TMI Blog2022 (4) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... ion without it. But the fact is WOEG is able to generate electricity with the kinetic energy of the wind by itself. The very acronym WOEG stands for Wind operated electricity generator. Whereas, transformers for WOEG is installed on the ground adjoining to WOEG to make the electrical energy generated by WOEG usable for consumption or distribution purpose. It is noted that the transformers are neither placed in nacelle nor tower but on the ground beside the WOEG. Suzlon s submission in this regard that transformers are placed in nacelle/ tower at para 6 is not correct. WOEG and transformer inclusive devices to form a wind power system/ wind generating system/ project. But WOEG per se is capable of generating electricity with wind. Now if a specially designed transformer with step down function is designed to rotate the blades/fan in WOEG that does not make it a part of WOEG, but makes the transformer per se a dual function transformer with step up and step down function - the word used in the said Notification is WOEG, which is generator per se. WOEG generates electricity per se and to include the aspects of transmission, distribution and supply of electricity for which Transform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Turbine Generator consisting of WOEG (nacelle including hub, controller microprocessor, accessories, set of 3 rotor blades, hybrid tower) and supply of transformer. A copy of Order: Supply/001/SMEIPL dated 30-8-21 entered with Shree Malaiamman Energy India Private Limited was submitted 6. Suzlon submits that the transformer supplied by it is specially designed for WOEG application and is installed on the ground adjoining to each Wind Operated Electricity Generator. Its transformer performs dual function of a Step-Down Transformer and a Step-Up Transformer unlike a normal Transformer. In as much as it performs dual function, it is different from other general use transformers like used by the State Electricity Board, which have a single function of either stepping down or stepping up the voltage, and does not perform both the functions simultaneously. 6.1 Step-Down function: To activate the generator inside WOEG. The transformer draws electricity from the electricity grid of Electricity Board having a voltage of 33kv, and steps it down to 0.690 kv for supply to the WOEG. The voltage of 0.690 kv electricity provided by transformer activates the generator inside WOEG to enab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansformer for PV Solar IEC standard IEC 60076-1 IEC 60076 IEC 60076-16 IEC 61378 IS standard IS 2026-1 IS 1180-1 IS 2026-16 IS 2026-1 Loading Continuous Continuous Cyclic Cyclic Average annual loading 60% - 100% 80% - 100% 30% - 40% 20% - 30% Category Oil insulated transformer Oil insulated / dry type transformer Oil insulated / dry type transformer Oil insulated / dry type transformer Installation Outdoor Indoor / Outdoor Indoor / Outdoor Indoor / Outdoor Mounting Ground mounted Ground / Plinth mounted Ground / Plinth / Nacel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3 The IEC Standard and IS Standard for Wind Turbine Transformer as mentioned in the above Comparison reads as follows: IEC 60076 part 16: 2018 This is a dedicated international standard defining the technical requirements for step up voltage Transformer for use in wind turbine application (Renewable energy generation): The part of IEC 60076 applies to dry-type and liquid-immersed transformers for wind turbine step-up applications having a winding with highest voltage for equipment up to and including 72,5 kV. This document applies to the transformer used to connect the wind turbine generator to the wind farm power collection system or adjacent distribution network and not the transformer used to connect several wind turbines to a distribution or transmission network. Transformers covered by this document comply with the relevant requirements prescribed in the IEC 60076 standards or IEEE C57 standards. IS2026 part 16: 2021 This is a new standard included in the Indian standard for Transformer for wind turbine application. National forward of the document is mentioned below: This Indian Standard (Part 16) which is identical with I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Tax (Rate) dated 30-9- 21. 10. Suzlon submits that it was charging 2.5% each towards CGST and SGST on WOEG up to 30-9- 21and currently charges 6% each towards CGST and SGST and there is no ambiguity with respect to the same but have some confusion and ambiguity on the rate being differently charged for the Transformers by it. 11. Suzlon cites CBIC Circular No. 80/54/2018-GST dated 31-12-18, the relevant extract, reproduced as follows: 11. Applicability of GST on supply of Waste to Energy Plant: 11.1. Representations have been received regarding applicable GST rate on the goods used in the setting up of Waste to Energy plants (WTEP) in term of Sr. No. 234 of Schedule I of Notification No 1/2017-Central Tax (Rates) dated 28th June, 2018. The said entry 234 prescribes 5% rate on the following renewable energy devices parts for their manufacture: (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Solar lantern / solar lamp (g) Ocean waves/tidal waves energy devices/plant (h) Photo volt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the electrical energy usable for consumption or distribution and accordingly it is understood that the specially designed Transformers are the parts of WOEGs and hence be liable to CGST and SGST at the rate of 2.5% each as per Sr. No. 234 to Schedule I to Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 and 6% each towards CGST and SGST as per Sr. No. 201A to Schedule II to Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 as amended by Notification No. 8/2021-Central Tax(Rate) dated 30th September, 2021 with effect from 1st October, 2021. 15. Suzlon further submits that the test of whether the specially designed Transformers be considered as part and / or device it is essential to know the meaning of device and part. Suzlon submits that what constitutes parts can be inferred from the decision of Larger Bench of Mumbai CESTAT in case of Rakhoh Enterprises vs. Commissioner of Central Excise, Pune (2016) 338 ELT 449 (CESTAT-MUMBAI) whose findings are reiterated as follows: 5.4 We find that the anchor rings and the load spreading plates are specifically designed for the purpose of attaching the tower to the ground by providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xCorp(IDT) 124987 (CESTAT-AHMEDABAD) whose findings are reproduced as: 11.3 Appellants have contended that the bearings are used at various places in the wind mill like rotor shaft, gearbox, generator, yaw gearbox, etc. We find that the interpretation sought by Revenue is very narrow. The term wind operated electricity generator appeared in notification 06/2006-CE dated 01.03.2006 includes the entire setup i.e. the tower, the generator, the blades which are used to generate electricity from wind. The term wind operated electricity generator in the notification does not refer to solely to the generator which is just one of the parts of the wind operated electricity generator. In view of above, we do not find any merit in the argument of Revenue and the demand on that is set aside. Hence, the appeal is consequently allowed. 20. Suzlon submits that in the absence of any Tariff Item in the Customs Tariff which mentions Windmill, WOEG or parts for manufacture of Windmill, WOEG, no specific tariff entry is required to be examined to evaluate what constitutes a part for manufacture of Windmill, WOEG. A general examination of the term parts is required in order to evaluate wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seats of a car and a seat is complete even without the rail assembly from seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A part is an essential component of the whole without which the whole cannot function. 24. Further, in CTO vs Prasoon Enterprises reported at 2019 (23) G.S.T.L. 441 (SC), the Hon ble Supreme Court has reiterated the test laid down by it as to what constitutes a part. The relevant para reads as follows: 27. This Court has laid down the test as to how the Court should decide the question as to whether a particular item is a part of other. The test is a thing is a part of the other if the other is incomplete without it . In other words, a thing is a part of the other, if the other cannot function without it . [See M/s. Annapurna Carbon Industries v. State of Andhra Pradesh [(1976) 2 SCC 273 and Commissioner of Central Excise, Delhi v. Insulation Electrical Private Limited (2008) 12 SCC 45) = 2008 (224) E.L.T. 512 (S.C.)] 25. Suzlon submits that WOEG converts wind energy into electrical energy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able Apex Court in Civil Appeal No(s) 1954/2006 and Suzlon submits that it has a reason to believe that the specially designed Transformers are part of the Windmill / Wind Turbine Electricity Generators and liable to CGST and SGST at the rate of 2.5% each up to 30th September, 2021 and 6% each thereafter. Question on which Advance Ruling sought: 29. The specially designed Transformers for Wind Operated Electricity Generators which are meant to perform dual function of Step Down and Step Up manufactured by Suzlon and supplied to the customers of Suzlon as a part of Wind Operated Electricity Generator be treated as part of Wind Operated Electricity Generator and falls under Sr. No. 234 in Schedule-I to Notification No. 01/2017-Central Tax (Rate) dated 28th June, 2017 read with Notification No. 1/2017- State Tax(Rate) dated 30th June, 2017 and liable to Central GST at the rate of 2.5% along with Gujarat State GST at the rate of 2.5% up to 30th September, 2021 and 6% each towards CGST and SGST with effect from 1st October, 2021 by virtue of omission of the said entry and addition of Entry No. 201A to Notification No. 01/2017-Central Tax (Rate) dated 28th June, 2017 vide No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed attached to bring wind turbine in active use of power generation should be treated as a part of Wind Mill. Wind Mill is a plant as defined under section 43(3) of Income tax act and it is undertaking itself ( M/s The Hutti Gold Mines Co. Ltd. vs Department Of Income Tax, ITA No. 832/Bang/ 2012 A Y 2008-09). If meaning of wind mill is narrowed to only wind turbine or standing structure of tower or together both, will not justify correct legal position. If meaning is narrow down to such extent, active use of wind turbine will not be possible. All standing equipment are bald and useless. It needs to be integrated and therefore any expenses related to such integration and helping this plant to bring them in use must be said as a part of windmill. Any payment made for electrical work within turbine or connecting power generated to grid and transformer expense, metering work charges, surfacing works cost, data lock and control machine cost etc. should be treated as a composite cost of Wind Mill. Even in case of VTM Limited, Virudhunagar vs. Department of Income Tax (ITA No. 1425/Mds/2010) , the Honourable Chennai Tribunal has held that the transformer used for the windmill ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower generating system but solar power generator . We opine that bringing on record our thought process on the difference between the phrase solar power generating system and solar power generator to be useful in present case. We are of the opinion that solar power generator is different from solar power generating system. We infer that system includes more devices and not just the generator. 38. The solar power generating system and solar power generator , both are not one and the same. We have to read the wordings of the said Notification carefully. Prima facie, what is inferred is solar power generating system includes not only the solar power generator but even more device than the generator itself. We find the case law Belectric Photovoltaic India Pvt. Ltd.[2019 (21) GSTL 319( MP)] of H ble High Court of Madhya Pradesh of immense use for ready reference in this matter. We reproduce relevant excerpts of said the case law- 2019 (21) GSTL 319 (MP)- Belectric Photovoltaic India Pvt Ltd vs Commr. of Commercial Tax- writ petition no. 1245 of 2018, decided on 2-1-2019: Solar power generating system includes all devices or equipment, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion mains; (g) electric supply-lines; (h) overhead lines; (i) service lines; (j) works. [Indian Electricity Act (36 of 2003) S. 2 (50)] In light of the aforesaid, it can safely be gathered that the solar power generating system includes all devices or equipments, which are connected or combined together to complete the solar power generating system. If one ingredient is missing, the solar power generating system will not function. 15. The dictionary meaning of the word system also finds place at page 4589 of Advance Law Lexicon by P. Ramanatha Aiyar, General Editor Hon ble Shri Justice Y.V. Chandrachud reads as under :- System . The word system is defined by the Encyclopaedic Dictionary as a plan or scheme according to which things are connected or combined into a whole; an assemblage of facts or of principles and conclusions, scientifically arranged or disposed according to certain relations, so as to form a complete whole, as a system of philosophy, a system of government , etc. For the purposes of sub-heading 8471 49, the term SYSTEM means automatic data processing machines whose units satisfy the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 1989 (40) E.L.T. 239 (S.C.) [ para 11]. 1978 (2) ELT (J350)(SC) CCE 1995(77) ELT474(SC) AIR 2000 SC 66 319 ELT 556 (SC) 38.3 Thus, we hold that WOEG is a generator and different from Wind Power project/ Wind Turbine system. If the wording used in said Notification was wind power system/ wind power project/ wind turbine system, the scope of inclusion of Transformer in the said project/ system arises. However, the wording is WOEG and we find no scope to include Transformer as a part of WOEG. In simple words, Transformer itself is a device to link the electricity generated by the WOEG to the distribution grid and thereby Transformer makes the electrical energy usable for distribution/ consumption. However, We do not find that Transformer is a constituent of WOEG. We note Suzlon s submission that said Transformers have dual step up and step down function. Dual function of the transformer does not equate itself to be treated as a part and parcel of WOEG. WOEG, which is the generator functions complete with itself and the use of transformer is to link the WOEG s electricity generated to the distribution grid. 38.4 The notification s rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of C.Ex., Calcutta [2006 (203) ELT 362 (S.C.)] had held that insulated wires and cables are not parts of wind mill which is complete in itself without electric cables, although wind mill may not be able to function without these cables, hence the benefit of exemption is not available to Cables and wires. Further, in case of M/s. Enercon (India) Ltd., Authority of Advance Ruling had ruled that entry Wind Operated Electricity Generator covers the generator per-se and it is not intended to include equipments which are deployed with the generator for production of electricity. The sponsoring zone was of the view that the towers and others parts, which are not directly related to generation of electricity would not be eligible for exemption. In view of the sponsoring zone, it would be desirable that the list of equipments/parts/components eligible for exemption may be spelt out in the Exemption Notification. Discussion Decision It was noted in the conference that a clarification has already been issued on 20.10.2015 vide Circular No. 1008/18/2015-CX by the Board wherein details of parts on which exemption is available is specified. Ministry of New and Renewable En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd supply of electricity for which Transformer is requisite is to add extra words WOEG system to a clearly worded Notification with the words WOEG and not WOEG system B. GST Rate on Transformers. 39. On reading of the agreement entered between i.e. M/s. Suzlon Energy Ltd., Daman and M/s. Shree Malaianman Energy India Pvt. Ltd. we note that the supplier of goods WTG is M/s. Suzlon Energy Ltd, Daman. We required the applicant to clarify the following: (i) As per the referred agreement the supplier is M/s. Suzlon Energy Ltd., Daman and not the applicant (GSTIN 24AADCS0472N1Z8). Please clarify who is the supplier of goods? (ii) If WOEG is not supplied by you i.e. applicant then what is supplied by you. Please specify. 2. Refer to your application para 1.1 of Annexure wherein it is submitted that the goods is supplied by you or your subsidiaries companies. Also refer para 5.2 of Agreement with M/s. Shree Malaiamman Energy India Pvt. Ltd. Please specify what goods is supplied by you i.e. Applicant. 3. Is there any subcontract by Daman Unit to you? Copy of the contract to be submitted. 4. Copies of few Invoices of any undergoing contracts, inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied by us only i.e the Applicant registered with GSTIN: 24AADCS0472N1Z8 directly to the customer as evident from Para No. 5.3 of the said Purchase Order / Agreement and other components and parts of Wind Operated Electricity Generator which shall be assembled at the site namely Nacelle, Blades and Tower shall be supplied based on the availability and location of the Recipient of Supply from Dadra and Nagar Haveli and Daman and Diu as well as from Gujarat under Bill-to-Ship-to Model. 3. With reference to Para 1.1 of the Annexure and Para No. 5.3 (inadvertently seems to have mentioned as Para No. 5.2) of the Agreement, it is to be stated that Blades and Towers might be supplied by us i.e your Applicant registered with GSTIN: 24AADCS0472N1Z8 under Bill-to-Ship-to Model along with the specially designed Dual Function Transformers from Gujarat directly to the said Recipient of Supply for which the impugned Application has been preferred seeking Advance Ruling on the GST Rate applicability on the said specially designed Transformers meant to function only with Wind Operated Electricity Generators and the remaining parts / components including nacelle and Blades along with Tower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut to Mailaiamman at Erode and Ship to was directly by Suzlon the applicant to Malaiamman at Tuticorin. This view is supported by the Invoices which the applicant raises on Malaiamman wherein the details are as follows: (a) the supplier of Transformer who is the applicant before us and (b) bill to is to Malaiamman at Erode and Consignee is Malaiamman at Tuticorin. Suzlon Daman finds no mention in the Invoices of the applicant before us. 41. We find our views that s Transformers are not part of WOEG in consonance with the following: i. CBEC Circular No1008/15/2015-CX dated 20-10-2015 ii. CBEC Instruction dated 7-12-2015 issued vide FNo. 96/85/2015-CX.1 41.1 We find our views in compliance to judicial discipline laid down vide H ble High Court of Madhya Pradesh in the case of M/s. Belectric Photovoltaic India Pvt. Ltd.[2019(21) GSTL 319( MP)] 42. We note Suzlon cited certain case laws. We find that- i. Rakhoh enterprises case law pertains to anchor rings and load spreading plates and pertained to whether these part parts of towers of WOEG; ii. Elecon Engineering case law pertains to import and is a customs matter and pertains to eligibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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