TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 542
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....it 8419 18% 8 ACCEL Make Air Cooling Unit Spares 8419 18% 9 ACCEL Make Air Conditioning System 8415 28% 10 ACCEL Make Air Conditioning System Spares 8415 28% 11 Works Contract of Cold Storage Plant with installation & Commissioning 9954 12% 12 Goods supply to Navy (Other Vessels) vide Notification No.01/2017-IT (Rate), S. No. 252 (Any Chapter) Part of Goods of Heading 8906 8906 5% 13 Service of Maintenance & Repair of ACCEL Made Items 9987 18% 2. The applicant further submitted that they also provide works contract of Cold Storage Plant with installation & Commissioning. Further, the applicant is also engaged in supplying Air Conditioning Plants on board to the Indian Navy (Other Vessels), vide Notification No.01/2017-IT (Rate), S. No. 252 (Any Chapter)-Part of Goods of Heading 8906. The applicant also undertakes the repair and maintenance of various "ACCEL" made items as above. 3. The applicant has received an enquiry from the Naval Dockyard (Vishakhapatnam) for composite supply entailing "Supply, Testing and Commissioning of 160TR Chilled Water Plant". 3.1 The applicant further submitted that Naval Dockyard (Visakhapatnam) is Indian Naval Ship Repair ....
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....r Plant" to Naval Dockyard (Vishakhapatnam). Question-3: Clarification is also sought on applicability of the Notification No. 01/2017-IT (Rate), S. No. 252 (Any Chapter) whether Chillar Water Plant may be categorised as "Any Parts" and subject to GST @ 5% under HSN 8906. 8. Further, the applicant, vide their letter dated 27.07.2020, submitted the additional submission, as below: I. Facts of the Case: (i) The applicant sought Advance Ruling in respect of the following question as below: "Whether Water Chiller Plants and other Refrigeration Systems and Air Conditioning Systems supplied by the Applicant intended for use in relation to the Warships, Vessels and Submarines meant for Indian Navy and Shipbuilders, attract 5% GST" (ii) The applicant also received Works Contract of Cold Storage Plant with installation and commissioning. (iii) Further, subject matter of present application relates to supplies effected against purchase order received from the Indian Navy. (iv) Naval Dockyard (Vishakhapatnam) is Indian Naval Ship Repair Organisation. They have placed a Tender for "Trailer Mounted 160 TR Chilled Water Plant". (v) The applicant has received an enquiry from Nava....
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....ly made of the Water Chillar Plant is essential for smooth operations of stationed Naval Ships since the engines and machines installed in the Naval ships need to be maintained under a fixed temperature to provide efficacy in operation and also prevent damage due to overheating. (xi) In the light of facts as given above, supplies made by applicant to Naval Dockyard for use in Warship, Vessels and Submarines being used by the Indian Navy, the applicant is required to determine the classification of the subject supplies and rate of tax applicable for the same. (xii) As per Section 2(30) of the CGST Act, 2017, "Composite Supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply and as per Section 2(74) of the CGST Act, 2017, "a Mixed Supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitu....
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.... 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. (c) Section XVII of the First Schedule to the Customs Tariff Act, 1975, relates to "Vehicles, Aircrafts, Vessels and Associated Transport Equipment" including four chapters namely 86 (Railways), 87 (Vehicles Other than Railways), 88(Aircrafts) and 89 (Vessels). (d) While other three chapters have separate heading for parts and accessories (8607, 8708, 8714 & 8803). Chapter 89 does not have separate heading for parts and accessories. The heading in the Chapter, from 8901 to 8908, do not includes sub-headings/ items for 'parts and accessories'. (e) The above observation further is reinforces by Note No. 3 to Section XVII which states that reference in Chapter 86 to 88 to parts or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters. Notably, the note does not mention about Chapter 89 for the obvious reason that Chapter 89 has no reference to 'Parts and Accessories'. (f) On the o....
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....07); (4) Sails (heading 6306); (5) Masts, hatchways, gangways, rails and bulkheads for ships or boats and parts of hulls, having the character of metal structures of heading 7308; (6) Cables of iron or steel (heading 7312); (7) Anchors of iron or steel (heading 7316); (8) Propellers and paddle wheels (heading 8487); (9) Rudders (heading 4421, 7325, 7326, etc.) and other steering or rubber equipment for ships or boats (heading 8479). (k) Hence, the classification of "parts" of ships, particularly when they are cleared in the form of assemblies/systems as in the case of supplies to Shipyards/ Indian Navy by the applicant is close to impossibility. Even if so done, it would be difficult to identify the 'principal' amongst the various goods to adopt the rate of tax as a composite supply or to determine the goods attracting the highest rate as mixed supply. 8.2 In absence of separate heading of classification for parts of ships, the Expression 'Any chapter' in column 2 of the Schedule assumes significance: (a) The applicant further submitted that the Column 2 of the Schedules in subject Notifications(s) refers to Chapter/Heading/Sub-heading/Tariff Item". Whereas for eve....
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....he Central Excise Tariff Act, 1985 (5 of 1986) and cleared for repair of goods falling under Heading Nos.8901, 8902, 8904 and 8905 (excluding floating or submersible drilling or production platforms) and 8906, by ship repair units from whole of excise duty. (i) From the above, the applicant states that it can be seen that whenever exemption is provided to goods meant for ships, etc. falling under Chapter 89, either for manufacture of ships or for repairs or for specified purposes such as under by Indian Navy, such exemption has been provided to goods falling under any Chapter of the respective Tariff (Customs or Central Excise). (j) The applicant has relied on the following decisions wherein it has been held that once the goods are supplied for specified use, such as construction of warship and have been certified to be so used by the Naval Authorities, the exemption is applicable irrespective of the classification of goods: (a) Brahmos Aerospace Pvt. Ltd. v/s CC, CE&ST, Hyderabad-II- 2014 (307) ELT 795-Tri = 2014 (8) TMI 184 - CESTAT BANGALORE; (b) GE Industrial India Ltd. v/s CCE, Cus & CE, Bangalore-1-2016 (335) ELT 103 (Tri Bang) = 2016 (1) TMI 1138 - CESTAT BANGALORE. ....
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....he goods are used in warships, vessels and submarines, whether for construction or repair or replacements: (a) The applicant submitted that they are of the view that the rate of 5% GST in terms of Sl. No.252 of Schedule I would apply whenever goods falling under any chapter are supplied, either as individual parts/ components or as system/assemblies so long as they are meant for use in Warships (or other type of vessels falling under Heading 8901 etc.. (b) The applicant also submitted that when the GST Notification is compared with the corresponding Customs/Central Excise Notifications mentioned earlier, it can be noticed that the GST Notification in general terms refers to 'parts of goods falling under 8901, 8902, 8904, 8905, 8906, 8907'. (c) The applicant further submitted that whereas, the Customs/ Central Excise Notifications exempted 'raw materials and parts, for use in the manufacture of goods falling under 8901, 8902, 8904, 8905, 8906, 8907'. The expression 'for use in the manufacture of goods' is conspicuously absent from the GST Notification(s). (d) Further, the applicant submitted that the Customs Notifications mentioned above, also exempt Capital Goods and spares....
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....nterpretation of law. 10.1 At the outset, we would like to state that the provisions of both the CGST Act and the GGST 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 GGST Act. 11. In this case, moot points to be decided are the GST rate and HSN/SAC Code applicable to the "Supply, Testing and Commissioning of 160 TR Chilled Water Plant" to the Naval Dockyard (Vishakhapatnam). It is also to be decided as to whether supply of Chilled Water Plant can be categorised as "Any Parts" subject to GST @ 5% under HSN 8906 as per Sr. No. 252 (Any Chapter) of the Notification No. 01/2017-IT (Rate). 12. The applicant submission is as under: (i) Subject matter of present application relates to supplies effected against Purchase Order dated 24.10.2019 received from the Naval Dockyard, Visakhapatnam an Indian Naval Ship Repair Organisation of Indian Navy. (ii) Said Purchase Order is for composite supply entailing "Supply, Installation, Testing and Commissioning of 01 in No. Trailer Mounted 160 TR Capacity Chilled Water Plant ....
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....revent damage due to overheating. (vii) In the light of facts as given above, supplies made by applicant to Naval Dockyard for use in Warship, Vessels and Submarines being used by the Indian Navy, the applicant is required to determine the classification of the subject supplies and rate of tax applicable for the same. 13. We find from their submission that the said Purchase Order is for composite supply entailing, goods (i.e. Compressor, Fan Condenser, Evaporator, Centrifugal Pump with motor, Electrical Panel, Chilled Water piping/Hoses and mobile trolley) and services (i.e. installation, testing & commissioning) are to be provided by the applicant. 14. Now, first we have to examine whether the supplies are naturally bundled and in conjunction with each other as required by the definition of composite supply. Hence, we refer to the definition of 'Composite Supply' as mentioned in sib-section (30) of Section 2 of the CGST Act, 2017, which is as under:- "Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunctio....
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....flexible insulated hoses to Ships under refit i.e. ships under repair whose main engine, AC plant are non-operational or cannot be used. The chilled water is further circulated on-board ship to provide control temperature for electronics and human comfort. Thus, the said Chilled Water Plant shall be mobile and movable since it will be installed on a Trailer lying at Naval Dockyard to enable movement of same from one ship to another depending on the requirement. 17. We thus find that the supply involved in present case is a composite supply with principal supply of goods i.e. supply of the Chilled Water Plant ('Chiller'). 18. In order to determine the classification and the tax liability under GST in respect of said supply by the applicant, we are required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the sub-headings as well as the rates of Central GST applicable to various goods, which are covered under 6 Schedules, as below: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent.....
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.... is used to chill water. It does not perform any function other than chilling/refrigerating water. Thus, Chiller is a refrigeration unit. Hence, as per note 4 to section XVI, chiller as functional unit has to be classified as 'Refrigeration system" under tariff heading 8418. 18.6 Explanatory Notes to heading 8418, as per page XVI-8418-3, 2007 edition, states that "...Apparatus of the foregoing kinds are classified in this heading if in the following forms: (i) Units comprising a compressor (with or without motor) and condenser mounted on a common base, whether or not complete with evaporator, or self-contained absorbing units (These units are commonly fitted into domestic type refrigerator or other refrigerating cabinets.) Certain compression type machines, known as "liquid -cooling units", combine on a common base ( with or without condensers) ,compressors and a heat exchanger containing an evaporator and tubing carrying the liquid to be cooled. These latter machines include those known as chillers, which are used in air-conditioning systems". 18.7 We further find that Chillers in the domestic and international trade parlance are known as refrigerating equipment. The trade ide....
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....rs, freezers and other refrigerating or freezing equipment, electric or other; heat pumps other than air conditioning machines of heading 8415 It can be seen from above that goods of Chapter heading 8418 would attract GST @ 18% (CGST: @ 9%+ SGST: @ 9%), w. e. f. 27.07.2018. 21. In view of the above, we hold that the "Supply, Testing and Commissioning of 160 TR Chilled Water Plant" to Naval Dockyard (Vishakhapatnam), is a composite supply with supply of goods being the principal supply i.e. 'Chilled Water Plant'/ 'Chiller' falling under Chapter sub-heading No. 8418 10 10 and the GST rate applicable to the principal supply levies to the complete supply of goods and services. Accordingly, the applicant is liable to pay GST @28% till 26.07.2018 and @18% from 27.07.2018 on said complete supply of goods and services. 22. Now, we take up the last question regarding applicability of the Notification No.01/2017-IT (Rate), S. No. 252 (Any Chapter) whether Chillar Water Plant may be categorised as "Any Parts" and subject to GST @ 5% under HSN 8906. We find that the HSN 8906 covers, "OTHER VESSELS, INCLUDING WARSHIPS AND LIFEBOATS OTHER THAN ROWING BOATS". In this regard, we reiterate that ....
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.... deployed by the Indian Navy, attracts 5% IGST [OR 2.5% CGST + 2.5% SGST depending on the Place of Supply] in terms of Sl. No. 252 of Schedule I of Notification No.1/2017-Central Tax (Rate)/ Integrated Tax (Rate)/ SGST. 23.1 For the ease of understanding we have perused the Entry at Sl. No. 252 of the Notification No. 01/2017-IT (Rate) dated 28.06.2017, reads as under: S. No. Chapter/Heading/Sub-heading/ Tariff item Description of Goods 252 Any Chapter Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 23.2 On perusal of said entry 252, it clearly reveals that this entry covers Parts of goods of headings 8901, 8902, 8904, 8905, 8906 & 8907. As we have already mentioned that the Chilled Water Plant in question is positioned on jetty (Naval Dockyard), which is used for supplying chilled water through flexible insulated hoses to Ships under refit i.e. ships under repair whose main engine, AC plant are non-operational or cannot be used. The chilled water is further circulated on-board ship to provide control temperature for electronics and human comfort. The said plant is, thus, primarily used in the Naval Dockyard meant for repairing to maintain and control the temp....