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2019 (4) TMI 455
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....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 submissions, as reproduced verbatim, could be seen thus- I. BRIEF BACKGROUND OF THE TRANSACTION: • The Applicant, M/s Premium Transmission Private Limited is a supplier, exporter and manufacturer of various industrial products mainly specialized in manufacturing geared boxes, geared motors, fluid couplings, etc. • One of the product 'Geared Motor', manufactured by applicant is a combination of gear box' and electric motors'. Both the products have specifically been classified under the Harmonized System of nomenclature (HSN). While the product Gear Box' is classified under the HSN Code '8483', 'Electric Motors' are classified under the HSN Code '8501'. However, the product 'Geared Motor' is not specifically classified under any of the HSN Codes. • In the erstwhile Indirect Tax regime, Applicant has been discharging Central Excise duty on removal of such prod....
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.... visited at company's official website http://www.premium-transmission.com/products/geared/. II. DETAILS OF PRODUCT MANUFACTURED BY THE APPLICANT Geared Motor (i) Geared Motor refers to a combination of an electric motor and a gearbox. (ii) Typically gear boxes are used to increase torque while reducing the speed of a prime mover output shaft. This means that the output shaft of a Gear Box rotates at a slower rate than the input shaft, and this reduction in speed produces a mechanical advantage, increasing torque. In short, the gearbox monitors the speed of the electric motor to which it is attached thereby converting the speed into torque. (iii). Hence, primarily the function of a gear box is to control the speed of electric motors and hence, in order for a gearbox to function, it has to be attached to an electric motor. In short, Gearbox cannot have any use without being rotated and coupled with motor affixed to it. (iv) Following raw components/ inputs materials are primarily used in the manufacture of Geared Motor Major Raw Materials HSN Code Rate of GST Bearing 8482 18% Casting - raw or finished 7325 18% Fasteners 7318 18% ....
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....rt. Inspection It is process of confirming the machining parameters as per drawing requirement. Material Handover to Store It is process where Finished material will be handover to store in wrapped condition. Receipt of Material and work order from store It is process where material is issuing as per BOM to Assembly section. Housing Assembly It is process where internal gear will be assembled in main housing with the use of bearing and circlip. Adaptor Assembly It is process where Input pinion body will be assembled in adaptor with the use of bearing and circlip. End Cover Assembly It is process where out wheel with shaft will be assembled in end cover with the use of bearing and circlip. Final Assembly It is process where the main housing assembly is assembled with adaptor assembly and end cover assembly Testing It is process of confirming noise level & ear head ratio as per requirement. Electric Motor Assembly It is process where Gear head will be assembled with electrical motor which is bought out item and new product will be gear motor which is sold in market as a final product. Painting It is process where the geared ....
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....er notes and General explanatory notes mentioned under Customs Tariff Act, 1975 shall apply to the goods classified therein under GST. (e) Since the notification refers to the classification of goods under the Customs Tariff Act, 1975, we have to refer to classification adopted therein. (ii). CLASSIFICATION UNDER CUSTOMS TARIFF ACT (a) As regards classification of 'Geared Motor', it would be pertinent to note that there is no separate tariff entry for this combined product. Hence, it would be important to refer to tariff entries in which 'Gear Boxes' and 'Electric Motor' fall. We would like to draw your attention to the extract of description of goods falling under Customs Heading 8483 and 8501 : 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 couplings (including universal joints) 8501 - Electric motors and generators (Excluding generating sets) (b) Further it is also imperative to look at the relevant section and....
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....54 = 1995 (3) TMI 93 - SUPREME COURT OF INDIA, it was held by the Apex Court that "12. It is significant, as expressly stated, in the Statement of Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the HSN." (d) This case has further been referred in various other cases wherein the harmonized system of nomenclature along with its explanatory notes has been relied on as a safe guide for matters of classification. (e) Hence, it would be imperative to refer to the descriptions provided in the Explanatory Notes to the Harmonized System of Nomenclature. (f) We request your kind attention to the relevant extract of explanatory notes for chapter headings 8483 and 8501 reproduced below 8483- "(E) Gear Boxes and other speed changers, including torque converters'. 'The heading does not cover gear boxes or other variable speed changers combined with a motor; these ar....
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....der the heading 8501. (b) Thus bearing in mind, entry 372 of Schedule III of GST classification notification (1/2017 - Integrated Tax dated June 28, 2017) and aforesaid case law, it can be concluded that 'Geared Motor' shall fall under the HSN classification '8501' shall be chargeable to tax at the rate 18% under the above mentioned schedule entry. (vi) CONCLUSIONS: (a) In our view, 'Geared Motors' so supplied by applicant, would be classified under Sr. No 372 of Schedule III of IGST Act, 2017 - Electric motors and generators (excluding generating sets) as the product 'Geared Motors' manufactured by the applicant is a combination of two products and that schedule entry specific to this product is not present in the Harmonized System of Nomenclature, the classification has to be done on the basis of chapter and section notes to the Customs Tariff Act, 1975 and explanatory notes to the Harmonized System of Nomenclature, (b) Under the chapter and section notes to the Customs Tariff Act, 1975 and explanatory notes to the Harmonized System of Nomenclature, it has to be classified under the same heading as that of the Electric Motors at Sr. No. 372 of the schedule III of the ....
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....547) are to be classified according to the following rules : (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of heading 8479 or 8543) are to be classified with the machines of that kind or in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of headings 8517 and 8525 to 8528 are to be classified in heading 8517; (c) all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. 3. Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines designed for the purpose of performing two or more complementary or alternative functions are to be classifi....
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....een mentioned in Chapter 8501 about Electric Motors equipped with gears or gear box. As claimed by the applicant, although earlier the duty rate was same for 8483 & 8501, the department never questioned the classification as it was correct. The applicant has mentioned that in Collector of Central Excise Shillong V. Wood Crafts Pvt. Ltd. (1995) 3 SCC 454 = 1995 (3) TMI 93 - SUPREME COURT OF INDIA (Attached as Annexure 5), it was held by the Apex Court that "12. It is significant, as expressly stated, in the Statement of Objects and Reasons, that the Central Excise Tariffs are based on the HSN and the internationally accepted nomenclature was taken into account to "reduce disputes on account of tariff classification". Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature merging from the HSN." However, the existing classification (i.e.8483) is already based on the harmonized system of nomenclature & therefore an already adopted classification of 'Geared Motor under heading 8483, included in Entry number 135 of Schedule IV of IGST Rate Notification No. 1/2017-lntegrated Tax (Rate) by the applican....
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....ed goods into 4 digit codes as per HSN. In the said Notification it has been specified that for the purpose of classification of goods, the section notes, chapter notes and the General Explanatory notes mentioned under Customs Tariff Act, 1975 would apply to classification of goods under the GST Act. Therefore the classification of the product is to be decided in terms of HSN. On perusal of the same, we find that the following two headings compete for the classification of Geared Motor:- (i) 8483: Gear Boxes and other speed changers, including torque converters'. and (ii) 8501 - Electric motors and generators (excluding generating sets). In view of this, we now refer to relevant Explanatory Notes etc. to section XVI, Explanatory notes to headings 8483 and 8501 to find the appropriate classification for 'geared motors,. (i) Section Notes 4 and 5 of HSN are relevant to this case which are reproduced below: Note : 4 Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defi....