2019 (4) TMI 108 - AAR - GST

GST Ruling: Different Tax Rates for Marine Diesel Engines Based on End Use

The ruling clarified that Marine Diesel Engines and Gear Boxes supplied for use in vessels under specified headings are considered parts of such goods and ... Classification of goods - Marine Diesel Engine - Gear Box - whether classified under TSH 8408 and TSH 8483 respectively or can be treated as parts of heading of 8902, 89048905, 8906 and 8907? Held that:- The parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter are taxable @5% GST as per Sl No.252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. In view of the specific inclusion of parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 of any chapter under Sl No. 252 of 1st Schedule of the notification, the general tax rate applicable to parts like Marine Engine and Gear Box falling under HSN 8408 and 8483 respectively has no applicability, if the end use of the goods are in the vessels / goods falling under the heading 8901, 8902, 8904, 8905, 8906, 8907 of the Customs Tariff as parts of such goods. The marine diesel engine and gear boxes supplied for use in vessels / goods falling under heading 8901, 8902, 8904, 8905, 8906, 8907 will be deemed to be parts of such goods and thereby taxable @5% GST per Serial No.252 of Schedule-I of the Notification No.1/2017 Central Tax (Rate) dated 28.06.2017. If it is used for some other purpose, the applicable tax rate would be as per their respective TSH 8408 and 8483 at the rate of 28% GST as per Sl Nos 115 and 135 of the said notification. Issues:1. Classification and tax rate applicability of Marine Diesel Engine under TSH 84082. Classification and tax rate applicability of Gear Box under TSH 84833. Treatment of Marine Diesel Engine and Gear Box as parts of vessels under headings 8901, 8902, 8904, 8905, 8906, 8907Analysis:1. The Authority clarified that Marine Diesel Engines supplied for use in vessels falling under specific headings attract 5% GST as per Schedule I of Notification No. 01/2017. However, if used for other purposes, the tax rate would be 28% GST as per the relevant schedule. The ruling confirms the correct tax rate applicability based on the end use of the engine.2. Gear Boxes under TSH 8483, when supplied for use in vessels under specified headings, are considered parts of such goods and taxable at 5% GST as per the notification. For other purposes, the applicable tax rate is 28% GST. The judgment provides clarity on the tax treatment of Gear Boxes based on their usage in vessels or other applications.3. Regarding the treatment of Marine Diesel Engine and Gear Box as parts of vessels under specific headings, the ruling states that if these components are supplied for use in vessels falling under particular headings, they are deemed as parts of such goods and attract 5% GST. However, for alternative uses, the tax rate would be determined as per the respective Tariff Sub-Headings at 28% GST. This analysis ensures consistent tax treatment based on the intended purpose of the engine and gear box.