CVD on Castings Imported for Wind Electricity Generators: CESTAT Directs Fresh Valuation, Appeals Against Provisional Assessment Valid [Read Order]
The Tribunal held that the value of castings within the imported components was not properly determined, the matter was remanded for fresh valuation, with a direction that CVD cannot be levied if valuation fails.
The Chennai Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that Countervailing Duty (CVD) is leviable on castings imported as parts of sub-assemblies or components of wind-operated electricity generators under Notification No. 1/2016-Customs and rejected the plea that CVD applies only to castings simpliciter and upheld the maintainability of appeals against provisional assessment orders.
However, due to improper determination of casting value, the matter was remanded for fresh valuation, with a direction that CVD cannot be levied if valuation fails.
An appeal was filed by the Commissioner of Customs (Revenue) against an Order-in-Appeal dated 31.08.2016, which had set aside the levy of Countervailing Duty (CVD) on certain imported parts of Wind Operated Electricity Generators (WOEG).
The Respondent, M/s.Siemens Gamesa Renewable Power Pvt. Ltd., imported various parts of Wind Operated Electricity Generators (WOEG) from China. These goods were provisionally assessed for CVD under Section 18 of the Customs Act, 1962, pursuant to Notification No. 1/2016-Customs (CVD) dated 19.01.2016. This notification authorized CVD on "Castings for wind-operated electricity generators, whether or not machined, in raw, finished or sub-assembled form, or as a part of a sub-assembly, or as a part of an equipment/ component meant for wind-operated electricity generators."
The Section 18 of the Customs Act, 1962 explained that: Provisional assessment of duty.
“When the duty leviable on such goods is assessed finally in accordance with the provisions of this Act, then-(a)in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed and if the amount so paid falls short of, or is in excess of [the duty finally assessed] [ Substituted by Act 56 of 1974, Section 3 and Schedule II, for " the finally assessed" (w.e.f. 20.12.1974).], the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be;(b) in the case of warehoused goods, the proper officer may, where the duty finally assessed is in excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty.
(3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order under sub-section (2), at the rate fixed by the Central Government under section [28-AA] [Substituted '28-AB' by Finance Act, 2018 (Act No. 13 of 2018), dated 29.3.2018.] from the first day of the month in which the duty is provisionally assessed till the date of payment thereof.”
The importer challenged this provisional assessment, contending that the notification applied only to 'castings simpliciter' and not to items that had acquired a distinct nomenclature and character after undergoing value addition, even if they were parts of WOEGs. They further argued that it was incorrect to vivisect a complete item to levy CVD only on its casting component.
The Authorized Representative for the Appellant/Revenue, Anandalakshmi Ganeshram, stated that since goods were assessed only provisionally under Section 18, the issue had not attained finality. Therefore, it was premature for the Commissioner (Appeals) to entertain the appeal at that stage.
On the other hand, the Counsel for Siemens, S. Ramamurthy, stated that the CVD notification covers only "castings" for wind-operated electricity generators, not complete parts or components. The imported goods were specific and distinct products that had acquired separate nomenclature after value addition, not mere castings. The notification emphasizes "castings" falling under tariff items 8503 0010 and 8503 0090, and should not be extended to all parts under these tariff headings merely by classification.
Further, the Counsel argued that items which developed from castings but acquired distinct identity cannot be subjected to CVD, as this would overlook the value addition. CVD was leviable only on castings simpliciter, not on developed products derived from castings.
The Tribunal consisted of Judicial Member, P.Dinesha and Technical Member, M. Ajit Kumar, heard and reviewed the matter.
The Tribunal, after considering the material on record, held that a plain reading of CVD Notification No. 1/2016-Customs clearly authorizes levy on castings existing "as a part of a sub-assembly, equipment or component" for wind-operated electricity generators and rejected the Commissioner (Appeals)'s interpretation that disallowed "vivisection," holding this would render the notification nugatory and contradict statutory interpretation principles.
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Further, the Tribunal while upholding CVD liability on casting portions within imported components, stated that the Revenue had not satisfactorily determined the casting's value. The matter was remanded to the Adjudicating Authority to determine the value as per law after considering the importer's submissions.
The Tribunal cautioned that if valuation cannot be determined, no CVD can be levied, citing the Supreme Court principle in CIT v. B.C. Srinivasa Setty (AIR 1981 SC 972), that there can be no levy if the computation mechanism fails.
Accordingly, the Tribunal allowed the appeal of the Revenue for statistical purposes and remanded the matter back to the Adjudicating Authority. The Order was pronounced in open court on 04.11.2025.
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