GST classification cannot change on onward supply where imported goods remain the same; lower ship-parts rate denied.

Imported goods supplied later to ship owners could not be reclassified at the stage of onward supply as parts of vessels under headings 8901, 8902, 8904, 8905, 8906 or 8907 for purposes of Entry 252 of Notification No. 1/2017-Central Tax (Rate). The AAR applied the principle that classification follows the character of the goods as imported and does not change merely because the same goods are resupplied in a different taxable context. Because the applicant had accepted the customs classification at import and the goods remained unchanged, the lower GST rate of 5% was unavailable. HSN notes for Chapter 89 and the cited rulings did not justify a fresh reclassification on these facts.

---

---

Issues: Whether the goods imported by the applicant and later supplied to ship owners could be reclassified at the time of onward supply as parts of goods of headings 8901, 8902, 8904, 8905, 8906 or 8907 so as to attract entry 252 of Notification No. 1/2017-Central Tax (Rate), and whether the GST rate on such supply could therefore be 5%.

Analysis: The ruling turned on the principle that classification does not change merely because the goods are subsequently supplied by a different person or in a different taxable context. The applicant had accepted the customs classification at the time of import and discharged the corresponding duties, and the goods remained the same goods at the stage of onward supply. The interpretation provisions under the GST notification and the customs tariff framework required classification to follow the tariff entry applicable to the imported goods, while the HSN notes for Chapter 89 also indicated that separately presented parts and accessories of vessels are excluded from that chapter and classified according to their appropriate headings elsewhere. Reliance on the earlier advance ruling and the cited Supreme Court order was found to be unhelpful because those matters were factually distinct and did not support a fresh reclassification on the applicant's facts.

Conclusion: The goods could not be reclassified at the stage of onward supply and continued to bear the same classification as at import. Entry 252 of Notification No. 1/2017-Central Tax (Rate) was not available merely on the applicant's claim that the items were essential ship parts.

Final Conclusion: The ruling confirms that the GST rate on the applicant's post-import supply follows the customs classification already accepted at import, and the claimed lower rate based on reclassification as ship parts is unavailable.

Ratio Decidendi: Classification cannot be altered at the stage of onward supply without a change in the character of the goods; where the goods remain unchanged, their accepted import classification continues to govern GST treatment.

---