GST Rates for Wear Plates and Tamping Tools Changed: Know the Impact

The Wear Plates and Tamping Tools, classified under sub-heading 860799, are considered parts of railway or tramway locomotives or rolling stock. They attract a GST rate of 5% until 30.09.2019 and 12% from 01.10.2019 onwards. The products are not classified under HSN 86040000 and Chapter 86 for GST purposes.

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Issues Involved:
1. Classification of Wear Plates and Tamping Tools under HSN code.
2. Applicable GST rate for Wear Plates and Tamping Tools.

Detailed Analysis:

Issue 1: Classification of Wear Plates and Tamping Tools under HSN code

Applicant's Submission:
- The applicant is engaged in manufacturing Wear Plates and Tamping Tools as per RDSO specifications, used in Ballast Cleaning Machines and Tie Tamping Machines for railway track maintenance.
- The applicant argued that these items should fall under HSN code 86040000, classified under Chapter 86, as they are parts of track maintenance vehicles.

Authority's Discussion and Findings:
- The Wear Plates and Tamping Tools are essential parts of Ballast Cleaning Machines and Tie Tamping Machines, which are self-propelled track maintenance vehicles used by railways.
- The Chapter 86 sub-heading 8604 00 00 covers "Railway or Tramway Maintenance or Service Vehicles whether or not Self Propelled" but does not specifically mention parts of these vehicles.
- Classification of parts and accessories of vehicles under Chapter 86 is provided under sub-heading 8607, which includes "Other Parts of railway or tramway locomotives or rolling stock."

Conclusion:
- The Wear Plates and Tamping Tools, being parts of the Ballast Cleaning Machine and Tie Tamping Machine, are classified under sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock).

Issue 2: Applicable GST rate for Wear Plates and Tamping Tools

Applicant's Submission:
- The applicant cited Notification No. 1/2017-Central Tax (Rate) and Circular No. 30/4/2018-GST, claiming that the items should be taxed at 5% GST as they fall under Chapter 86.
- The applicant also referenced Notification No.14/2019-Central Tax (Rate), which amended the tax rate to 12% w.e.f. 1st October 2019.

Authority's Discussion and Findings:
- Goods of Chapter heading 8604 and 8607 attract GST @ 5% as per entry Nos. 238 & 241 of Schedule I of Notification No.01/2017-Central Tax (Rate).
- Circular No.30/4/2018-GST clarified that goods classified under Chapter 86 supplied to railways attract a 5% GST rate.
- Notification No.14/2019-Central Tax (Rate) amended the GST rate for Chapter heading 8604 and 8607 to 12% w.e.f. 1st October 2019.

Conclusion:
- The Wear Plates and Tamping Tools, classified under sub-heading 860799, attract GST @ 5% under S. No. 241 of Schedule I till 30.09.2019 and @12% under S. No.205G of Schedule II w.e.f. 01.10.2019.

Ruling:
Question: Whether supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing, directly to the Railway Authorities as per the Order received from M/s Trio Enterprise, should fall under HSN 86040000 & classified under Chapter 86 and should be taxed GST @ 5%Rs.

Answer: No. The products, “Wear plates” and “Tamping Tool” manufactured specifically as per RDSO Drawing and supplied to the Railways through M/s Trio Enterprise, being parts of self-propelled track maintenance vehicles (viz. the Ballast Cleaning Machine & the Tie Tamping Machine), are classifiable under chapter sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock), and, hence, same would attract GST @ 5% under S. No. 241 of the Schedule I till 30.09.2019 and w.e.f. 01.10.2019, @12% under S. No.205G of the Schedule-II to the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017, as amended.

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