AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 1453
X X X X Extracts X X X X
X X X X Extracts X X X X
....plicant submitted copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017. 2. The Applicant has stated that the Electric Motor is a bought out item. Gear boxes are assembled by them. Gear boxes and Electric Motor is coupled and integrated and supplied by them as "Geared Motor". The principal and predominant function of Geared Motor, which is transmission of power for the required application by changing the speed and torque, is that of the Gear Box. The Applicant has also stated that the Electric Motor converts electrical energy into Mechanical energy and it is not a speed or "Torque Converter". Mechanical energy has to be transmitted in specific requirement for the function of another device for which gear is required. Gearbox coupled with electric motor is a transmission machine in a power transmission system, which provides controlled application of the power. Often the term transmission refers simply to the gearbox that uses gears and gear trains to provide speed and torque conversions from a rotating power source to another device. Geared motor is a single unit consisting of gear box ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g speed changers and torque converters, which are not specified in Sl. No. 369A and 372 of Schedule Ill of the said notification. Therefore, the rate of SGST is 14%. 3.1 The authorized representative of the applicants/ Shri. S. Durairaj, Advocate and R. Rajesh Kumar, Company Secretary appeared for the hearing on 19-11-2018. They stated that they import gear boxes and procure motors locally and combining both to make geared motors. They undertook to submit import invoice, sale invoices, write-up of manufacturing and Purchase Order in 2 weeks. They furnished a written submission wherein they stated that it is a mixed supply of gear motor as the gear boxes and electric motor is coupled. The principal and predominant function of gear motor, which is transmission of power for the required application by changing the speed and torque, is that of the gear box and hence the principal supply is gear box. During prc GST period, this product was classified under 8483 as per Central Excise Tariff Act, 1985. In the GST regime, the Applicant has classified the same under 8483 of the Customs Tariff Act and paid CGST (Sl. No. 135 Schedule-IV of Notification 1/2017-Centra1 Tax (Rate) & &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and worm gears. 2. Gear Reducer : Gear Reducers or gearboxes are used to increase torque while reducing the speed of a prime mover output shaft. This means that the output shaft of a gearbox rotates at a slower rate than the input shaft, and this reduction in speed produces a mechanical advantage, increasing torque. Common types of gear reducers are bevel, helical, spur and worm gears. 3. Electric Motor : An electric motor is an electrical machine that converts electrical energy into mechanical energy. Most electric motors operate through the interaction between the motor's magnetic field and winding currents to generate force in the form of rotation. General-Purpose motors with standard dimensions and characteristics provide convenient mechanical power for industrial use. 4. The applicant was offered an opportunity to be heard again on 12-3-2019 due to change in the SGST Member of the Authority and was heard. The Applicant appeared and reiterated the written submissions made by the Applicant. They stated that HSN Explanatory Notes states the product to be classified under 8501. However, Chapter Notes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ms) No. 62, dated 29-6-2017 is - (a) 9% as per Schedule-Ill (Sl. No. 372); (OR) (b) 9% as per Schedule-Ill (Sl. No. 369A); (OR) (c) 14% as per Schedule-IV (Sl. No. 135)". In terms of explanation (iii) and (iv) contained in the Notification No. 1/2017-C.T. (Rate), dated 28-6-2017, "Tariff item", "sub-heading", "heading" and "Chapter" shall mean respectively a tariff item, sub-heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First schedule shall, so far as may be, apply to the interpretation of this notification. Accordingly, to arrive at the classification, the respective chapter headings, Chapter Note, Section Notes are to be seen. 7.1 From the various submissions of the applicant, it is evident that the applicant is engaged in the manufacture of Geared motors which consists of Electric motor and Gear boxes. Electric Motor is a bought out item either locally or imported from their related party. Gear reducers or gear boxes are imported from their related party. Both are assembled in India by the applicant d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ording to the requirements of the machine. They include, inter alia : (1) Gear-boxes consisting of assemblies of gears which can be selected in alternative arrangements; the speed of transmission can thus be varied according to the arrangement of gears set. ---------- The heading does not cover gear boxes or other variable speed changers combined with a motor; these are classified in the same heading as the motor. It is seen from the above that gear boxes of all kinds are classifiable under Tariff Heading 8483. The Explanatory Notes to 8483 clearly specify that this heading does not cover gear boxes combined with a motor and they are to be classified in the same heading as motor. 7.2 Customs Tariff Heading 8501 reads as follows : 8501 Electrical Motors and Generations (EXCLUDING GENERATING SETS) The Explanatory Notes for 'Electric Motors' under Tariff Heading 8501 of the Harmonised System of Nomenclature, inter alia, provides as follow :- (1) ELECTRIC MOTORS Electric motors are machines for transforming electrical energy into mechanical power. This group includes rotary motors and linear motors. ..............
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is supplying Gear motor which is a single component that integrates a gear reducer with an electric motor. It is a transmission machine in a power transmission system, which provides controlled application of the power i.e. Gear motors can deliver high torque at low horsepower or low speed. In this instance geared motors combine two machines gearboxes and electric motors to provide the function of converting electrical energy to mechanical energy in a controlled manner giving control over the torque generated m moving any attached transmission shaft. Therefore, the principal function is the conversion of electrical to mechanical energy as per Section Notes 3 and 4 of Section XVI. This is also supported by HSN Explanatory Notes to Chapter 8483 and 8501. The Explanatory notes of Chapter Heading 8483 specifically excludes 'gear boxes or other variable speed changers, combined with a motor' and is stated that such products are to be classified in the same heading as 'Motor'; Further, the Explanatory notes to Chapter 8501 specifically states that 'Motors remain classified here even when they are equipped with gears or gear boxes... ' In the purchase order and sa....