TaxTMI 
TaxTMI 
2018 (9) TMI 1035
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....Tariff Act, 1975 as adopted to GST attracting 28% of IGST (14% CGST + 14% SGST) as per Schedule IV (Sr. No. 135) of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 is correct or not? C. Whether the goods falling under TSH 8408, 8409 and 8483 of Customs Tariff Act, 1975 as adopted to GST can be treated as 'parts of heading of 8902, 8904, 8905, 8906 and 8907' attracting 5% of IGST (2.5% CGST+ 2.5% SGST) as per Schedule I (Sr. No. 252) of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 or not? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus - Des....
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....Hereinafter referred as 'said goods') to two types of customers i.e. dealers who supply the said goods to the sailors who further use the said goods in fishing vessels, ships, boat or trawlers and the shipyard manufacturers engaged in manufacturing of various vessels falling under Chapter 89 of Customs Tariff Act, 1975. 6. The applicant would like to furnish details of Engine models (assembled and/or imported) fitted in the fishing boats with the help of certain photographs of fishing boats and engine details as per the models to establish that the diesel engines (assembled and/ or imported) are specially designed for Marine application and used exclusively for fishing vessels. (The five copies of different engine models and photos of fishing boats with certain specifications are enclosed and marked as Annexure - F). 7. The applicant would also like to highlight some of the photographs of marine engines to show that the said marine engines installed on the vessels (The three copies of actual photographs taken of engines fitted on the trawlers arc enclosed and marked as Annexure - G). 8. The applicant either after assembly of marine engine, however prior to supply, is suppo....
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....d changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints) 14% 28% 11. As per the Annexures F to H enclosed with this application and as narrated in Para Nos. 5 to 8 (Supra), the applicant supply the marine engines and gear boxes, the end - use of which is in fishing vessels, boats, trawlers etc, The classifications of these vessels etc. are falling under following 4 digits of Customs Tariff Act, 1975 as adopted by GST. Chapter/Heading/Sub-heading Tariff item Description of goods 8901 Cruise-ships, excursion boats, ferry-boats, cargo-ships, barges and similar vessels for the transport of persons or goods 8902 Fishing vessels; factory ships and other vessels for processing or preserving fishery products 8904 Tugs and pusher crafts 8905 Light-vessels, fire-floats, dredgers, floating cranes and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms 8906 Other vessels, including warships and lifeboats Other than rowing boats 8907 Other floating structures....
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....that the applicant can supply the marine engine and the marine gear boxes as Parts of headings of 8901, 8902, 8904, 8905, 8906, 8907 as per Sr. No. 252 of Schedule 1 of Notification No. 1/2017 - Central Tax (Rate) Dated 28thJune, 2017. However, the applicant as on date of this application has never supplied the goods under Sr. No. 252 by charging 5% IGST or 2.5% CGST and SGST each. 16. The applicant by this application of advance ruling would like to know the correct interpretation and applicability of Sr. No. 252 (Schedule I) vis-a-vis Sr. Nos. 115, 116 and 135 (Schedule IV), reference Para 10 above in the light of different rates of CGST+SGS applicable to TSH 8408, 8409 and 8483 of Customs Tariff Act, 1975 as adopted for GST. Statement of applicants interpretation of law in respect of question raised in Sr. No. 14 i.e. questions on which Advance Ruling is sought. Brief note regarding prior to GST regime a. The applicant is engaged in assembling of Marine Diesel Engine prior to 01.07.2017 also, however, never claimed General Exemptions of Central Excise Tariff Act, 1985 which read as under Sr.No. Chapter or heading Description Rate Condition 305A 8....
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..... The applicant was unable to fulfill the said conditions and hence did not claim the General Exemptions. Therefore, the applicant was paying normal rate of Central Excise Duty while making clearances of Marine Diesel Engine irrespective of the supplies made to dealer or Shipyard manufacturer and also paying CVD while importing the Marine Diesel Engine and Gear Box at normal rate. It is also to be noted that the applicant has never claimed any General Exemptions for import duty also under General Exemptions issued under Customs Tariff Act, 1975. 2. Applicant's views and submissions (GST Regime) a. In the GST regime, there are two separate Schedules (I and IV) given under Notification No. 1/2017 - C.T. (Rate) dated 28/06/2017. The relevant entries related to the applicant are reproduced below:- Schedule I Sr.No. Chapter/Heading Description of goods Rate of GST (CGST+SGST) 246 8901 Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods 5% 247 8902 Fishing vessels; factory ships and other vessels for processing or preserving fishery products 5% 248 8904 Tugs and pus....
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....The applicant, till date, has made all the supplies after 01.07.2017 by charging 28% IGST (14% CGST + 14% SGST) as per Sr. No. 115, 116 and 135 of Schedule IV of Notification No. 01/2017 - C. T. (Rate) dated 28.06.2017. (Refer Para 10 above). 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- 1. M/s. Shandong Heavy Industry India Pvt. Ltd., falls under the Jurisdiction of Range: IV, Division: II (Pimpri), Central GST, Pune-l Commissionerate. In the pre-GST regime, the taxpayer had obtained registration under Central Excise, Service Tax as well as Importer & Trader/Dealer. Their registration Nos. being AAPCS5350REM001, AAPCS5350RSD001, AAPCS5350RE1004, AAPCS5350RED003 respectively. The taxpayer has migrated in the GST regime with GSTIN 27AAPCS5350R1ZF. The taxpayer is engaged in importing diesel engines from their parent company and also manufacturing of diesel engines and making supply to various dealers and shipyards. The taxpayer is also engaged in the Import of Gear Boxes making supply as such to various dealers and shipyard. 2. The details of the classification and rate of duty before GST on the above mention....
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....T/SGST Rate IGST Rate I 246 8901 Cruise-ships, excursion boats, ferry-boats, cargo-ships, barges and similar vessels for the transport of persons or goods 2.5% 5% I 247 8902 Fishing vessels; factory ships and other vessels for processing or preserving fisher products 2.5% 5% I 248 8904 Tugs and pusher crafts 2.5% 5% I 249 8905 Light-vessels, fire-floats, dredgers, floating cranes and other vessels the navigability of which is subsidiary to their main function; floating docks; floating or submersible drilling or production platforms 2.5% 5% I 250 8906 Other vessels, including warships and lifeboats other than rowing boats 2.5% 5% I 251 8907 Other floating structures (for example, rafts, tanks, coffer-dams, landing-stages, buoys sand beacons) 2.5% 5% Further, the taxpayer stated that the marine engine and the gear boxes supplied by them end - use which is in the vessels, trawlers etc which are classified under TSH 8901 to 8907 attracting 5% IGST (2.5% CGST and SGST each). Therefore, marine engines and marine gear boxes supplied by the applicant to dealers and shipyard ....
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....applied for classification under CHAPTER HEADING NO. 8901 to 8907 of the schedule to the tariff under the GST regime. Chapter 89 actually attracts classification of "SHIPS, BOATS AND FLOATING STRUCTURES thereunder. 9. In this case, it is seen that a very specific description for classification of the parts/spares of MARINE GEAR BOX is found in CHAPTER HEADING NO. 8483 of the schedule of the tariff which is "gear boxes and other speed changers" Gear boxes of all kinds are classifiable under this heading only. Chapter 89 attracts classification of "SHIPS, BOATS AND FLOATING STRUCTURES which is a specific description and does not attract gear boxes to be classified under this chapter. Schedule I and Schedule IV of the NOTIFICATION NO. 1/2017-Central GST (Rate), dated 28-06-2017: while schedule I attracts Central GST @ 2.5 per cent and schedule IV attracts Central GST @14 per cent. As a result, rate difference of 11.5 per cent (14% - 2.5%). 10. It is seen that Chapter 89 is about the classification of Ships/Boats/Floating Structures and Chapter 84 is about Machinery & Mechanical Appliances. The chapter note no. 7 to chapter 84 of GST Tariff Act, 2017 is reproduced below: ....
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....specific product description and mint is only the flavour of the tea. Explanation: Rule 3(b) applies to mixtures, composite goods and sets that cannot be classified by use of the previous Rules. These should be classified as if they consisted of the material or component which gives them their essential character. Example: An importer bringing in "liquor gift sets" (that include the bottle of liquor and glasses) must classify the goods under the appropriate liquor Heading. The essential character of the item is the liquor itself and not the glasses contained within the set. Explanation; Rule 3(c) is for use in cases in which a good seems to fit in more than one Heading and the essential character cannot be determined. In this case, the product should be classified under the Heading which occurs last in numerical order. Example: A gift set which includes socks (Heading number 6115) and ties (Heading number 6177) cannot be classified by previous rule since neither item gives the gift set its essential character. The gift set must be classified under the Heading number for ties which is the Heading that occurs last in numerical order. 12.1t may be noted that a Gear Box ....
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....g the Final Hearing on Sh. Vidhyadhar S. Apte, Advocate along with Mr. Suresh Kumar, Sr. Manager, Service, appeared and made contentions as per their written submissions at the time of preliminary hearings and hearing today. The jurisdictional officer, Sh. S.H. Phatak, Supdt. Division - II Pimpari, Pune - I Commissionerate appeared and made written submissions and orally made contentions as per details in their written submissions. 05. OBSERVATIONS We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department. We take up the first question raised by the applicant which is as under:- (1) ---Wether the classification of Marine Diesel Engine falling under TSH 8408 of Customs Tariff Act, 1975 as adopted to GST attracting 28% of IGST (14% CGST + 14% SGST) as per Schedule IV (Sr. No. 115) of Notification No. 01/2017 - Central GST (Rate) dated 28.06.2017 is correct or not? The applicant has submitted that they are engaged in the assembly and testing of Marine Diesel Engines (MDE) falling under TSH 8408 which they supply to various dealers and shipyard manufacturers. MDEs are also imported by them and sup....
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..... 01/2017- Central GST (Rate) dated 28.06.2017 is correct or not? The applicant has submitted that they are also engaged in Import of Gear Box falling under TSH 8483 and making supply of the same as such to various dealers and shipyard manufacturers. We find that Tariff Heading 8483 covers goods as under:- Chapter/Heading/Sub- heading Tariff item Description Of goods 8483 Transmission Shafts (Including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft coupling (including universal joints) Gear Boxes are specifically mentioned under Heading 8483 (SH 8483 40 00) of the GST Tariff (Machinery and Mechanical Applications). The applicant has submitted that they import such Gear Boxes. In view of the fact that a very specific description and mention of such gear boxes is made under Heading 8483 of the GST Tariff, we find that Gear Boxes are classifiable under Heading 8483 of the GST Tariff. Under Sr. No. 135 of Schedule IV of Notification No. 1/2017 - Central Tax....
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....r following 4 digits of Customs Tariff Act, 1975 as adopted by GST, namely, 8901, 8902, 8904, 8905, 8906 and 8907. We find, from a general reading of Sr. No. 252 of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, that goods falling under any chapter of the GST Tariff, if used as parts of goods falling under headings 8901, 8902, 8904, 8905, 8906 and 8907,then such goods would attract CGST and SGST each. We find that the applicant has stated in their submissions that the marine engine and the gear boxes supplied by them are for end-use in the vessels, trawlers etc, classified under TSH 8901, 8902, 8904, 8905, 8906 and 8907 of the GST Tariff and therefore would attract 5% IGST (2.5% CGST and SGST each). We find that marine engines and marine gear boxes which are claimed to be supplied by the applicant to dealers and shipyard manufacturers for use in goods falling under heading 8901, 8902, 8904, 8905, 8906 and 8907 will be deemed to be Parts of vessels falling under heading 8901, 8902, 8904, 8905, 8906 and 8907, if they are used in goods covered under Tariff Headings 8901, 8902, 8904, 8905, 8906 and 8907 and are not diverted and used for other purposes somewhere ....