AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 694
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....Code 997319 be charged at 5% GST as per HSN Code 8803 - Parts Goods of Heading 8802 (Satellites)? 2) Whether the applicant can levy GST @5% for Leasing of Satellite Transponder Services which is covered under SAC 997319 as per HSN Code 8803-parts goods of Heading 8802 (Satellites) from the date of commencement of the service-Leasing of Satellite Transponder? 3. The applicant furnishes the following facts relevant to the stated activity: a. The applicant stated that they are a commercial arm of Indian Space Research Organisation (ISRO) and are a Government of India company (CPSE) under the administrative control of the Department of Space (DOS). They entered into an agreement MOU with DOS, inter alia, for leasing of Satellite Transponder capacity to service providers, as part of the mandate to carry out production and marketing of space based services. b. The applicant enables satellite communication service providers with necessary transponder capacity on INSAT/GSAT fleet in C, Ext C, Ku and Ka-Ku bands to Indian users for Television Broadcasting (TV), Direct to Home (DTH), Digital Satellite News Gathering (DSNG), Very Small Aperture Terminal (VSAT) and Telephony services. T....
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....8802 Satellites"; Goods of Heading 8802 60 00 i.e. Spacecraft (including satellite) and suborbital and spacecraft launch vehicles are charged at Nil rate of Tax (GST) vide Sl.No.140 of Notification No.2/2017-Integrated Tax(Rate) dated 28.06.2017, as amended till date; Parts of goods of Heading 8802, falling under Heading 8803 i.e. Transponder, is charged at 5% IGST under SI.No.245 of Schedule I to Notification No.1/2017-Integrated Tax(Rate) dated 28.06.2017, as amended. PERSONAL HEARING: / PROCEEDINGS HELD ON 10.03.2020. 5. Sri Radha Krishnan D, Director and duly authorised representative of the applicant appeared for personal hearing proceedings held on 10.03.2020 86 reiterated the facts narrated in their application and also made the following written submissions inter alia stating that: 5.1 The Applicant, New Space India Limited in short 'NSIL' has been incorporated on 05/03/2019 under the provisions of Companies Act 2013 as a wholly owned Government of India undertaking/ Central Public Sector Enterprise(CPSE), under the administrative control of the Department of Space (DOS). 5.2 THE VISION AND MISSION OF NSIL: VISION "Excel in providing space related products and servic....
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.... finalizing the Agreements, amendments, securing caution deposits and bank guarantees, invoice raising and payment receipts. Provisioning of space segment capacity on a transponder from a satellite to user, involves leasing of transponder capacity to the user for a specific period of time for his use. For ease of understanding, this activity could be considered analogous to leasing out a Flat to a tenant, wherein the owner (in case of transponder it is DOS /NSIL) lets out the flat (equivalent of transponder) and the tenant (transponder capacity user) utilizes the flat ( transponder capacity) for his purpose for a specific period of time. Following relevant clauses of the agreement indicating provisioning of space segment capacity as leasing of transponder capacity is indicated below for reference (Copy of agreement enclosed as Annexure-2). I. Article 2, Transponder capacity of the Agreement - It states that DOS provides certain bandwidth capacity on a satellite (part of INSAT/ GSAT system) to the user and this space segment capacity is known as transponder capacity. Both the term, space segment capacity and transponder capacity are used interchangeably. II. Article 5, Operationa....
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.... parameters are working. e. Thermal System - This protects the satellite and its sub-system from external environment. f. Propulsion System - This is used for station keeping and orbit correction, to ensure that the satellite stays in its orbit. ii) Satellite Payload: The payload of a communication satellite is Transponders. Transponder is an electronic part of the satellite that receives the signal at a particular frequency, amplifies it and transmits it back to earth. The transponder has the following parts i. Band Pass Filters ii. Low Noise Amplifier iii. Mixer and Oscillator iv. High Power Amplifier a. The Band Pass Filter is a device that passes frequencies within a certain range and rejects (attenuates) frequencies outside that range. b. Low Noise Amplifier: - An electronic amplifier that amplifies a very low power signal without significantly degrading its signal-to-noise ratio. In general, an amplifier increases the power of both the signal and the noise present at its input. LNAs are designed to minimize additional noise. c. Mixer: - An electronic system which converts the input frequencies to output frequencies with the help of oscillator frequency so ....
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....rises of the following: * Uplink Station (to send signals from earth to Satellite). * Downlink Station (to receive signals from earth to Satellite). Ground Segment is established at earth and which transmits (uplink) the signals to satellite transponders and receive (downlink) the signals from satellite at ground. Whereas, the Space segment comprises of Satellite located at a Specified orbital slot in space with transponder for catering various application/ user needs. The Applicant further submits that, the tariff heading 8525 60 92 of the Customs Tariff Act - "Other Satellite Communication Equipment" covers those equipment's which are in the Uplink Station and Downlink Station on earth which are not part of Space Segment. Some of such equipment are as follows: a) Amplifiers are used to regenerate and amplify signals. b) Antennas (receiving antennas or transmitting antennas) are Structures used to radiate electromagnetic waves. c) Modulators: Digital data is sent to the modulator which takes the data and converts it into a modulated signal in the Intermediate Frequency Range. d) Block up converters (BUC) are used to convert a band or a block of frequencies from lower....
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....e "Other Satellite Communication Equipment". The Applicant submits that the uplink and /or downlink operations carried out by the customers require base station at ground which may be owned by them or leased from the Teleport operators. The customers, through the teleport or through their own ground equipment, uplink their data directly to satellite and it can be down linked in the area covered by satellite by using appropriate ground equipment such as antenna, down converters de-modulators, set top boxes, etc., when a customer intends to start any communication service like, Television, Broadcasting, Digital Satellite news gathering, outdoor Broadcasting, Direct to Home, VSAT (Very Small Aperture Terminal - ATM, Retail, Banking etc.,). Department of space (DOS) identifies and allots Satellite Bandwidth Capacity (in MHz) to customer to enable such services. A Transponder lease agreement/ MOU between DOS and the Customer with NSIL as Contract Manager is entered towards this. The Customer starts using the allotted Satellite Bandwidth Capacity after obtaining other regulatory approvals/ clearance. No intervention of NSIL / DOS is involved in either up linking or down linking. One suc....
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....n Satellite without which the Communication Satellite cannot function. Eureka Forbes Limited v. Commissioner of central Excise, Meerut 2001 (130) ELT 146 (Tri - Del) = 2000 (8) TMI 567 - CEGAT, NEW DELHI wherein it was held in Para 8 as under: "According to note 2(b) parts which are suitable for use solely or principally with particular machines or apparatus are classified in the same heading as those machines or apparatus. This has been confirmed by the Appellant Tribunal and Courts in many cases, including the decision in Sealol industan Ltd., = 1988 (3) TMI 74 - HIGH COURT OF JUDICATURE AT BOMBAY, and Plastic Craft Industries, = 1990 (10) TMI 181 - CEGAT, NEW DELHI, relied upon by the Ld. Advocate for the Appellants. The Board also clarified vide letter F. No. 145/ 12/ 87-CX4, dated 18-03-88 that Ice Trays, freezer doors, etc. would be classified under Heading 84.18 as parts of refrigerator. The Board, however, classified butter box under Chapter 39 as it was not solely designed for use with refrigerator. Accordingly, we hold that applying Rule 2(b) to section XVI, hoses in question are appropriately classifiable along with vacuum cleaner under Heading No. 85. 09 of the Tarif....
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....Sri. Radha Krishnan D, Director and duly authorised representative of the applicant during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 6.2 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 6.3 The Applicant seeks advance ruling in respect of the following question: 1. Whether Leasing of Satellite Transponder which is covered under SAC Code 997319 be charged at 5% GST as per HSN Code 8803 - Parts Goods of Heading 8802 (Satellites)? 2. Whether the applicant can levy GST @ 5% for Leasing of Satellite Transponder Services which is covered under SAC 997319 as per HSN Code 8803-parts goods of Heading 8802 (Satellites) from the date of commencement of the service-Leasing of Satellite Transponder? The applicant contends that leasing of satellite transponder is covered under SAC 997319 and the said transponder is classifiable ....
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.... (4) of the Notification against Serial No. 17 (viii) reads as follows: Same rate of integrated tax as applicable on supply of like goods involving transfer of title of goods. In the instant case satellite transponders had been leased out. Therefore the rate of tax applicable on the service of leasing of the satellite transponders shall be the same as the rate of tax as applicable on the supply of the satellite transponders. This brings us to the question of determination of the rate of tax on supply of service of leasing of satellite transponders which in turn requires us to determine the classification of the said goods. 6.7 Before proceeding to examine the entries in the Tariff, we shall examine the nature and characteristics of a satellite transponder to understand its features, characteristics etc to correctly determine its classification. 6.8 A Transponder is an automatic electronic monitoring or control device that receives, cross examines, amplifies and retransmits the arriving signal and is primarily implemented in wireless communication (as ascertained from independent sources). The word 'Transponder' itself is a combination of two words i.e. transmitter and responde....
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....I and Chapter 88 is covered under Section XVII of the Customs Tariff Act. We proceed to examine the two competing entries sequentially. 6.12 The applicant has stated that the competing entry in the Tariff is 85256092- "Other Satellite Communication Equipment". The Tariff entry 8525 reads as under: Tariff Item Description 8525 Transmission apparatus for radio broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television cameras, digital cameras and video camera recorders 852550 - Transmission apparatus 85255010 --- Radio broad cast transmitter 85255020 --- TV broad cast transmitter 85255030 --- Broadcast equipment sub-system 85255040 --- Communication jamming equipment 85255050 --- Wireless microphone 85255090 --- Other 852560 - Transmission apparatus incorporating reception apparatus --- Two way radio communication equipment 85256011 ---- Walkie talkie set 85256012 ---- Marine radio communication equipment 85256013 ---- Amateur radio equipment 85256019 ---- Other - Other: 85256091 ---- VSAT Terminals 85....
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....ch equipments ought to be in the nature of equipments located on the ground and used to establish communication with the satellite much as VSATs. This leads one to the conclusion that these equipments shall not be located on the satellite, but on the ground and used to establish communication from the ground up with the satellite. The flow of the classification of the apparatus/equipments, thus, leads to the inference that goods not specifically covered under 852550 and 852560 but used in transmission/communication from a ground station to the satellite find classification under the specific heading 85256092. In view of the above, it is evident that the goods / equipment covered under the heading 8525 60 are primarily meant for communication with the satellite and form part of ground segment. 6.15 In the instant case the transponder is a key payload of communication satellite and hence cannot form part of ground segment but is essentially a part of space segment and more specifically the main part to the communication satellite without which the communication satellite becomes defunct. Therefore transponders located on the communication satellite are not covered under the Heading ....
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....well as in Section XVII, its final classification is determined by its principal use. Further in case parts and accessories classifiable in two or more headings of the Section i.e. when certain parts and accessories are suitable for use on more than one type of article/ product they are to be classified in the heading relating to the parts and accessories of the articles / products with which they are principally used. In the instant case the product "Transponder" being an integral part of the communication satellite can be used solely or principally with the communication satellite falling under Tariff heading 8802. Hence the second condition is also complied with. 6.21 The third condition lists certain parts and accessories covered more specifically elsewhere in the Nomenclature (paragraph (C)). Such parts and accessories, even if identifiable as for the articles of Section XVII, are excluded if they are covered more specifically by another heading elsewhere in the nomenclature. It is observed from the list that the transponder does not find a place. Moreover the transponders are not more specifically classified elsewhere in the Tariff. Therefore the third condition is also com....