ENERCON (INDIA) LIMITED Vs. COMMISSIONER OF CUSTOMS (IMPORT)
LAWS(AR)-2007-5-1
AUTHORITY FOR ADVANCE RULINGS
Decided on May 15,2007

Enercon (India) Limited Appellant
VERSUS
COMMISSIONER OF CUSTOMS (IMPORT) Respondents

JUDGEMENT

P.V.Reddi, J. - (1.) THE applicant Enercon (India) Limited is a company registered under the Indian Companies Act, 1956 having its corporate office at Andheri (West), Mumbai. As per the facts stated in the application, Enercon GmbH of Germany holds majority equity capital of Enercon (India) Limited - the applicant. It has entered into a collaboration agreement with the said German company and has set up a modern plant in the Union territory of Daman as a joint venture for the manufacture of wind operated electricity generators. These facts are borne out by the Joint Venture Agreement and Share -holding Agreement filed by the applicant (vide Annexures C and D to the application).
(2.) THE applicant submits that it intends to set up independent power generation projects of different capacities across India by harnessing wind energy. The applicant also proposes to have a business tie up with an existing company/project by entering into an 'agreement to sell' in order to set up wind -energy based independent power project. The business activities proposed to be undertaken by the applicant are set out in Annexure -II to the application as follows: BUSINESS ACTIVITY TYPE - -I - Enercon India Ltd intends and desires to set up power generation projects across India in different states by harnessing wind energy by setting up large number of independent power generation projects along with power stations, whereby electricity so generated will be connected to local grid supplying power to consumers for which a separate division called IPP division is being carved out in their organizational set up. The IPP division shall set up an independent power generation project of different capacities by importing from places outside India goods i.e, machinery, instruments, apparatus, appliances, transmission equipment, auxiliary equipment, components, raw material etc. falling under chapter 98 tariff item 9801 and after installing and commissioning the same to effectively generate the electricity for the nation. Enercon India Ltd after installing and commissioning independent power projects may sell the entire project at a price, which is determinable upon prevailing market conditions in the power generation sector. The sole objective of IPP division would be to set up exclusively an independent power project with sole objective of generating clean and green power. The power so generated will not be used for the captive consumption. BUSINESS ACTIVITY TYPE - -II: ... Enercon (India ) Ltd. would carryout above activities whereby a business tie up would be made with an existing company / projects by way of "offer to sell" (Agreement to sell) for setting up an independent power project which would be called IPP division of the Existing company/project with whom the business tie up would materialize by accepting "such an offer to sell" and "part payment". Such an IPP division so set up for entities would be in activities other than power generation and eventually will independently sell the electricity and shall not consume the electricity captively.... 2.1 The diagrams relating to the generator manufacturing are given in Exhibit I. The details of articles proposed to be imported are given in Exhibit J to the application It is the contention of the applicant that the articles (which are mostly components and parts of wind operated electricity generators) components to be imported by it for the purpose of setting up the wind -mill based independent power projects attract customs duty @ 5% only and no additional duty/CVD is leviable under Section 3(1) or 3(5) of the Customs Tariff Act on such imports
(3.) THE following questions for determination were re -framed by the applicant 1. Whether the goods detailed in Exhibit "J" which are proposed to be imported by the Applicants and which are required by the applicants for proposed Independent Power Project (not for captive consumption) by harnessing the wind energy described in Annexure II & Exhibit "I" will be eligible for classification under Customs Tariff Heading 9801? 2. (a) Whether the said goods referred to in Question No. 1 above will be eligible for exemption from basic customs duty in excess of 5% under Serial No. 399 (iv) of customs -cus dated 01.03.2002? (b) Whether the said goods referred to in question No. 1 will be eligible for exemption from the whole of the additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975 by virtue of serial No. 84, list 5, item 13 of Central Excise notification No. 6/2006 -CE dated 01.03.2006? (c) Whether the said goods referred to in Question No. 1 will be eligible for exemption from the whole of the additional duty of customs under Section 3(5) of the Customs Tariff Act, 1975 by virtue of serial No. 11 of custom exemption notification No. 20/2006 -cus dated 01.03.2006?;


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