Wind Turbine Towers Recognized as Generator Parts, Not Structures: CESTAT [Read Order]

In a recent decision made by the Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), it was held that imported wind turbine towers are to be classified as integral parts of wind-operated electricity generators (WOEG) under Customs Tariff Heading (CTH) 8503 and not as civil structures under CTH 7308.

The assessee, Siemens Gamesa Renewable Power Private Ltd., had imported and cleared two consignments of wind turbine towers. They classified the goods under CTH 8503, claiming the applicable benefits under Notification No. 06/2006.

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However, the Directorate of Revenue Intelligence (DRI) on 12.03.2012 issued a Show Cause Notice (SCN), alleging misclassification. According to DRI, the towers were civil structures rightly classifiable under CTH 7308, attracting higher customs duty.

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Based on statements recorded during the investigation, the department proposed to recover the differential duty with interest and impose penalties under sections 11(m) and 112(a) of the Customs Act, 1962.

Aggrieved by the order, the assessee preferred an appeal before CESTAT.

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Shobhana Krishnan, counsel for the appellant, contended that the towers were specifically manufactured and used solely as parts of WOEG. She relied on the Bills of Entry and argued that CTH 8503, covering parts suitable for use solely with machines of headings 8501 or 8502, was the correct classification.

Conversely, N. Satyanarayana, departmental representative, argued that towers are general structures falling under CTH 7308. He asserted that there is a specific heading for towers and that the commissioner rightly treated the goods as civil structures rather than integral generator parts.

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The bench, comprising M. Ajit Kumar (Technical Member) and P. Dinesha (Judicial Member), carefully examined the documentary evidence, including the Bills of Entry.

The bench noted that the goods were clearly described as towers exclusively meant for WOEG.

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The tribunal referred to Section Note 2(b) of Section XVI of the Customs Tariff Act, 1975, observing that parts solely or principally used with specific machines must be classified alongside those machines. The bench also placed reliance on Circular No. 1008/15/2015, which in turn referred to the Supreme Court’s decision in CCE Nagpur v. Hyundai Unitech Electrical Transmission Ltd. (2015), where towers were recognized as parts of electrical systems.

The tribunal pointed out that the classification cannot be decided based merely on structural appearance but must consider functional use. Since the towers were inseparable from the operation of wind power generators, they had to be treated as parts under CTH 8503.

The Tribunal also found support from the Chennai Bench’s ruling in CC Chennai v. Suzlon Towers and Structures Ltd. (2024), which classified tower flanges for wind turbines under 8503.

To Read the full text of the Order CLICK HERE

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