2025 (12) TMI 1741 - AAR - Customs

Imported marine propulsion engines, engine parts and marine gear box classification-treated as vessel spares, taxed at 5% IGST

The dominant issue was whether imported marine engines, their spare parts, and a marine gear box qualified for 5% IGST under Sl. No. 252 of Schedule I to ... Applicability of IGST 5% for Marine engine and its spares & Marine Gear as per N/N. 01/ IGST(Rate) dated 28/06/2017, Sr.252 of schedule I for imports - HELD THAT:- CTH 8408 of chapter 84 contains heading as Compression- Ignition Internal Combustion Piston Engines (diesel or semi diesel Engines). There is specific subheading 840810 as Marine Propulsion Engines followed by single dash which has specific CTI 84081010 as 'Others' followed by triple dash. Further, for the classification of the spares of Marine Engine the CTH 8409 contains description as Parts Suitable for use solely or principally with the Engines of heading 8407 or 8408. Therefore, it is clear that spare parts of Marine Engines are classifiable under CTH 8409 under CTI 84099990 for 'Others' - the Marine Gear Box is classifiable under CTH 8483 and specifically under CTI 84834000 descripted as Gears and gearing, other than toothed wheels, chain sprockets and other transmission elements presented separately; ball or roller screws; gear boxes and other speed changers, including torque converters. It is mentioned in the Charted Engineer certificate issued to the applicant that Marine engine spares are part of Fishing vessels, due to it spares of Marine engine damaged, marine engine will not run which in tum Fishing boat will not moving in Sea of water, area, part is vital product of finished goods/ whole, if its damaged, whole function of main product will not be functioning. When Marine engine it means all the parts of Marine engine is fitted with boat/ vessels, they are called as Boat/ship spares for example valve for cycle tubes is part of cycle not a part of cycle tubes. when it fitted with cycle they are called as cycle parts not a cycle tubes parts Components of components is also component of main machines part of parts is also a part of main product. The subject goods in question i.e. Marine engine and its spares & Marine Gear Box are applicable of 5% IGST as per SI. No. 252 of Schedule I of N/N. 01/ IGST(Rate) dated 28.06.2017. Issues: Whether marine diesel engines (CTH 8408/84081010), their spares (CTH 8409/84099990) and marine gear boxes (CTH 8483/84834000) imported for use as parts of fishing vessels (heading 8902) are eligible for IGST at 5% under Serial No.252 of Schedule I of Notification No.01/2017-IGST(Rate) dated 28.06.2017.Analysis: Classification of the subject goods is governed by the General Rules for Interpretation, relevant Section and Chapter Notes, headings and HSN explanatory notes. The goods are classifiable as marine propulsion engines (CTH 8408/84081010), parts suitable for use with engines (CTH 8409/84099990) and gear boxes (CTH 8483/84834000). Chapter and Section notes indicate parts of ships/boats are generally classified in other chapters where appropriate. Circular No.52/26/2018-GST (TRU) and multiple advance rulings interpret Serial No.252 of Schedule I of Notification No.01/2017-IGST(Rate) to grant a 5% rate to parts of goods of headings 89018907 when such parts are used in those goods. The applicant provided end-use evidence and technical certification supporting that the imported engines, spares and gear boxes are used as parts of fishing vessels falling under heading 8902.Conclusion: The marine engines (CTH 8408/84081010), their spares (CTH 8409/84099990) and marine gear boxes (CTH 8483/84834000) when imported and used as parts of fishing vessels of heading 8902 are eligible for IGST at 5% under Serial No.252 of Schedule I of Notification No.01/2017-IGST(Rate) dated 28.06.2017.