TaxTMI 
TaxTMI 
2018 (9) TMI 1256
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....cation is 'admitted' to pronounce advance ruling . 1. Submission of The Applicant: 1. KEI Industries Ltd. (hereinafter referred to as the "Applicant") is a public limited company incorporated in India and is engaged in the business of manufacturing and supply of various kinds of Power Cables. 2. The present application pertains to the supply of Copper XLPE insulated armoured low tension cables(hereinafter referred to as "electric/power cables") by the Applicant to M/S. Vedanta Ltd. 3. M/s. Vedanta is undertaking petroleum operations under PRE-New Exploration Licensing Policy(PRE-NELP) granted by the Government of India/State Government to Cairn Energy India Pvt. Ltd. in the State of Rajasthan which was vested in Vedanta after the merger of Cairn India Pvt. Ltd. in Vedanta. For carrying out such petroleum operations, it uses various kinds of machines and equipment. Almost all machines and equipment used by Vedanta for petroleum operations run on electricity and thus, electric cables are required for providing electricity to such machines and equipment, 4. M/s. Vedanta issues tender notice for supply of power cables required for its petroleum operations and further sel....
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....ccessories' 'consumables', and/or 'stores' under Sl. No. 1 of Notification No. 03/2017-CT for running machines listed in the list annexed to that notification for the reasons are furnished herein below: Applicable provisions: Notification No. 03/2017-CT 11. Notification No. 03/2017 provides for the intra-State supplies of goods, the description of which is specified in column (3) of the Table with relevant List appended hereto and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table, from so much of the central tax leviable thereon under section 9 of CGST Act as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to the notification .A corresponding benefit is given under Rajasthan Goods and Services Tax Act vide File No. F.12 (56)FD/Tax/2017-Pt-1-42 dated 29.06.2017. Similar benefit on inter-state supplies is given under IGST Act vide Notification No. 03/2017-lntegrated Tax (Rate) dated 28.06.2017. 12. Further, Sl. No. I of Notification No. 03/2017-CT prov....
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....ied contracts" under clause (b) of SI. No. I would mean and include all those contracts which are entered into with the Government of India under the policies/rules other than specifically covered under other clauses of SI. No. I and would include Pre-NELP contracts. 18. Further according to him, this benefit would also be subject to the following conditions: a. the goods are supplied to an Indian company or a foreign company or a consortium or a contractor thereof, in connection with the operations undertaken under a contract with the Government of India; and b. a certificate from the Directorate General of Hydro carbons certifying that the goods are required for the petroleum operations referred in the Sl. No.1. 19. Applicant submitted that the term 'Indian Company' has not been defined in Notification No. 03/2017-CT. Moreover, it is also not defined in the CGST or IGST Act. In common parlance, an 'Indian Company' would mean any company who is established and registered in India in accordance with the relevant laws prevailing at that time. 20. To substantiate the same, reference is made to the definition provided in the Income Tax Act, 1961, which defines Indian Co....
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....nse for petroleum exploration in field RJ-ON-90/1 was given to Cairn Energy India Pvt. Ltd. under the Pre-NELP. Subsequently, Cairn Energy India Ltd. was merged into Vedanta Ltd. Thus, with this merger, the petroleum exploration license granted to Cairn Energy India Ltd. was transferred to Vedanta. 25. Condition No. 4: It is also explained in the facts above that at the time of placing order with the Applicant, Vedanta produces a certificate issued by the Directorate General of Hydrocarbons certifying that the goods specified in the certificate are required for the petroleum operations undertaken by Vedanta. Thus, the Applicant supplies the goods to Vedanta only when it produces the requisite certificate 26. Applicant insisted that in view of the above, it can be safely concluded that in the instant case, condition no. 2, 3 and 4 as discussed above, are satisfied by the Applicant. 27. As far as condition no. 1, he stated that a detailed analysis of the same is given in the following paragraphs. The power cables supplied by the Applicant qualify' as accessories which are required for running the goods (machines) specified in the list 28. According to him, benefit of c....
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.... with more than one kind of machines, the same would still qualify as 'accessories'. This is supported by the decision of Hon'ble Apex Court in the matter of Annapurna Carbon Industries Co. vs. State of Andhra Pradesh [AIR 1976 SC 1418] = 1976 (3) TMI 156 - SUPREME COURT OF INDIA,. The relevant extract of the said decision is reproduced as under: "7. .........Apparently, the deciding factor is the predominant or ordinary purpose or use. It is not enough to show that the article can be put to other uses also. It is its general or predominant user which seems to determine the category in which an article will fall. 10......."Accessories" are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument. ......Emphasis Supplied 31. He further stated that in view of the above discussions and the judicial decisions relied upon, it is submitted that the power cables supplied by the Applicant to Vedanta in the instant case qualify as accessories for running the machines given in the list annexed to Notification No. 03/2017-CT. The power cables supplied by the Applicant also....
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....) Ltd. vs. CCE, Ahmedabad [2009 (247) ELT 578] = 2009 (6) TMI 808 - CESTAT, AHMEDABAD. In the said case, the issue involved was whether or not, the wires and cables supplied for aircrafts, satellite launch vehicles, etc. would be entitled to the benefit under Notification 10/97-C.E. 36. According to applicant, it can be safely concluded that power cables supplied by the Applicant to M/s. Vedanta are the goods covered by the list (entry no, 24) appended to Notification No. 03/2017-CT. Moreover, the power cables are supplied to M/s. Vedanta, an Indian company, against the certificate issued by the Directorate General of Hydrocarbons. As all the conditions prescribed in Notification No. 03/2017-CT for Sl. No. 1 are satisfied, the Applicant is eligible for the benefit of concessional rate of duty under Notification No. 03/2017-CT. 37. Applicant contents that intention on the part of the Applicant and M/S Vedanta to supply/procure such power cables for the purpose of running machines to be used in petroleum operations. 38. Based on above the applicant states that it can be inferred that the power cables supplied by the Applicant to Vedanta which are meant to be used for running....
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....erials, supplies, consumables for running, repairing or maintenance of the goods. Further the applicant has stated that he is not aware of the type, nature and functions etc of the machines or equipments for which the cables are required for. So in his opinion the condition "The goods must be covered under the list annexed to the notification no. 03/2017-CT" which is not fulfilled and hence power cable do not qualify description of goods mentioned in the notification that is to say "Goods specified in the list annexed to this table" 9. Findings and analysis: a) Applicant is a public limited company and is engaged in the business of manufacturing and supply of various kinds of "Electrical Power Cables". b) The applicant has to supply electrical cables in accordance with the specifications of the WS Vedanta Ltd. which is undertaking petroleum operations in Rajasthan and electrical cables are needed for providing electricity to machines and equipments. c) Directorate General of Hydrocarbons certifies that goods i.e. power cables of various specifications are required for the petroleum operations. d) Applicant contends that power cable supplied to M/s. Vedanta for sup....
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.... supplied to an Indian company or a foreign company or a consortium or a contractor thereof in connection with the operations undertaken under a contract with the Government of India; and iv. A certificate from the Directorate General of Hydro carbons certifying that the goods are required for the petroleum operations referred in the Sl. No. 1 is produced j) Applicant has claimed concessional rate on supply of electric cables tilling under entry no. 24 of the List of goods appended to Notification No. 03/2017-CT specifies various goods including sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List". k) This clearly means that sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance are only restricted and related to those goods as specified in entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. l) On careful perusal of notification it is evident that Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods a....
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....anufactured as per the specifications provided by Vedanta and supplied exclusively to Vedanta, the cables are not exclusively or specifically meant to be used with such machines in as much as these power cables are general power cables and are capable of being used with any machine/equipment. "(pg. 7 of ARA) Further the applicant has declared "In the instant case, the power cables supplied by the Applicant are not specific or exclusive to the machines used by Vedanta. In fact, the said power cables so supplied to M/S Vedanta are capable of being used with more than one kind of machines. "(pg. 20 of ARA) Here again the applicant has mentioned that Electrical Cables so supplied by them 1) are not specific and exclusive to machine used by M/s. Vedanta 2) supplied cables are capable of being used with more than one kind of machine by M/s. Vedanta. Thus it can be inferred that: 1) dealer is not aware off and has not clarified that "Electrical cables" supplied will be used as accessories, stores, materials and/or consumables to which goods falling under entry no. 1 to 23 of the list. 2) "Electrical cables" supplied can very well be used as by M/s. Vedanta....
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....ables" are generally used for setting up of a system in which by electric cabling or wiring, electricity is downloaded from the main source ( i.e. from grid or transformers ) and further transmitted , distributed or supplied to various points in working area. Machines, equipments and accessories draw supplies of electricity from these points to be functional. Hence Electrical Cables are generally used to set up a network of wires and cables which are usually permanent in nature through which electricity can flow, distributed and supplied to various points. To regard Electrical Cables as "accessories, stores, materials or consumables for running of the goods specified in the List" as mentioned in entry no. 24 of the notification is not rational by any stretch of imagination. If we regard Electrical Cables as accessories, stores, materials and/or consumables for running of the goods specified in the List, then going through this logic poles, insulators, transformers and all other equipments used to ensure flow of electricity at work site from the main source to the supply point are to be covered under this classification. v) Main function of Electric Cables is to supply and dis....