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TMI Blog2024 (1) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... dent are classifiable under CTH 8503 and eligible for exemption benefit of the Notification No. 12/2012--CE (Sl.No. 332) dated 17.03.2012. 2.2 From the grounds of Appeal, it is evident that the main argument of the Department is that 'Flanges' are part of Wind Mill Towers and are of general use and so cannot be treated as parts of WOEG to be eligible for the benefit of the Notification No. 12/2012--CE dated 17.03.2012. The summary of the grounds of Appeal are as follows:-- i. Classification of the imported goods is governed by the General Rules for the Interpretation of the Import Tariff (GRI). As per Rule 1 of GRI, "The titles of Sections, Chapters and sub-- Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to Rule 2 to Rule 6 of the GRI". ii. In understanding the Customs Tariff, the Harmonized Commodity Description and Coding System Explanatory Notes can be utilized. The Explanatory Notes (ENs) provide a commentary on the scope of each heading of the Customs Tariff, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 85.15) when presented together with their welding heads or welding appliances. (II) ELECTRIC ROTARY CONVERTERS These consist essentially of a combination of an electric generator and a prime mover consisting of an electric motor permanently mounted on a common base, though in certain cases the two functions are combined in one unit with certain windings in common. They are used to transform the nature of the current (to convert from AC to DC or vice versa) or to change certain characteristics such as the voltage, frequency or phase of alternating current (to convert, for example, the frequency of 50 to 200 cycles or to transform single phase to three phase current). Another type of rotary converter (sometimes known as a rotary transformer) is used to convert DC from one voltage to another. PARTS Subject to the general provisions regarding the classification of parts (see the General Explanatory Note to Section XVD, parts of the machines of this heading are classified in heading 85.03. (v) The Explanatory Notes to the heading 8503 of HSN is reproduced below: 85.03--Parts suitable for use solely or principally with the machines of heading 85.01 or 85.02. Subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n chapter 85 provided they are presented together: (even if packed separately for convenience of transport). The EN does not state that such a "common base must be, or even, should be included. Further, the ENs do not provide that such a common base is, or should be regarded as, "a part." Insofar as, only a wind engine and its prime mover presented together, would be considered a "generating set," the subject merchandise, imported separately from the electric turbine, and absent any evidence of the presence of how a steel tower may be considered a "prime mover," is not classifiable under heading 8503, HTSUS, as a "part of a generating set in heading 8502, HTSUS. The said ruling held that the steel tower is classifiable under heading 7308 and not under heading 8503 as a part of such equipment or goods of heading 8502 or parts of goods of another heading in chapter 84 or 85. (viii) Though the said ruling is in the nature of advance ruling not applicable to other parties, the finding that the towers are not working parts of the turbine generator and provide no operational or mechanical interaction with it and also they are classifiable under heading 7308 as there is an entry "eo nom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule for Windmills and Wind operated generating sets. These goods attain their identity after completion only i.e. after erection and installation. Whereas, now there is a separate entry for windmills or wind turbine/engine under Heading 8412 and for Wind operated generating sets under Heading 8502. 2.3.5 Hence, the towers and flanges used to assemble or join sections together cannot be classified under heading 8503 and also cannot be considered as part of the Wind Operated Electricity generator. As such, it is clear that the tubular towers are rightly classifiable under heading 7308 and particularly under Tariff Item 73082019 as towers whether or not assembled other than for transmission line. As the towers cannot be classified under heading 8503, the flanges also cannot be classified under 8503 of the First Schedule of the Customs Tariff Act, 1975, which are used to join the sections of the towers by bolting. 2.4 In the case of G.B. Engineering Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise, Trichy [2010 (251) ELT 298 (Tri.--Chennai)], the Hon'ble Tribunal upheld the classification of windmill towers under heading 7308 and observed as follows "We have heard b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) whether the imported goods (flanges of wind tower) are classifiable under tariff item 85030090 or 73079190 and 2) Whether the imported goods are parts of WOEG eligible for the benefit of exemption from additional duty of customs under Notification No. 12/2012 CE (Sl.No.332, list 8, entry No. 13). v. In the absence of any such proposal in the SCN, the adjudication has traversed beyond the scope of the SCN. Further, the SCN unilaterally held that the imported flanges are classifiable under heading 73072100 as mentioned in para 3 of the order in original but the adjudicating authority had held that the flanges are classifiable under heading 73079190 which is also beyond the scope of the SCN and not legally sustainable. vi. Notwithstanding the above, the respondent has submitted that the Flanges Imported are design specific and meant only for use with or for manufacture of Windmill Towers, and they are parts of WOEG falling under heading 8503 and not the general--purpose flanges falling under heading 7307. As per the HSN explanatory notes to heading 7308, the said heading excludes "constructions clearly identifiable as machine parts". vii. The Ld. Advocate has placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, the respondent submits that the tower flanges imported by them and used for WOEG are rightly classifiable as parts of WOEG under chapter 8503 and hence the appeal filed by the department contending that the tower flanges are classifiable under Chapter 73 and denying of CVD exemption is devoid of merit and hence is liable to be dismissed. He has prayed for setting aside the Appeal filed by the Department. 4. The Ld. Authorized Representative Shri R. Rajaraman appeared for the Department and reiterated the grounds of the appeal. He has mainly contended that Wind Mill Tower cannot be treated as part of Wind Operated Electricity Generators (WOEG) and these flanges are made of iron and steel and they are more in the nature of general purpose items and as such their classification under CTH 73 is more appropriate. He has asserted the findings of the Order--in--Original No. 22208/2013 dated 17.10.2013 and the grounds of Appeal. 5. Heard both sides and have considered various decisions relevant for resolution of the dispute in this Appeal. 6. The main issue involved in this case is whether the flanges imported by the Respondent are to be classifiable under 8503 and whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are parts of WOEG and are classifiable under 8503 and not CTH 7307 as claimed by the department. It was also held that the flanges are eligible for the benefit of exemption as per Notification No. 12/2012 dated 17.03.2012. The relevant Paragraph reads as under:-- "12.3 If every 'flange' available in the market could be used in any industry, then perhaps the classification under a single CTH would have served that purpose, but since one size does not fit all, different classifications are provided. The classification thus depends on, inter alia, functionality as well. Hence, when an item is imported for a specific purpose, if the Revenue does not believe in the classification declared by such importer, then the same could be rejected on some palpable evidence and if required, the Revenue could always insist upon further details / explanation in so far as the function / end--use claimed by such importer is concerned, in order to ascertain the chief/primary function, to arrive at the proper classification, otherwise the purpose of having two Customs Tariff Headings loses its significance, which is not the intention of legislature. 13. In view of our above discussions, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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