Whether import of a specially designed transformer used in the manufacturing process by the applicant is covered under exemption from the whole of additional duty of customs under Section 3(1) of Custom Tariff Act, 1975

PJ/Case Law/2016-2017/3452

Case: ENERCON (INDIA) LTD.
Citation: 2011 (268) E.L.T. 105 (A.A.R.)
Issue: Whether import of a specially designed transformer used in the manufacturing process by the applicant is covered under exemption from the whole of additional duty of customs under Section 3(1) of Custom Tariff Act, 1975
Brief facts: M/s. Enercon (India) Limited, Mumbai, the applicant, is a joint venture company set up in collaboration with Enercon GmbH of Germany. The applicant has set up a plant for the manufacture of Wind Operated Electricity Generators (WOEG). The applicant proposes to import “specially designed transformers” (sealed corrugated tank integrated wind turbine transformers) for wind operated electricity generators E-48/E-53(800 KW) which are being manufactured by the applicant in India. The purpose of these transformers is to step up or step down the voltage while wind operated electricity generator is made to run for the generation of electricity by harnessing wind power.The applicant has sought a ruling on the eligibility of the transformers for exemption from additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975 in terms of Notification No. 06/2006-Central Excise dated 1st March, 2006
Respondent’s Contention and Judgement: The authority for Advance Ruling stated that it has considered the submissions made by the applicant in their application for advance ruling. The Clause 2(s) of the Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 defines clinical establishment as under:
‘‘clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases
In the instant case the applicant offers services/facilities requiring diagnosis such as patient counseling, suggesting the relevant test for the patient, collecting samples, obtaining the result of the test, sharing the test results and post counseling. The medical team of the applicant discusses with the oncologist/pathologist, takes samples of required tissues and sends it for the tests to US/Germany, with regard to the oncology/auto immune diseases. They play the role of referral/physician and also advice doctors for line of treatment to the establishment. They provide the said services in “Allopathy” system of medicines, recognized in India. Therefore they qualify to be a clinical establishment.
Clause 2 of the Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 defines “Healthcare Services” as under:
“healthcare services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects developmental abnormalities, injury or trauma;
In the instant case the applicant is involved in providing the services of diagnosis, pre and post-counseling, therapy and prevention of diseases by providing tests that are sophisticated and relevant. The medical team of the applicant is involved in the complete cycle and hence they facilitate the diagnosis process and therefore the services provided by the applicant qualify to be healthcare services.
Decision: The applicant qualifies to be a clinical establishment and the services offered/provided by the applicant qualify to be Healthcare Services. The intra-State supply of said services attract NIL rate of central tax as per Sl. No. 74 of the Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017.
Comment: The gist of this case is that the Health Care services provided by a clinical establishment within the state attract NIL rate of tax.
Prepared by: Adit Gupta

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PJ/Case Law/2016-2017/3452

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