GST classification confirmed for air dryer in locomotive braking system

The Advance Ruling Authority confirmed the classification of "Air dryer complete with final filter for use in the braking system of locomotive supplied to Railway" under chapter 8421, attracting 18% GST. Despite the goods being supplied to Railways, the classification remained under chapter 8421, as per the supplier's initial classification. The ruling was based on the definition and usage of Air dryers, aligning with Circular No. 30/4/2018. The applicant was advised on the appeal process under Section 100 of the CGST Act within 30 days of the ruling.

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Issues: Classification of goods for GST purposes

Detailed Analysis:
1. Submission of the Applicant: The applicant, a trader in Air dryer used by Railways, raised an issue regarding the classification of goods supplied to Railways. The applicant contended that based on the use of the material for railway locomotives, the most appropriate classification should be under chapter 86, specifically heading 86072100 for Air brakes and parts thereof. However, the vendor classified the goods under chapter 84, heading 84213990, as a mechanical appliance.

2. Questions on Advance Ruling: The applicant sought an advance ruling on the tax rate applicable to "Air dryer complete with final filter for use in the braking system of locomotive supplied to Railway," as per the order received from Western Railway.

3. Findings, Analysis & Conclusion: The Advance Ruling Authority examined the definition and usage of Air dryers, noting their application in various industries, including train braking systems. The HSN code 8421 covers machinery for filtering or purifying liquids or gases, which includes Air dryers. The supplier classified the goods under chapter 8421, attracting 18% GST. The Circular No. 30/4/2018 clarified that goods under chapter 86 supplied to Railways attract 5% GST, without refund of unutilized input tax credit. Since the supplier already classified the goods under chapter 8421, the classification remained unchanged, despite being supplied to Railways. Therefore, the ruling confirmed the correct classification under chapter 8421, attracting 18% GST.

4. Legal Reference: The ruling was made in accordance with the provisions of the CGST Act 2017, Section 97(2)(a), and relevant GST Tariff Act 2017 classifications. The applicant was advised on the appeal process available under Section 100 of the CGST Act within 30 days of the ruling.

This detailed analysis of the judgment provides insights into the classification of goods for GST purposes, the application of relevant HSN codes, and the impact of supplier classification on GST rates, ensuring clarity on the tax implications for the goods supplied to Railways.

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