The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that galvanised solar structures manufactured and cleared for the initial setting up of solar power plants are exempted from excise duty.
During an audit, the department noticed that the clearance of galvanised solar structures (module mounting structures and hot dip galvanised structures) falling under Central Excise Tariff Heading 5 7308 2019 was being done by availing the benefit of the exemption notification as amended on 08.05.2012. The appellant/assessee availed himself of the benefit of the exemption notification after being duly permitted by the competent authority in terms of the notification. The Central Excise authorities allowed clearance only after they were satisfied that the appellant was justified in availing the notification.
The department alleged that the mounting structure cleared by the assessee cannot be said to be machinery, prime movers, instruments, apparatus, and appliances, control gear and transmission equipment, and auxiliary equipment (including those required for testing and quality control) and components, and thus, the benefit is not available to the assessee.
The assessee submitted that the show-cause notice was for the period December 2015 to September 2016 and was received by the appellant on 2.3.2018. The demand up to the period of 31.1.2016 was barred by limitation. There was no suppression, fraud, collusion, etc., to necessitate the invocation of an extended period. The assessee had intimated the jurisdictional Assistant Commissioner regarding the clearance of excisable goods without payment of duty for solar power projects. The clearances were on the basis of a certificate issued by the Ministry of New and Renewable Energy Resources.
The department contended that the mounting structure supplied by the assessee can not be considered as a "component" of a solar power generation project or facility. The appellant never informed the department about the admissibility of exemption under the notification. The contention of the appellant that the demand was time barred was incorrect.
The issue raised was whether the assessee was entitled to the benefit of the exemption notification for the galvanised solar structure it cleared to solar power generating companies. Yet another issue was whether, in the case of non-applicability, duty can be recovered from the appellant and whether the show-cause notice is barred by limitation.
The CESTAT held that support steel structures for mounting or holding reflectors or mirrors are to be considered as "components" of reflectors or mirrors. They are required for the initial setting up of solar power generation projects and are eligible for the benefit of exemption available under notification dated 27.2.2010.
The CESTAT observed that when the clearances were intimated to the department, it was not open to the department to invoke the extended period as no fraud, collusion, suppression, etc., had been brought on record. When the competent authority in the Ministry has issued a certificate stating that exemption is available, exemption under said notification cannot be denied.
"As far as the appellant is concerned, the clearances are made in accordance with the provisions of the notification and on the strength of a certificate issued by the competent authority. No demand can be raised against the appellant without getting the said certificates cancelled. For this reason, the demand is also not sustainable," the tribunal said.
Case Title: M/s. KEC International Limited Versus Commissioner of Central Excise and Central Goods & Service Tax (Appeals)
Citation: Excise Appeal No. 52907 Of 2019
Counsel For Appellant: CA Mehul Jiwani
Counsel For Respondent: AR O.P. Bisht