TaxTMI 
TaxTMI 
2019 (9) TMI 988
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....nctioning of barge. 2] Whether we can claim input tax credit in respect of indigenous and imported inputs which are being used for manufacture of the above equipment, if GST on the equipment manufactured by us is determined as 5% in terms of Notification No 1/2017 dated 28th June 2017. 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 any 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, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "Our company is a Small Scale Engineering Industry registered under M.S.M.E.D. Act and specializes since the past 51 years in design & manufacture of customised hydraulic equipment for use in Dams (Irrigation Projects), Marine Vessels, Marine Barges, Offshore Structures, Nuclear Power Plants, Steel Plants, Hydro Electric Power Stations, ....
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....f Schedule I of GST Notification No. 1/2017 reads as under : Chapter /Heading : Any Chapter Description of Goods : Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 Our customer has informed that the notified rate of GST for all goods listed in Schedule I of Notification No: 1/2017 dated 28th June 2017, as amended, is 5% and hence if we charge them 18%, our prices will become uncompetitive (copy of mail is annexed herewith as Exhibit-)). They have also provided us with a copy of the Tax Invoice of Marine Engine purchased by them from M/s. Cummins India Ltd on which GST has been charged @ 5% /copy is annexed herewith as Exhibit-2). The question of what constitutes a part of a ship / marine vessel has already been dealt with in great detail and decided by relying on various judgments, in the Observations made by the Hon'ble Advance Ruling Authority in Application No. 28 dated 21.02.2018 (revised on 14.05.2018) of M/s. Mazagon Dock Shipbuilders Ltd and Order passed therein on 11.07.2018 = 2018 (12) TMI 1153 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA, and hence same the same being a settled matter is not being dealt with by us in this application. The items referred to....
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....raising the anchor. All the above items are specifically designed and custom manufactured by us to suit the hull dimensions of the barge being built by M/s Mandovi Drydocks, and its load holding capacity of 750 tons (volume of 850 Cubic Meters) and therefore cannot be employed for any other use. The above items are essentially required for operation of the barge, without which it cannot perform the function for which it is built. The Normal rate of GST applicable on all the above items falling in Chapter 84 is 18%. Our Customer has informed us that since the above parts are being fitted on a Barge, they are classifiable as "Parts of goods of heading 8901, 8902, 8904, 8905, 8907" falling under Entry No. 252 of Schedule I of GST Notification No. 1/2017, and therefore GST is applicable. @ 5% (CGST-2.5% AND SGST-2.5%) or IGST @ 5%. Additional submissions We refer to the hearing held on 22.05.2019 and the written submission made by the Ld Asst. Commissioner (D-830, Nodal 3) on three grounds, in response to our application made to the Advance Ruling Authority. Our Point wise submissions in respect of each of the three grounds raised by the Ld. Asst. Commissioner are furnished below. ....
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.... type of barge and its usage, we are enclosing herewith drawing Nos. SBM-19-1011-216 and SBM-19-1011-217 (duly approved by internationally recognised Marine Classification Society Indian Registrar of Shipping) which clearly show our Hydraulic Cylinders fitted in the hull on the Forward and Aft side of the barge, with dimensions of the Cylinder which are unique to the hull design of this barge. We are also enclosing herewith drawing Nos, SBM-19-1011-502 and SBM-19-1011-602 (duly approved by Indian Registrar of Ship which clearly shows our Hydraulic Power Pack Fitted in the Engine Room of the barge, A perusal of these drawings will show that the Hydraulic Power Pack has been specifically designed and manufactured to suit the Engine Room Layout of this barge. All the above drawings clearly state the description as "850 Cu, M. SELF PROPELLED SPLIT HOPPER BARGE": POINT NO. 2: The main contention raised in Point No. 2 by the Ld. Asst. Commissioner is that "Marine Duty hydraulic Cylinders are used for variety of purposes in shipping world. Certainly it's not the only or primarily used as hydraulic cylinder to split the hull of the barge. Hence, in present case it cannot be considered as....
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....imensions of our Hydraulic Cylinders are custom manufactured to suit the hull design and dimensions of this Split Barge, and suitable for generating the required Splitting Force of 750 Tons: 2] Drawing Nos. SBM-19-1011-502 and SBM-19-1011-602 (duly approved by internationally recognised Marine Classification Society Indian Registrar of Shipping) showing therein the Engine Room Layout of Split Barge in which our Hydraulic Power Pack has been housed. The hydraulic control circuit of Power Pack has been designed and custom manufactured to suit the variable flows, pressures and working logic required to operate the hydraulic cylinders for splitting the barge at various loads and splitting speeds. The dimensions of Hydraulic Power Pack and its oil flow pipelines are specifically maintained to suit its fitment inside the engine room of Split Barge, as shown in the above drawings. In fact, the Hydraulic Cylinders being supplied by us to M/s. Mandovi Drydocks cannot even be used on another Split Hopper Barge (let alone for an altogether different application) as the distance between mounting points, mounting configurations, bearing sizes, axial force requirements and working pressure wo....
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....spensable or not essential for the functioning of the Split Barge, and whether the material can be dropped from the barge by using human labour or by using other items like cranes. To address the second issue raised by the Ld. Asst. Commissioner, we must first understand that the Hydraulic Cylinders and Power Pack employed in this application specifically designed to perform the following functions. 1] Ensure that the hull stays closed during transportation of the barge. That is, the hydraulic cylinders should not open/extend even a little when the barge is in motion, thereby ensuring that material loaded in the hopper is not unintentionally dropped. Special purpose hydraulic system is employed to achieve this. 2] Ensure smooth and quick opening of the hull and discharge the transported material of around 850 Cu, Mt. (Approx. 1000 Tons) in just 3-4 minutes, thereby saving time and increasing productivity. A specially designed regenerative feed hydraulic system is employed to achieve this. Hence, this is not a typical or regular hydraulic application. With regard to the submission made by the Ld. Asst. Commissioner that the same process can be done manually by using human labo....
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....he barge for which it is put to use. The function shall be transport of persons or goods. There are different types of barges used in shipping world. Like 1. Barracks barge 2. Dry bulk Cargo barges. 3. Power barge: 4. Car float barge. 5. Split Hopper barge. Of the above types of barges, barracks barge and power barge are not used for transportation of persons or goods. These types of barges are not covered under entry no. 246 of Schedule I of GST notification No. 1/2017. From submission of the applicant, function of the barge for which it is put to use is not clearly ascertainable, neither did the applicant submitted valid specification and function of the barge required by customer (M/s. Mandovi Dry docks, Goa). In the absence of the same, it cannot be ascertained whether the barge on which marine duty hydraulic equipment built by the applicant is fitted falls under entry no. 246 of GST notification No. 1/2017. Point no. 2 The word "Part/Parts" has not been defined in GST nor was it defined in central excise earlier. The general meaning of the word "part/Parts" is "a separate piece of something or a piece that combines with other pieces to form the whole of something....
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....nd imported inputs which are being used for manufacture of the above equipment, if GST on the equipment manufactured by us is determined as 5% in terms of notification No. 1/2017 dated 28th June 2017. Yes. 04. HEARING Preliminary hearing in the matter was held on 22.05.2019. Sh. P. G. Chhabria, Dy. C.E. appeared and requested for admission of their application. Jurisdictional Officer Sh. Jayankur Chougule, Asstt. Commr. of S.T.(MUM-VAT-D-830) Nodal -3, Mumbai also appeared and made written submissions. The application was admitted and called for final hearing on 03.08.2019. Sh. P. G. Chhabria, Dy. C.E., appeared & made oral and written submissions. Jurisdictional Officer Sh. Chougule, Asstt. Commr., also appeared and made oral submissions. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well as the jurisdictional office. The applicant is a manufacturer of customized hydraulic equipment for use in Dams (Irrigation Projects), Marine Vessels, etc. and the said equipment/products are designed to suit the individual application / end use of each customer, after studying their operational and functiona....
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....nloaded at mid-sea. We also find that the said products, being tailor made for being fitted only on such barges, cannot be used elsewhere and without the same the barge will not be able to function for the purpose for which it is built, namely for unloading materials in mid-sea. Hence the subject products i.e. Marine Duty Hydraulic Cylinders and Hydraulic Power Packs, can be considered as an integral part of such barge and therefore would fall under Sr. No. 252 of Schedule I of GST Notification No. 1/2017 as Parts of goods of headings 8901. GST @ 5% (CGST of 2.5% and SCGT of 2.5%) or IGST @ 5% [under Serial No. 252 of Schedule I of GST Notification No. 1/2017], will be applicable for the above mentioned Marine Duty hydraulic equipment, which is being designed and custom built for being fitted on a Barge falling under Serial No 246 of Schedule. I of GST Notification No 1/2017 dated 28th June 2017. Now we discuss the second question raised by the applicant as under: Question No. 2 :- Whether we can claim input tax credit in respect of indigenous and imported inputs which are being used for manufacture of the above equipment, if GST on the equipment manufactured by us is determined ....