Marine engines, spares and gearboxes for fishing vessels: classified as vessel parts, eligible for 5% IGST rate

Marine engine, its spares, and marine gear box proposed to be imported for use in fishing vessels were held classifiable as parts of vessels of headings 8902/8904/8905/8906/8907, rather than under heading 84834000, because a Chartered Engineer's certification established that these items are integral to the functioning of fishing vessels and are not suitable for automobile or other industrial use; consequently, they were held eligible to IGST at 5% under Sl. No. 252 of Sch. I to Notif. No. 01/2017-IGST (Rate). Items intended to be procured locally (marine gear oil and gear box spares) were held outside the scope of advance ruling under the Customs Act, 1962.

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Issues: Whether imported Marine engines (CTH 8408/84081010), their spares (CTH 8409/84099990) and Marine gear boxes (CTH 8483/84834000) intended for use as parts of fishing vessels are eligible for IGST at 5% under Serial No.252 ("Any Chapter") of Schedule I of Notification No.01/2017-IGST (Rate) dated 28.06.2017.

Analysis: Application falls within advance ruling jurisdiction under Section 28H(2)(d) as it concerns applicability of notifications on imports. Classification proceeds by applying the General Rules for Interpretation (GRI) and relevant Chapter and Section Notes. The subject goods match the descriptive terms of headings 8408 (marine propulsion engines), 8409 (parts suitable for engines 8407/8408) and 8483 (gear boxes and other speed changers) and are classifiable under CTI 84081010, 84099990 and 84834000 respectively. Sectional Note in Section XVII confirms Chapter 89 contains no provision for parts of ships and such parts are classifiable in other chapters according to their own headings. Serial No.252 of Schedule I of Notification No.01/2017-IGST (Rate) provides that parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter attract IGST at 5%. The applicant furnished technical certification and end-use evidence indicating the goods are intended and suitable only for use in fishing vessels. Relevant TRU Circular (No.52/26/2018-GST) and prior advance rulings support the application of Serial No.252 to marine engines and gear boxes when used as parts of vessels. The authority reserves the right of Customs to verify actual use at importation. Domestically purchased goods were outside Customs AAR jurisdiction and no ruling was given for them.

Conclusion: The imported Marine engines (CTH 84081010), their spares (CTH 84099990) and Marine gear boxes (CTH 84834000), when used as parts of fishing vessels falling under headings 8901/8902/8904/8905/8906/8907, are eligible for IGST at 5% under Serial No.252 of Schedule I of Notification No.01/2017-IGST (Rate) dated 28.06.2017; no ruling is given for domestically purchased Marine Gear Oil and Marine Gear Box spares.

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