2025 (7) TMI 1178

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....ernational and Hangzhou Advance Gear Box Group Co. Ltd., China, and distributes them to the fishing community and boat builders across 11 states through 4 38 branches. 4.2. The applicant states that they are an authorized dealer of marine engines, marine spares, marine gear, and marine engine oil. The marine engines and spares are procured from their Head Office and other dealers at a GST rate of 5% and are sold to the fishing community at the same rate. These transactions are classified under HSN Codes 84081093 and 84099990, covered under Sl. No. 252 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. Marine gear is purchased under HSN Code 84834000 at 5% GST and sold to fishermen at the same rate. 4.3. The applicant purchases marine engine oil from Mega Marine Spares India Pvt. Ltd. under HSN Code 27101980 at an 18% GST rate and sells it to the fishing community at the same rate. Additionally, the applicant provides maintenance and repair services for marine engines, gear, and fishing boat parts. These services are provided at a concessional GST rate of 5% as per Notification No. 02/2021-Central Tax (Rate) dated 02.06.2021, under HSN Code 998729. 4.4. The applicant....

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....t is noted that the applicant imports marine engines, their spares and marine gearboxes under Customs Tariff Headings 8408, 8409 and 8483. As per Entry Nos. 115, 116 and 135 of Schedule IV of the said Notification, these items attract GST at the rate of 28%. The relevant entries for fishing vessels under the Customs Tariff Act, in relation to the applicable GST Notification No. 01/2017-Central Tax (Rate), are as below. SI.No. Notification/Schedule Chapter/ Heading/ Subheading/ Tariff item Description of goods Tax rate 247 Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. 8902 Fishing vessels; factory ships and other vessels for processing or preserving fishery products. 2.5% CGST 252 Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Any chapter Parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907. 2.5% CGST 7.3 For this reason, if marine engines, their spare parts and marine gearboxes are supplied for use as part of a fishing vessel, they shall attract GST at the rate of 5%, in accordance with the entry at Serial No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. Furt....

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.... 84, the concessional rate is applicable by virtue of the goods being supplied as parts of vessels falling under the specified headings. 7.5 Therefore, if marine engines, their spare parts and marine gearboxes are supplied for use as part of a fishing vessel falling under Customs Tariff Heading 8902, they shall attract GST at the rate of 5% [2.5% CGST + 2.5% SGST], as per entry at Serial No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate), dated 28.06.2017. However, if such goods are supplied for use other than as parts of goods falling under headings 8901, 8902, 8904, 8905, 8906, and 8907, then the GST rate applicable will be that which corresponds to the respective Customs Tariff Headings under which the goods are classified. SMMAINES should ensure clear documentation of the intended vessel usage to solidify its entitlement to the concession for both engines and spares. 7.6 With respect to the third question, which pertains to the applicability of 5% GST on maintenance and repair services of marine engines, marine gear, and other parts of fishing boats, reference is made to Notification No. 02/2021-Integrated Tax (Rate) and Notification No. 02/2021-Central Tax ....

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....l No. 164 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 14/2019-Central Tax (Rate) dated 30.09.2019. As per the latest amendment, the modified entry at Serial No. 164 is reproduced below: Serial No. Chapter/ Heading/ Sub-heading/ Tariff item Description of goods Tax rate 164 2710 [kerosene oil PDS, (b) The following bunker fuels for use in ships or vessels, namely, i. IFO 180 CST ii. IFO380 CST] {iii. Marine Fuel 0.5%(FO)} CGST: 2.5% 7.9 In this regard, the question of whether the same tax rate applies to both marine fuel and marine engine oil is not relevant, as these two products serve entirely different functions in the operation of a marine vessel. In any motor vehicle, fuel is directly used for propulsion. Similarly, in marine vessels, marine fuel acts as the primary energy source that powers the vessel. The supply of marine fuel is recognized as essential for the operation of commercial marine transport and fishing activities. Therefore, the concessional GST rate of 5% is allowed as per the amendment made to the basic rate in Notification No. 01/2017-Central Tax (Rate), dated 28.06.2017, by Noti....