TaxTMI 
TaxTMI 
2019 (6) TMI 1107
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....ps under chapter 8901 /8902/8904/8905/8906 / 8907 shall be charged with 5% even if in their respective chapters, the rates of GST are higher. For example, GST for HSN code 8408 10 93 is 28%, but when supplied to shipyards would be 5% and also implied for chapters 8483 and 8502 1100 above. 3. Also the invoice made by the dealer to the shipyard would be made under the respective product chapter, but with only 5%, for example marine main propulsion engines would be made with 5% GST under HSN code 8408 1093 and not 28%. And also implied for chapters 8483 and 8502 1100 above. 4. As a generator manufacturer, when we buy a marine Engine from our principles (Ashok Leyland here) then we could buy under 5% GST with them using HSN code of 8408 1093 and with our letter of undertaking stating that we shall be supplying these Generators to marine Shipyard with Hull number (which is always unique) for that project with shipyard order copy and also a covering letter from the shipyard for the same subject matter and yard number (which is always unique). With all this can we get the supplies from Ashok Leyland at 5% GST? 5. When we have to sell an engine to shipyard for main Propulsion, we ....
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....o Vijai Marine shipyard regarding parts of goods falling under any chapter and supplied to shipyard who will be manufacturing the boats under headings 8901, 8902, 8904, 8905, 8906 and 8907 should be charged 5%. 9. As per Maharashtra Authority of Advance Ruling order passed on the 15/06/2018, marine propulsion engines and marine gear box (mentioned in point no I and 2) are parts of goods for headings 8901, 8902, 8904, 8905, 8906 and 8907. Additional submissions- We are authorized dealers for Ashok Leyland Marine engines business. We supply Marine Engines, Marine Gearbox and Marine Generator to Shipyards and ship owners who fit these on their ships. Back ground - 1. Marine Engines fall under sub-heading 8408-10 (for other application on marine boats like pumps etc.) where for main Propulsion would fall tariff item 8408 1093 2. Marine Gear box fall under heading 8483 3. Marine generator fall under tariff item 8502 1100 4. Ships, Boats and floating Structures fall under chapter 89 which is applicable mainly for shipyards; all the parts of goods supplied to shipyard and who are building their boats/ships under headings chapter 8901, 8902, 8904, 8905, 8906 and 890....
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....inches b. Pipes laying machines c. Cranes. Please do inform if you need any clarifications and we shall be glad to support." This letter received from M/s. A.G. ROY & GO. DIAMOND HERITAGE BUILDING", 16 STRAND ROAD ROOM NO 1505. KOLKATA - 700 001, Ref.: ACD/281/V/2018-2019, Date: 28.02.2019 is reproduced as as below. "sub: Clarification asked by C.S. Diesel Engg. Pvt. Ltd. about the application usage of Diesel Engine Marine Gearbox during the building the boats/ships/vessels. C.S. Diesel Engg, Pvt. Ltd., is our supplier for Diesel Engines, Marine Gearbox and Marine Generators which are fitted on boats/ ships /vessels, manufactured by us. They have approached us asking for the exact use of the products as stated above so that a clear understanding is obtained to represent them as a parts of goods for the chapter 89 could be established by the Advance ruling authority for GST rate. We wish to inform as follows - 1. Compression - ignition IC piston engines (diesel or semi diesel) would fall under 8408 chapter for Marine application these engines are fitted on boat with the following a. Main Propulsion engines for driving the boat/ships. T....
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....f the earlier SCN. However till date i.e. 18/02/2019 this office has not received any reply from them. Therefore information sought under annexure annexed to the preliminary hearing notice could not be furnished from department side. 2. At the outset after going through the ARA application it appears that assesse has not came forward with actual facts of the case in details along with documentary evidence associated with it. Further the exact point in respect of classification, valuation and applicability of exemption notification on which they require clarification from the Advance Ruling Authority was not clearly spelt out by the applicant. They have merely enclosed earlier decided case of M/s. Shendong Heavy Industry India Pvt Limited without clearly spelling out how the ratio of this case will be applicable to them. On these grounds alone the application filed by M/s. C.S. Diesel Engineering Pvt Limited alone is required to be quashed. 2.1 The question no 1,2,3,4 &5 raised by the assessee at 14 of the ARA in their application appears to be totally ambiguous, hypothetical, arbitrary in nature. No documentary evidence was submitted as regards to their activities i.e. supply....
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....oice is to be made. As a dealer applicant is merely selling the goods without actually effecting the change in goods by process. Therefore there is no change in the classification of the goods from that classification at the receipt stage. Here again the supply to shipyard owners will not be the only criteria for the availment of exemption Notification. At best that may be considered as one of the criteria. The usage of the goods as part of as part of heading No 8901, 8902, 8904, 8905, 8906 and 8907 should be established beyond reasonable doubts. 2.14 It appears from the Point No 4 raised by the applicant that they are engaged in the manufacture of generators. The marine engine procured from the Ashok Leyland was used in the manufacture of generator. Since marine Engine 84081093 are used for the manufacture of generator 85021100 by the assessee, the condition of Sr. No 252 of notification no 1/2017 Central Tax is not satisfied. Therefore applicant is not eligible for procuring the goods from Ashok Leyland at the rate of 5%. Further use of these marine generators by the shipyard owner cannot be criteria for procuring the goods at concessional rate of Tax from Ashok Leyland for ma....
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....tion of the goods remain same as that of 84081093 and 8483 respectively. However as generator manufacturer marine engines when used in generator lose its identity and become generator classifiable under 85021100 5. Applicant have merely enclosed the judgement of Maharashtra Authority for Advance Ruling ruling in the case of M/s. Shandong Heavy Industry Pvt Limited = 2018 (9) TMI 1035 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA and it appears that they are merely seeking confirmation about getting the order from ARA on the basis of the order passed in respect of some other company. 5.1 The fact of the case in respect of M/s. Shandong Heavy Industry Pvt Limited = 2018 (9) TMI 1035 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA and applicants are entirely different as their activities appears to be different. • Shandong Heavy Industry Pvt. Limited is engaged in assembly and testing of marine diesel engine and they are making supplies to various dealers and shipyard manufacturers. • Whereas assesse is "Authorized dealer for Ashok Leyland marine engines and imported marine gear boxes and manufacturer for marine generators" marine generator manufactured by ap....
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....n in this regards. 8. In the absence of these shortcoming appearing in their application, and being trader of Marine Engine and manufacture of generator chances of supply getting diverted appears to be on higher side. Therefore conferring the benefit of ratio of ARA ruling in M/s. Shandong Heavy Industry Pvt Limited is not correct, not legal Considering the above submission and facts available on records Honourable ARA may take the decision based on merit as deemed fit. 04. HEARING Preliminary hearing in the matter was held on 16.01.2019, Sh. Soumil C Shah, Director appeared and requested for admission of application as per contentions made in their application. Jurisdictional Officer Sh. Rajan Dewoolkar Supt., Division -III, Mumbai West Commissionerate appeared and agreed to submit written submissions in due course. The application was admitted and called for final hearing on 20.02.2019, Sh. Soumil C Shah, Director appeared, made oral and written submissions. It was brought to notice of applicant that question nos. 4 & 5 are not maintainable as they pertain to supply by M/s. Ashok Leyland. He was further informed to submit product details and usage as certified by c....
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....e confirm that whether Main Propulsion engine for ships falling under tariff item 8408 1093, Marine Gear box falling under heading 8483 and marine generator falling under 8502 1100 and Marine engine for other applications like pumps falling under sub-heading 8408 10 would be considered as parts of Goods for Chapter 89. Notification No. 1/2017 - CT (Rate) dated 28^th June, 2017, amended from time to time, specifies CGST rate schedules and classification of above mentioned goods under different Schedules. The Schedules applicable to the 'classification of goods' as mentioned in the submission attracting tax rate is as follows: Schedule No. Sr. No. Chapter / Heading / Sub-heading / Tariff item Description of goods CGST/SGST Rate IGST Rate IV 115 8408 Compression-ignition internal combustion piston engines (diesel or semi-diesel engines) 14% 28% IV 116 8409 Parts suitable for use solely or principally with the engines of heading 8407 or 8408 14% 28% IV 135 8483 Transmission Shafts (Including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; ge....
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..... To deal with the limited issue before us i.e. to find out whether the goods/parts used by the applicant are parts of a ship/boat/vessels first of all we need to examine as to what are "Parts". There is no separate tariff item as 'parts of ship' under chapter 89 of First Schedule to Customs Tariff Act, 1975 thus meaning of the term, parts of goods' could then be adopted from its meaning in common parlance. The term, part' as defined in Black's Law dictionary: 'an integral portion, something essentially belonging to a larger whole, that which together with another or others makes up a whole' We find that as per Cambridge English Dictionary: 'a separate piece of something or a piece that combines with other pieces to form the whole of something One of the pieces that together form a machine or some type of equipment' As per Import-Export Policy "Part" means an element of a sub-assembly or assembly not normally useful by itself, and not amenable to further disassembly for maintenance purposes. A part may be a component, spare or an accessory. From the above it could be understood that anything which is an integral element and is also essential to an object, co....
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....gines (diesel or semi-diesel engines) 8408 10 Marine propulsion engines Compression-ignition internal combustion piston engines (diesel or semi-diesel engines) are classified under Heading 8408 of the GST Tariff (Machinery and Mechanical Applications) and Marine Propulsion Engines are classified under sub heading 8408 10 of the said Tariff. The applicant has submitted that they are supplying the goods like Marine Engine. We find that that a very specific description and mention of such engines is made under Heading 8408 of the GST Tariff and in view of the same it is very clear that Marine Engine is classifiable under heading 8408 of the GST Tariff. Under Sr. No. 1 15 of Schedule IV of Notification No. 1/2017 - Central Tax (Rate) dated 28th June 2017, the tax rate for Marine Engine is 14% each of CGST and SGST. Now we shall move to the second product raised in question by the applicant which is "Marine Gear Box", as follows:- The applicant has submitted that they are also engaged in supply of Marine Gear Box falling under heading 8483 and making supply of the same as such to various dealers of shipyard manufacturers. We find that Tariff Heading 8483 covers goods as u....
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....together as one unit or on a common base (see the General Explanatory Note to Section XVI), are classified here provided they are presented together (even if packed separately for convenience of transport). Electric generating sets for welding equipment are classified in this heading when presented separately, without their welding heads or welding appliances. However, they are excluded (heading 8515) when presented together with their welding heads or welding appliances. In the present case applicant has submitted that the all Marine Generators are an assembly of Marine Diesel Engine, Marine Alternator and Marine Panel on a base rail. These Engines/ alternator/ panel are specially made for Marine adaptability, are specially manufactured and have a third party certifying (International Maritime approved body) which ensures the adherence to marine specifications. Therefore considering the above provisions under GST Act and submissions of the applicant, we find that marine generator are generating sets with compression-ignition internal combustion piston engines. They are a combination of an electric generator and any prime mover other than an electric motor and working with....
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....ion and therefore would be parts of a ships boat/vessel as per above discussions We have found that above said goods are falling under Headings 8408, 8483 and 8502 and as per the GST Notification no. 1/2017 CT (Rate) dated .28.6.2017, are taxable at rates of 28 % , 28% and 18% respectively. But in view of the above discussion and as submitted by the applicant we find that the marine engine, the gear boxes and marine Generator supplied by them as parts for end-use in the ships/boats/vessels, merit classification as parts of goods under headings 8901, 8902, 8904, 8905, 8906 and 8907 of the GST Tariff and therefore would attract 5% (2.5% CGST and SGST each). We find that Marine Engines, Marine Gear Boxes and Generators which are claimed to be supplied by the applicant to dealers and shipyard manufacturers for use in goods falling under headings 8901, 8902, 8904, 8905, 8906 and 8907 will be deemed to be parts of vessels falling under headings 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 else. However it is to reiterate that the benefit of....
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.... Boxes and Marine Generators as Parts of headings of 8901, 8902, 8904, 8905, 8906, 8907 as per Sr. No. 252 of Schedule I of Notification No. 1/2017 Central Tax (Rate) dated 28th June, 2017. However, the applicant's impugned products are covered under different Headings 8408, 8483 and 8502 attracting higher rate of GST. We have considered the opinion and appreciated the written contention of the jurisdictional officer but have not found the same to be convincing. Applicant has submitted sufficient information including the usage information and certificate of the manufacturing shipyard owners. We have also considered our ruling under The Maharashtra Authority for Advance Ruling order in the case of Shandong Heavy Industries India Pvt. Ltd, order passed on the 15/06/2018 where, on similar facts we held that the Marine Diesel Engine and marine gear boxes are the essential part of ships. Question Nos 4 & 5 As the question no.4 and 5 are related to the transaction of supply by M/s. Ashok Leyland, as per the provision of Section 95 and Section 97 of the GST Act, these questions are out of purview of this authority. Hence not answered. 06. In view of the extensive deliberation....