Concessional GST on marine diesel engines and gear boxes applies only when supplied as parts of specified vessels.

Marine diesel engines and gear boxes supplied for use as parts of vessels classified under headings 8901, 8902, 8904, 8905, 8906 and 8907 fall within the concessional entry for parts of those goods and are taxable at 5% GST. The concessional rate applies only where the end-use nexus shows supply as parts of the specified vessels; if the same goods are supplied for other uses, the general tariff entries for marine diesel engines and gear boxes continue to apply at 28% GST.

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Issues: Whether marine diesel engines and gear boxes supplied for use in fishing vessels and other vessels covered by headings 8901, 8902, 8904, 8905, 8906 and 8907 are classifiable as parts of such vessels attracting GST at 5%, or whether they fall under their respective tariff entries attracting GST at 28%.

Analysis: The applicable notification treats parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter as taxable at 5%. The clarification relied on by the Authority states that fishing vessels attract the concessional rate and that parts supplied for such vessels also fall within the concessional entry. Applying that scheme, marine diesel engines and gear boxes, when supplied for use as parts of the specified vessels, are to be treated as parts of those goods and not merely by their standalone tariff headings. Where the goods are used for some other purpose, the general entries for marine diesel engines and gear boxes continue to apply.

Conclusion: Marine diesel engines and gear boxes supplied for use in the specified vessels are taxable at 5% GST as parts of those goods; if supplied for other use, they attract GST at 28% under their respective entries.

Final Conclusion: The ruling accepts the concessional classification only when the goods are used as parts of the specified vessels, while preserving the higher rate for other uses.

Ratio Decidendi: A specific concessional entry for parts of identified vessel headings applies where the goods are supplied for use as such parts, and the general tariff entry applies only when that end-use nexus is absent.

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