Case nº Ruling No. AAR/CE/1/2011, arising from Application No. AAR/44/CE-1/10/2010 of Authority for Advance Rulings, March 18, 2011 (case In Re: Enercon (India) Ltd. Vs)

JudgeFor Appellant: Shri Paresh M. Joshi, Advocate, Praveen Kakulte, AVP Technical Services and Girish Paliwal, VP, and For Respondent: Shri S.N. Singh, Jt. CDR and Sonal Bajaj, SDR,
PresidentP.K. Balasubramanyan, Chairman and Shri J. Khosla and J.K. Batra, Members
Resolution DateMarch 18, 2011


J.K. Batra, Member, (New Delhi)

  1. M/s. Enercon (India) Limited, Mumbai, the applicant, is a joint venture company set up in collaboration with Enercon GmbH of Germany. The applicant has set up a plant for the manufacture of Wind Operated Electricity Generators (WOEG). The applicant proposes to manufacture/specially designed transformers" (sealed corrugated tank integrated wind Turbine transformers) for wind operated electricity generators E-48/E-53(800 KW). The generators are being manufactured by the applicant in India. The purpose of these transformers is to step up or step down the voltage while wind operated electricity generator is made to run for the generation of electricity by harnessing wind power.

  2.  The applicant has sought a ruling on the eligibility of the transformers for exemption from Central Excise duty in terms of Notification No. 6/2006-Central Excise dated 1st March, 2006. The application has been allowed under Section 23D(2) of the Central Excise Act, 1944 and the question raised by the applicant has been recast as follows:

    "Whether specially designed transformers for wind operated electricity generators E-53/E-48 (800 KW), of the specifications as given in the application, sought to be manufactured by the applicant will be eligible for exemption from the levy of central excise duty by virtue of the entry at Serial No. 84 [Item No. 13 of List 5] in the Table of the Notification No. 6/2006- Central Excise, dated 1-3-2006 as amended"

  3.  As per the said Notification 6/2006-Central Excise, goods specified in the Table read with relevant List appended thereto, are exempted from the levy of Central Excise duty specified thereon under the First Schedule to the Central Excise Tariff Act, 1985 subject to the conditions specified in the annexure to the Notification. The extent of exemption has also been specified in the Table against the corresponding entry. The applicant is seeking a ruling in respect of goods specified against Serial No. 84 of the Table to the Notification read with List 5. As per the said Serial No. 84 "Non-conventional energy devices/systems specified in List 5" falling under "Any Chapter" of the said First Schedule are exempted from the whole of the duty leviable thereon without any condition. Serial No. (13) of List 5 in respect of which the applicant has claimed that his goods are covered within the said entry reads as follows:

    "Wind operated electricity generator, its components and parts thereof including rotor and wind turbine controller".

  4.  The applicant has claimed that the transformers proposed to be manufactured by it are essential parts of wind operated electricity generators and are designed exclusively for such generators of Enercon make/application only. These transformers perform dual functions i.e. ''step down'' the voltage before generation of electricity by the WOEG and ''step up'' the voltage after commencement of generation of electricity by the WOEG. In their "step down" mode the specially designed transformers for WOEG step down the voltage from the grid to requisite level for the input power required for excitation of the generator during its start-up. The transformer is thus used in the system at a stage prior to the generation of electricity by Wind Operated Electricity Generator. Most of the transformers used in the electrical grids of the State Electricity Boards on the other hand, are single function transformers.

  5.  The applicant has further stated that these transformers have special features and characteristics which differentiate them from the usual transformers. A power point presentation was made by a technical representative on behalf of the applicant during the course of the hearing. Due to the varying wind speeds at different times, the power generated by the Wind Operated Electricity Generators has variable voltage and frequency. Special equipments are required to stabilize the raw power and make it compatible with the power required to be fed into electricity grid. The specially designed transformers for WOEG take into account the specific requirements of such generators and are designed to withstand the cyclic loads and the electrical stresses that the system is subjected to. Its specially designed sensing system interfaces and integrates with turbine mean control system to deliver stable power of prescribed specifications. The absence of such a transformer would lead to disablement of Wind Operated Electricity Generators and it has been urged before us that for these reasons, it is an essential part of WOEG entitled to the benefit of exemption in terms of Notification 6/2006-Central Excise. The applicant has also quoted the decision of the Tribunal in the case of Hyundai Unitech Electrical Transmission Ltd. v. Commissioner of Central Excise, Nagpur [2005 (187) E.L.T. 312 (Tri. -Mumbai)] to point out that even parts of tower and lattice masts have been held to be parts of Wind Operated Electricity Generators.

  6.  The applicant has emphasized the fact that entry against Serial No. 84 of the Table in the Notification 6/2006 covers non-conventional energy devices/systems falling under any chapter of the tariff. Thus it is claimed that there is no restriction placed to the items/goods...

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