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 N/N. 01/IGST (Rate) dated 28.06.2017. The AAR held that marine propulsion engines fall under CTH 8408 (specifically subheading 840810), and parts suitable for use solely or principally with engines of heading 8407/8408 are classifiable under CTH 8409. It further held that the marine gear box is classifiable under CTH 8483 (CTI 84834000). Treating these as essential vessel/boat spares, the AAR ruled that the subject goods attract 5% IGST under the notification.

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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.

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