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The Ministry of New and
Renewable Energy recently
issued a clarification with
regard to the excise duty exemption
that is available for procurement
of transmission equipment
during the initial set-up of solar
power generation projects.
The clarification was issued in
response to a request for excise
duty exemption certificate from
Mumbai-based Viraj Renewable
Energy Pvt. Ltd. The company
had sought the certificate to procure
transmission equipment for
setting up a 5-mw solar photovoltaic
power project in Jodhpur
district of Rajasthan.
In Rajasthan, many power project
developers are required to
bear the cost of laying transmission
lines from their plant to the
power substation.
An excise notification dated
February 27, 2010, provides
excise duty exemption on procurement
of transmission
equipment for initial setting up
of solar power generation projects.
The notification, however,
does not clarify whether a transmission
line located outside the
project area should be considered
part of the solar power
project or if transmission equipment
for laying transmission
lines outside the project area
would be eligible for duty concession.
Transmission lines,
laid primarily to connect a solar
power plant to the central transmission
utility/state transmission
utility system, are located
outside the project area.
Following the request for excise
duty exemption certificate from
Viraj Renewable Energy, the
MNRE had asked for a clarification
on the issue from the Central
Board of Excise and Customs.
Last month, the Department of
Revenue, Ministry of Finance,
responded stating that the excise
duty exemption was available to
transmission equipment wherever
the contractual obligation for
installing transmission lines/
equipment up to the point of
delivery fell on the solar power
developer. It also clarified that
the excise duty exemption was
available only during the initial
set up or installation.
The MNRE has issued the clarification
on excise duty exemption
through an office memorandum
dated December 21, 2011.
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