2022 (1) TMI 746

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....licant) are registered under GST with GSTIN 33AACCG6145R1Z8. The applicant has sought Advance Ruling on the following questions:- 1. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of fishing vessel of HS code 8902. 2. Applicability of GST rate 5% on marine engines pertaining to HS code 8407 and its spare parts without considering its general tax rate as per the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, being this engine forms a part of boats of HS code 8906 being supplied to defence department and other agencies used for patrolling/flood relief and rescue purposes. The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a 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. 2.1 The applicant has stated that they are importing outboard motors from Japan and selling the outboard motors to Fishermen, Boat builders, Defence Departm....

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....wing documents:- • Purchase order no. CHPO/0003/2122 dated 23.04.2021 raised on M/s YAMAHA MOTOR CO.LTD • Purchase order no. CHPO/0014/2122 dated 09.06.2021 raised on M/s YAMAHA MOTOR CO.LTD • Invoice No.M07241Y2 dated 27.05.2021 of M/s YAMAHA MOTOR CO.LTD • Invoice No.M17733Y2 dated 07.08.2021 of M/s YAMAHA MOTOR CO.LTD • Bills of entry for the above said invoices. • Tax invoice No.PONOBG/OO 182/2122 dated 30.04.2021 for supplying E9.9 DMHL 2 Stroke Yamaha Petrol OBM E9.9 DMHL (HSN 84012100) to Shri.P.V. Sebastain Ponnaiya • Tax invoice no. NAOBG/0251/2122 dated 30.09.2021 for supplying E9.9 DMHL 2 Stroke Yamaha Petrol OBM E9.9 DMHL (HSN 89020090) to Shri.Franklin Rajesh 3.3 On perusal of the documents furnished by the applicant it was seen that there were no purchase orders for supplies made to P.V Sebastain Ponnaiya and Franklin Rajesh and registry called for the same from the applicant. The applicant vide their email dated 03.11.2021 informed that most of their sales happened through walk in customers and the above said persons are fishermen and the applicant has not received any purch....

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.... per the entry of schedule I, Sl.no.252 of Notification No.01/2017 dt. 28.06.2017. Hence the application is found admissible under Section97 (2)(b) of the CGST Act,2017. 7.1 Applicant has submitted that they sell the outboard motors imported from Japan to fishermen and has sought if the general tax rate of 5% for marine engines as specified in the entry of Schedule I, SI.No.252 of GST Act dated 28.06.2017, this engine forming a part of fishing vessel of HS code 8902 is applicable to the goods so cleared. In respect of the boats sold to defence department and other agencies wherein such boats are used for patrolling/ flood relief and rescue purposes, they have sought ruling if the general tax rate of 5% is applicable as these engines form part of boats of HS code 8906 as provided therein. They have also stated that Para 10.1 of Circular no.52/26/2018-GST dt.09.08.2018 clarifies that the marine engine attracts 5% GST being part of fishing vessels. It is observed that the Applicant has come for ruling on Marine engines and its spare parts as found from their submissions. Thus the ruling has been sought for two scenarios, one being supply of outboard motors used in fishing vessels a....

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....Tariff Act, 1975 would attract a GST rate of 5% by virtue of S. No. 252 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated 28.06.2017. 10.2 Therefore, it is clarified that the supplies of marine engine for fishing vessel (being a part of the fishing vessel), falling under tariff item 840810 93 attracts 5% GST." It is found that the circular further clarities that the marine engines falling under tariff item 8408 would attract 5% GST only when it is supplied for fishing vessels. Thus it is seen that the rate would be applicable based on end use only. The centre jurisdictional authority has observed that the Out Board motors/ Marine engines cleared by the applicant are used in vessels for pleasure, sport falling under Chapter Heading 8903 in which case the goods are not eligible for the benefit of the abovementioned notification and are chargeable at 28% GST. Hence it becomes imperative that the end use of such engines should be established to avail the reduced rate of GST. Applicant has submitted that the outboard motors they supply are fitted in fishing vessels and patrolling vessels. However they have also submitted that they supply to Boat builders....

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....e goods have been cleared at the rate of 28% IGST under the HSN code 8407 21 00. (ii) For supply done to The Controller Procurement, Material organization (Kochi), Naval Base, Cochin, Ernakulum vide purchase order 18KBYC002 dt. 24.8.2021, copies of invoice no. COOBG/00473/2122 dt. 25.10.2021 and COOBG/00369/2122 dt. 30.09.21 has been submitted, wherein the duty has been paid at the rate of 5% under the HSN Code 8902 00 90. 8.2 On perusal of these documents, it is seen that the applicant has effected sale of engines to defense department and Naval base at Cochin. The vessels used by the defence and other agencies for patrol, relief and rescue operations fall under Customs Tariff Heading 8906- Other vessels including warships and lifeboats other than rowing boats. As per entry at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T (Rate) dated 28.06.2017, parts of goods of headings 8901,8902,8904,8906,8907 falling under any chapter of the customs Tariff attracts GST @5%. Therefore if the marine engines supplied for use as part of vessel falling under tariff heading 8906, which are used by the department of defence and Naval base for patrol, relief and rescue operatio....