOEG. The Tribunal also considered previous judicial decisions, including the Supreme Court's ruling that tower doors are integral to the generator, reinforcing their classification as parts of WOEG.

Application of Law to Facts

The Tribunal applied the legal framework and precedents to the facts, determining that the towers were specifically designed for and used as parts of WOEG. This specific use aligned with the criteria for classification under CTH 8503, as they were parts suitable for use with electric generating sets.

Treatment of Competing Arguments

The Tribunal addressed the Revenue's argument that the towers should be classified under CTI 7308 due to their structural nature. However, it found that this interpretation ignored the specific use of the towers as parts of WOEG, which is critical for classification under CTH 8503. The Tribunal emphasized that the specific use and the intention behind the importation were crucial factors.

Conclusions

The Tribunal concluded that the towers were correctly classified under CTH 8503 as parts of WOEG. It found the Revenue's re-classification under CTI 7308 to be erroneous and unsupported by the evidence and legal precedents.

SIGNIFICANT HOLDINGS

The Tribunal held that the towers imported by the appellant were indeed parts of WOEG and thus should be classified under CTH 8503. It emphasized that the specific use of the towers as parts of wind energy generators was a decisive factor in their classification. The Tribunal set aside the impugned order and allowed the appeal, granting consequential benefits to the appellant.

The Tribunal's decision reinforced the principle that classification should be based on the specific use and function of the goods, aligning with established legal precedents and clarifications provided by the relevant authorities. The ruling underscored the importance of adhering to the intended use of imported goods when determining their tariff classification and eligibility for exemptions.