TaxTMI 
TaxTMI 
2025 (12) TMI 1561
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....th the CAAR-1 application: 2.1 M/s MEGA MARINE SPARES INDIA PRIVATE LIMITED, started in the year 2014 and is incorporated under companies act 1956 on 18.10.2014 and is in trading activity of buying and selling of Marine engine and its spares and Marine Gear boxes, out of three products Marine engine and spares are imported from YIWU JIAQI IMPORT AND EXPORT CO.,LIMITED, CHINA and marine gear boxes purchased from regular GST dealers and selling these goods to fisher man community through various branches situated in and around India 11 states and 22 branches. SI No PROD UCT DESC RITPI ON HSN Code/SAC Code Rate of Tax Notification under which we claimed tax Rate Imported/ Domestically purchased Purpose for which imported 1 Marine engine for fishing boat 84081093 & 84081091 5% Notification No.1/IGST (Rate) or CGST (Rate)dated 28/06/2017, Serial No.252" Any chapter" part of goods under heading 8401,8402,8404,840 5, 8406,8407, Imported as well as Domestically purchased For Part of fishing Vessels sold to Fisher man & Boat Builders 2 Marine Gear for fishing boat 84834000 5% Notification No.1/IGST (Rate) or CGST (Rate)dated 28/06/....
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....import marine engine and its parts and Marine Gear through Tuticorin Port -Tamilnadu for selling the same to fisherman, through Tamilnadu, Karaikal, Kerala and Karnataka branch. Submissions regarding interpretation of law and facts for afore said question. 2.4 The applicant is dealing with the product Marine engine and its spares and Marine Gear box. As per notification No.1/2017-IGST (Rate) specifies the General Rate for classification of subject goods under different Scheduled which are as under. Schedule No. Sr. No Chapter Heading Description of goods IGST IV 115 8408 Compression-ignition combustion piston engines (diesel semi-diesel engines) 28% IV 116 8409 Parts suitable for use solely principally with the engines heading 8407 or 8408 28% IV 369A 8483 Transmission shafts (including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints) 18% (previously28%-IV) from 31.12.2018....
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....Director of Fisheries-Nagercoil who verify the KYC documents of customers like Boat Registration Certificate and Fisher man ID Card etc. and certify that they sold marine engine spares to fishing vessels only. Chartered Engineer Er. P Shankar Ramalingam issued the certificate No. ER.PSR/CEC@SMM/1122_dated 01.09.2024 to the applicant where in it is certified that Marine engine & its spares and Marine Gear can be using only in Fishing or Transport or Cargo vessels, it will not be suitable for automobile vehicle or industries. The Content of the certificate is as following: 2.7.1 Marine Diesel Engine and Marine Gear Box, Definition: Marine diesel engine is type of internal combustion/compression-ignition engine that is designed to power boats and ships, it operated by burning diesel fuel, which creates a high- pressure gas that drives a piston or turbine and its mechanical energy is then used to power the ship's/boat propeller which propels the vessel forward through the water and that is installed or intended to be installed on a vessel. Propulsion marine compression-ignition engines, which are those that move or are intended through water or direct the movement of a ves....
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.... fishing boat will not be able to move in sea, part is vital product of finished goods and if it gets damaged, whole function of main product will not be able to function. Marine engine as a whole means all the parts of Marine engine is fitted with boat/ vessels and these are called as boat/ship spares. For example valve for cycle tubes is part of cycle not a part of cycle tubes and when it is fitted with cycle they are called as cycle parts not a cycle tubes parts. Components of components is also component of main machines and part of parts is also a part of main product. 2.7.5 Conclusion: Marine Diesel Engines and its spares and Marine Gear box are the very essential parts of a fishing vessel, without marine engine and its spares and Marine Gear sailing of vessel or fishing vessel (boat) is not possible, A Vessel cannot be run without Marine Diesel Engines and its spares and Marine Gearbox because they are essential for the main propulsion or turning the propellers of the fishing vessels and also for providing auxiliary power 2.7.8 Certification Marine diesel engine and its parts and marine gearbox are the parts of vessels or fishing vessels (boat/ships), without whi....
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....ess and preventing entries of reptiles, insects, etc., inside the tower. This, according to us, would be sufficient to make it part of the electricity generator. Further, since the tower is held as part of the generator, door thereof has to be necessarily a part of the generator. We, therefore, are of the opinion that there is no case of interference made out by the department, benefit of Notification No.6/2002-CE available". (ii) In the case of Collector of Central Excise v. Mahendra Engg. Works, the Hon'ble CESTAT Delhi, allowing the benefit of exemption to Stampings and laminations used in electric motors or in rotors or stators which in turn is used as component parts in manufacture of power driven pumps, considered that parts of parts of power driven pump ought to be regarded as parts of power driven pump only and held that, there is no dispute about the fact that these were used in the electric motors or in rotors or stators and in turn that was used as component part in the manufacture of power driven pumps. (iii) In the case of Audio Vision Electronics v. Collector of Customs, Madras, the Hon'ble Tribunal Delhi, while allowing import of component o....
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....18) E.L.T. 1191. We find the 'flanges' to be a part of WOEG" (ix) In the case of Collector of C. Ex .. Calcutta v. Jay Engineering Works Ltd., the Hon'ble Tribunal Delhi, held that, "Electrical Stampings and Laminations used in the manufacture of electric motors, which in turn are used in the manufacture of power-driven submersible pumps, are eligible for the benefit of Notification No. 64/86-C.E., dated 10-2-1986. Parts of parts have been considered as to be eligible to the benefit of notification. (x) In the case of Shriram Bearings Ltd. v. Commissioner of C. Ex., Jamshedpur, the Hon'ble Tribunal, Kolkata, held that, "We find that the said exemption has been denied by the adjudicating authority by observing that the Tribunal's decision in the case of Mahendra Engineering Works is not applicable inasmuch as the product before the Tribunal in that case was stampings and laminations, whereas in the instant case, the benefit is being sought in respect of parts of Ball Bearings. We find that this differentiation done by the adjudicating authority is not intelligent, in as much as the ratio of the Mahendra Engineering Work' case is squarely app....
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....en, they are collecting Fisherman ID or Boat RC as an end use proof from them. The applicant mainly selling the following products to the fishermen: SL No PROD UCT DESC RITPI ON HSN Code/SAC Code Rate of Tax Notification under which we claimed tax Rate Imported/ Domestically purchased Purpose for which imported 1 Marine engine for fishing boat 84081093 & 84081091 5% Notification No.1/IGST (Rate) or CGST (Rate)dated 28/06/2017, Serial No.252" Any chapter" part of goods under heading 8401,8402,8404,840 5, 8406,8407, Imported as well as Domestically purchased For Part of fishing Vessels sold to Fisher man & Boat Builders 2 Marine Gear for fishing boat 84834000 5% Notification No.1/IGST (Rate) or CGST (Rate)dated 28/06/2017, Serial No.252" Any chapter" part of goods under heading 8901,8902,8904,890 5,8906,8907 Imported as well as Domestically purchased For Part of fishing Vessels sold to Fisher man & Boat Builders 3 Marine engine spares for fishing boat 8409 5% Notification No.1/IGST (Rate) or CGST (Rate)dated 28/06/2017, Serial No.252" Any chapter" part of goods under heading 8401,8402,8404,840 5,8406,8407 ....
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....termined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person: Provided that the integrated tax on goods [other than the goods as may be notified by the Government on the recommendations of the Council] imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962 (52 of 1962). Further, Section 7(2) of the IGST Act, 2017 is as follows: Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce. As per Section 28H (2) (d) of the Customs Act, 1962: (2) The question on which the advance ruling is sought shall be in respect of, - (d) applicability of notifications ....
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....: 5.1.1 Comments on the queries raised by the applicant vide Annexure-1& Annexure II of the application sought for Advance Ruling are furnished hereunder: Question of Law: i) Whether the Marine engine falling under CTH 8408 1093 and its spares under CTH 8409 of Customs Tariff Act 1975, can be treated as parts of vessels falling under CTH 8902 (Fishing vessels), 8904 (Tugs and Pusher craft), 8905 (Light vessels), 8906 (Other vessels), and 8907 (Other floating structures) and applicability of 5% of IGST, while importing of Marine Engine and its spares for fishing boat, as per serial No.252 "Any chapter" of Schedule -I of the Notification No.01/2017, IGST Tax dated 28.06.2017, on the basis of its ultimate use as part of fishing vessel of heading 8902. In this regard, a clarification has already been given by the Tax Research Unit, Ministry of Finance, Dept. of Revenue, New Delhi, with regard to Applicability of GST on Marine Engine vide Para 10.1 and 10.2 of Circular No.52/26/2018-GST issued from file F.No. 354/255/2018-TRU (Part-2) dated 09.08.2018. In the abovesaid Circular, it was clarified that- 1) The fishing vessels are classifiable under Head....
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....s of Goods for Chapter 89 The Authority answered in the affirmative. The goods as above supplied by the applicant would be considered as parts of goods for Chapter 89 and also answered that The goods as above supplied by the applicant used in the manufacturing of the boat/ships under headings 8901, 8902. 8904, 8905, 8906 and 8907 shall be charged with 5s even if their GST rates are higher, by application of Notification 1/2017 of the Central Tax (Rate). 3. TECHNO TRADINGS AND SERVICES (P) LTD., vide Advance Ruling No. KER/34/2019, dated 01.03.2019 held that the Marine diesel engine and Gear boxes supplied for use in vessels/goods falling under heading 8901, 8902. 8904, 8905,8906 and 8907 will be deemed to be parts of such goods and thereby tax 5% at Sl. No. 252 of Schedule I of Notification No.01/2017 dated 28/06/17. If it is used for some other purpose, the applicable rate would be as their respective TSH 8408 and 8483 at the rate of 28% as per SI.No.115 and 135 of the said Notification. The above said Advance Rulings of the GST Authorities concerned may be taken into account while considering the subject application sought for advance ruling on the applicabil....
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....ts and submissions placed before me for the goods i.e Marine engine and its spares & Marine Gear Box, intends to be imported by the applicant. I have gone through the submissions made by the applicant during the personal hearing as well as the comments received from the jurisdictional Commissioner. I therefore proceed to decide the present application regarding applicability of IGST 5% for Marine engine and its spares & Marine Gear Box (hereinafter refer as the subject goods) as per notification No.01/ IGST(Rate) dated 28/06/2017, Sr.252 on the basis of the information on record as well as the existing legal framework. I also find that the question raised by the applicant falls within the purview of section 28(H)(2)(d) which is related to rate of duty under the Customs Tariff Act, 1975. 7.1 Firstly I proceed to the classification of the subject goods. The process of classification of goods under the Customs Tariff Act, 1975 (hereinafter refer as CTA) involves the Interpretation of the Section Notes, Chapter Notes, Sub-Heading Notes, Supplementary Notes, Headings, Sub-headings and the General Rules for Interpretation (hereinafter referred to as the "GRI") of the Customs Tariff....
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.... of section XVII under heading Parts and Accessories, it is clearly stated as "It should be noted that Chapter 89 makes no provision for parts (other than hulls) or accessories of ships, boats or floating structures. Such parts and accessories, even if identifiable as being for ships, etc., are therefore classified in other Chapters in their respective headings." 7.7 Further, CTH 8408 of chapter 84 contains heading as Compression- Ignition Internal Combustion Piston Engines (diesel or semi diesel Engines). There is specific subheading 840810 as Marine Propulsion Engines followed by single dash which has specific CTI 84081010 as "Others" followed by triple dash. Further, for the classification of the spares of Marine Engine the CTH 8409 contains description as Parts Suitable for use solely or principally with the Engines of heading 8407 or 8408. Therefore, it is clear that spare parts of Marine Engines are classifiable under CTH 8409 under CTI 84099990 for "Others". 7.8 The CTH 8483 has description as Transmission shafts (including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other ....
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.....17 252 "Any Chapter" Parts of goods of heading 8901,8902,8904,8905,8906,890 7 5% Similarly, in Central Tax Notification No. 01/2017 dated 28.06.2017 specifies the General Rate for classification of subject goods under different Schedules which are as under. Schedule No. Sr. No Chapter Heading Description of goods IGST IV 115 8408 Compression-ignition combustion piston engines (diesel semi-diesel engines) 28% IV 116 8409 Parts suitable for use solely principally with the engines heading 8407 or 8408 28% III 369A 8483 Transmission shafts (including cam shafts and crank shafts) and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints) 18% Further, Sr.No.252 of Schedule I of Notification No.01/2017-Central GST (Rate) dated 28th June 2017 which states as follows. Notification No Serial No Chapter/Heading/Sub heading/Tariff item Description of goods IGST (Rate) Notification 01/2017- Ce....
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..... 01/2017-Central Tax (rate) dated 28.06.2017." 8.3 On the basis of above mentioned clarification issued vide Circular No.52/26/2018- GST- F.No.354/255/2018-TRU (Part-2) (Tax Research Unit) & Dated 09.08.2018, several AAR of GST have given their ruling accordingly which were also cited by the applicant in the statements of their application. 8.4 I have gone through the all case laws submitted by the applicant as well as submission received from the Jurisdictional Commissionerate. The Authority for Advance ruling under GST, Maharashtra in the case of SHANDONG HEAVY INDUSTRY INDIA PVT. LTD. issued vide Order No. GST-ARA-44/2017-18/B-51-Mumbai, dated 15-6-2018 in Application No. 44 held that: We find that the applicant has stated in their submissions that the marine engine and the gear boxes supplied by them are for end-use in the vessels, trawlers etc, classified under TSH 8901, 8902, 8904, 8905, 8906 and 8907 of the GST Tariff and therefore would attract 5% IGST (2.5% CGST and SGST each). We find that marine engines and marine gear boxes which are claimed to be supplied by the applicant to dealers and shipyard manufacturers for use in goods falling under heading 8901,....