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“Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 15.03.2025

CESTAT Chennai Tribunal found that the Commissioner had erred in reclassifying the towers under CTI 7308 in Siemens Gamesa case

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai, delivered a landmark ruling in favor of Siemens Gamesa Renewable Power Pvt. Ltd., settling a long-standing dispute over the customs classification of wind turbine towers. Below are the key highlights of the proceedings:

1. Allegations by the Directorate of Revenue Intelligence (DRI)

• DRI issued a Show Cause Notice (SCN) in March 2012, alleging that Siemens Gamesa had wrongly classified imported wind turbine towers under CTH 8503 (Parts of Electric Motors and Generators).
• The department reclassified the towers under CTH 7308 (Structures and Parts of Structures) and claimed that the company:
• Wrongly availed a lower customs duty rate (7.5%).
• Illegally claimed customs duty exemptions under Notification No. 06/2006.
• Owed differential duty, interest, and penalties due to the misclassification.

2. Siemens Gamesa’s Defense

• The company strongly contested the reclassification, arguing that:
• Wind turbine towers are not mere supporting structures but integral parts of Wind Operated Electricity Generators (WOEGs).
• CTH 8503 is the correct classification, as wind turbine towers contribute directly to power generation.
• Precedents and CBIC Circulars support their classification under CTH 8503, exempting them from higher duties.

3. Tribunal’s Observations and Legal Precedents

The CESTAT examined multiple legal precedents before delivering its ruling:

• Supreme Court Ruling (CCE Nagpur vs. Hyundai Unitech Electrical Transmission Ltd., 2015) – Confirmed that towers specifically designed for electricity generation are essential components of the generator unit.
• CBIC Circular (2015) – Clarified that wind turbine towers should be classified under CTH 8503 as parts of electricity generators.
• Other judicial precedents reinforcing that structural components specifically designed for power generation equipment should not be classified as general construction structures.

4. CESTAT’s Final Ruling

After evaluating all arguments, the Tribunal ruled in favor of Siemens Gamesa:

• Wind turbine towers are not general structural parts but essential components of electricity generators.
• Classification under CTH 8503 is correct, making the company eligible for duty exemption.
• The revenue department’s attempt to classify the towers under CTH 7308 was incorrect.
• Demand for differential duty, interest, and penalties was set aside.

5. Impact of the Judgment

• Significant financial relief for Siemens Gamesa, avoiding customs duty liabilities.
• Provides clarity for the wind energy sector, reinforcing tax benefits for renewable energy imports.
• Strengthens India’s ease of doing business in renewable energy by ensuring stable and predictable tax policies.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: CESTAT Chennai

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