2022 (5) TMI 647 - AT - Central Excise

Benefit of exemption notification - benefit of N/N. 15/2010-CE dated 27.2.2010 - manufacture and clearance of galvanised solar structure for the initial setting up of solar power plants - whether mounting structure cleared by the appellant can be said to be machinery, prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and component or not - HELD THAT - In terms of the notification, exemption would be available to all items of machinery, including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control)and components for initial setting up of a solar power generation project or facility; exemption is granted on the basis of a certificate issued by an Officer not below the rank of Deputy Secretary to the Government of India in the Ministry of New and Renewable Energy recommending the grant of this exemption and the said officer certifies that the goods are required for initial setting up of solar power generation project or facility. It is clear that experts in the field consider the Module Mounting Structure as an integral and essential component of the solar power systems and the Ministry implementing the projects also considers the same as components of the solar power plants and hence were covered by the notifications. Even by common understanding, a component is an essential part of the system without which the system would not function. Therefore, it is not open to the department to deny the benefit of exemption notification. Coming to the procedural compliance, it is not the case of the department that the appellant did not produce the requisite certificate from the competent authority. In such circumstances, in terms of the notification in the event of non-compliance, the project developer of such project shall pay the duty which would have been leviable at the time of clearance of goods, but for this exemption. The impugned order does not survive on merits and limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of the exemption notification dated 27.02.2010 for galvanised solar structures.
2. Whether the mounting structures are considered components of a solar power generation project.
3. Whether the demand is time-barred due to limitation.

Issue-wise Detailed Analysis:

1. Applicability of the Exemption Notification:
The appellant, M/s. KEC International Limited, challenged the applicability of the exemption notification dated 27.02.2010, which exempts specified goods required for the initial setting up of solar power generation projects from excise duty. The appellant argued that they availed the exemption after obtaining the necessary certificate from the Ministry of New and Renewable Energy, which was submitted to the Central Excise authorities. The Revenue contended that the mounting structures do not qualify as machinery, instruments, apparatus, or components required for the initial setting up of a solar power project.

2. Whether the Mounting Structures are Components:
The appellant argued that the mounting structures are essential for holding solar panels at specific angles to maximize energy generation and protect them from environmental factors. They referenced technical literature and publications from the Gujarat Energy Research & Management Institute and the Ministry of New and Renewable Energy, which described module mounting structures as components of PV systems. The Revenue relied on previous judgments (Saraswati Sugar Mills and Bharti Airtel) to argue that the structures are not components of machinery required for solar power projects. However, the Tribunal found that the facts of those cases were different and not applicable to the present case. The Tribunal concluded that the mounting structures are indeed essential components for the initial setup and functioning of solar power systems.

3. Whether the Demand is Time-Barred:
The appellant received a show-cause notice for the period December 2015 to September 2016, with a demand up to 31.01.2016. They argued that the demand is barred by limitation as there was no suppression, fraud, or collusion, and they had informed the jurisdictional Assistant Commissioner about the clearances. The Tribunal agreed, stating that the clearances were made based on the exemption notification and the certificate from the competent authority. Therefore, the extended period could not be invoked, and the demand prior to 31.01.2016 was time-barred.

Conclusion:
The Tribunal concluded that the mounting structures are components required for the initial setting up of solar power projects and are eligible for the exemption under the notification. The demand was also found to be time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized the importance of technical literature in understanding the components of solar power systems and upheld the appellant's arguments based on these references.