Customs – CVD Exemption to Machinery for setting up of Solar Power Generation Plant - But Why?

By Vijay Kumar

THE First Customs Notification issued in 2011 reads as,

In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), and in supersession of the notification of the government of India in the Ministry of Finance (Department of Revenue ) No. 30/2010 – Customs, dated 27th Feb. 2010, the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempts all items of machinery, including prime movers, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and components, required for the initial setting up of a solar power generation project or facility, when imported into India, from so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as is in excess of 5% ad valorem, and from the whole of the Additional Duty of Customs leviable thereon under section 3 of the said Customs Tariff Act, subject to the following conditions, namely:-

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The Customs Notification No. 30/2010, which is now superseded read as:

In exercise of the powers conferred by sub-section(1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempts all items of machinery, including prime moves, instruments, apparatus and appliances, control gear and transmission equipment and auxiliary equipment (including those required for testing and quality control) and components, required for the initial setting up of a solar power generation project or facility, when imported into India, from so much of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) as is in excess of 5% ad valorem, subject to the following conditions namely.-

So what is done by the new notification is that apart from allowing the concessional rate of 5% Customs duty, the whole of the Additional Duty under Section 3 of the Customs Tariff Act, is now exempted.

Was it not exempted earlier? Does it mean that the importers had to pay CVD from 27th February 2010 to 5th January 2011?.

Not exactly! When this Customs Notification was issued a parallel Central Excise Notification was also issued. Notification No. 15/2010 – C.E – Dated 27th February, 2010, exempted the same products from the whole of the excise duty and this notification would have equally applied to CVD .

Then why this exemption now? God Knows (and Board)

Notification No. 01/2011- Cus., Dated: January 6, 2011