2018 (6) TMI 515 - AAR - GST

Geared Motor Classified under Chapter Heading 8501: Applicable GST Rate 18%

In Re : M/s. Power Build Private Limited

The ruling authority classified the product 'Geared Motor' under Chapter Heading 8501 of the Customs Tariff Act, 1975. As a result, the applicable GST ... Classification of goods - Geared Motors - applicable rate of GST - Whether ‘Geared Motor’ falls under Chapter Heading 8483 or 8501 of the Customs Tariff Act, 1975? - Held that:- The Tariff Heading 8483 does not cover Gear Boxes or other variable speed changers combined with a motor. Motor remain classified under Tariff Heading 8501 even when they are equipped with pulleys, with gears or gear boxes, of with a flexible shaft for operating hand tools - On the basis of the Explanatory Notes of HSN under Tariff Heading 8483 and 8501, it is evident that the product ‘Geared Motor’, which is an assembly product of the ‘Electric Motor’ and ‘Gear Box’, will appropriately fall under Chapter Heading 8501 of the Customs Tariff Act, 1975. Ruling:- The product ‘Geared Motor’ is classifiable under Chapter Heading 8501 of the Customs Tariff Act, 1975 and Goods and Services Tax rate applicable to Chapter Heading 8501 is applicable to the said product. Issues Involved:1. Classification of the product 'Geared Motor' under the Customs Tariff Act, 1975.2. Determination of the appropriate GST rate for 'Geared Motor'.Issue-wise Detailed Analysis:1. Classification of the Product 'Geared Motor':The applicant, M/s. Power Build Private Limited, manufactures 'Geared Motors' by assembling Electric Motors with Gear Boxes. The key question raised is whether 'Geared Motor' falls under Chapter Heading 8483 or 8501 of the Customs Tariff Act, 1975. The applicant contended that under the erstwhile Central Excise regime, Geared Motors were classified under HSN code 8501 and taxed at 12.5%. They argued that under the GST regime, the classification should remain the same, with Electric Motors (whether geared or otherwise) under HSN code 8501, attracting an 18% GST rate.The Commissioner of Central Excise & GST, Vadodara, and the Assistant Commissioner, State Tax, Ghatak-51, Anand, provided their views. They noted that 'Geared Motor' is an assembly product of 'Electric Motor' and 'Gear Box' but lacks a specific entry in the GST Schedule. The Assistant Commissioner highlighted that the classification and tax rate should be determined based on the product's use, similar to how Gearboxes were classified under the erstwhile VAT Act.The ruling authority referred to the Harmonised System of Nomenclature (HSN) and the Supreme Court's decision in L.M.L. Ltd. Vs. Commissioner of Customs, which emphasized the importance of HSN Explanatory Notes in tariff classification. The Explanatory Notes for Tariff Heading 8483 (Gear Boxes and other Speed Changers) and 8501 (Electric Motors) were considered.The Explanatory Notes under Tariff Heading 8483 state that gear boxes combined with a motor are classified under the same heading as the motor. Similarly, the Notes under Tariff Heading 8501 specify that motors remain classified under this heading even when equipped with gears or gear boxes. Based on these notes, the ruling authority concluded that 'Geared Motor' should be classified under Chapter Heading 8501.2. Determination of the Appropriate GST Rate for 'Geared Motor':The classification under Chapter Heading 8501 implies that the GST rate applicable to Electric Motors under this heading should also apply to Geared Motors. According to Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, the GST rate for Electric Motors under HSN code 8501 is 18%.RULING:The product 'Geared Motor' is classifiable under Chapter Heading 8501 of the Customs Tariff Act, 1975. Consequently, the applicable GST rate for Chapter Heading 8501, which is 18%, applies to the said product.