GST rate applicable for Engine while considering as part of DG set

[Vivek anandhan]

Dear Expert

We are the manufacturer of Diesel Generating Set under HSN 85021100 and output GST rate applicable at 18%. But for our principle INPUT Item of Diesel Engine having HSN 84089010 falling GST rate at 28%. Can I insist our supplier to charge 18% for the supply of Engine under the HSN code of 85030000 because the engine specifically designed for DG set only. At present they are charging 28%. Furnished below the rates and description available in HSN data.

Description of Product HSN GST Rate

Parts suitable for solely or principally with the machines of heading 8501 or 8502 85030000 18%

Engine is the principle input item of Diesel Generating Set. Without Engine DG set will not run. It is principle part of DG Set. Also our supplier having separate engine division for manufacturing of Engine for DG set application, It is specifically designed for DG Set application.

Vivekanandhan

AI Summary

Inverted duty structure: claim refund when input GST rate exceeds output rate; supplier retains classification responsibility.
A purchaser cannot insist that a supplier charge the lower GST rate applicable to finished DG sets for engines; classification and invoicing rest with the supplier. The pragmatic remedy for a manufacturer facing a higher input rate is to claim refund under the inverted duty structure. Absent a concessional original equipment procedure in GST, industry must seek policy change through the GST Council to obtain an exemption or concessional treatment similar to pre GST rules.