Classification of Marine Diesel Engines and Gear Boxes under GST

The Authority for Advance Ruling confirmed the classification of Marine Diesel Engines under TSH 8408 and Gear Boxes under TSH 8483, both attracting a 28% GST rate. Additionally, goods under TSH 8408, 8409, and 8483 can be considered parts of goods under certain headings, attracting a reduced 5% GST rate if used accordingly, subject to no diversion for other purposes.

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Issues Involved:
1. Classification of Marine Diesel Engine under TSH 8408.
2. Classification of Gear Box under TSH 8483.
3. Applicability of reduced GST rates for goods under TSH 8408, 8409, and 8483 when used as parts of goods under headings 8902, 8904, 8905, 8906, and 8907.

Detailed Analysis:

1. Classification of Marine Diesel Engine under TSH 8408:

The applicant, engaged in the assembly and testing of Marine Diesel Engines (MDE) under TSH 8408, sought confirmation on the classification and applicable GST rate. The engines are used in marine vehicles such as ships and submarines. The Authority confirmed that Marine Diesel Engines are classified under Heading 8408 of the GST Tariff as "Compression-ignition internal combustion piston engines (diesel or semi-diesel engines)." The applicable GST rate is 28% (14% CGST + 14% SGST) as per Schedule IV, Sr. No. 115 of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017.

2. Classification of Gear Box under TSH 8483:

The applicant also imports and supplies Gear Boxes falling under TSH 8483. The Authority confirmed that Gear Boxes are classified under Heading 8483 of the GST Tariff, which includes "Transmission Shafts, gears and gearing; gear boxes and other speed changers." The applicable GST rate for Gear Boxes is 28% (14% CGST + 14% SGST) as per Schedule IV, Sr. No. 135 of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017.

3. Applicability of Reduced GST Rates for Goods under TSH 8408, 8409, and 8483:

The applicant argued that Marine Diesel Engines and Gear Boxes supplied to dealers and shipyard manufacturers for use in goods falling under headings 8902, 8904, 8905, 8906, and 8907 should attract a reduced GST rate of 5% (2.5% CGST + 2.5% SGST) as per Sr. No. 252 of Schedule I of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017. The Authority agreed that if these goods are used as parts of vessels classified under headings 8901, 8902, 8904, 8905, 8906, and 8907, they would indeed attract the reduced GST rate. However, this reduced rate is only applicable if the goods are not diverted for other purposes.

Order:

1. The classification of Marine Diesel Engine under TSH 8408 attracting 28% GST is correct.
2. The classification of Gear Box under TSH 8483 attracting 28% GST is correct.
3. Goods under TSH 8408, 8409, and 8483 can be treated as parts of goods under headings 8902, 8904, 8905, 8906, and 8907 attracting 5% GST, provided they are used in goods under these headings. If used otherwise, the standard GST rate for the respective TSH would apply.

Conclusion:

The Authority for Advance Ruling confirmed the classifications and applicable GST rates for Marine Diesel Engines and Gear Boxes. It also clarified the conditions under which reduced GST rates could be applied when these goods are used as parts of specific marine vessels.

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