In Re: Mukand Limited
GST
2018 (10) TMI 1243 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (18) G. S. T. L. 327 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 30-7-2018
GST-ARA-18/2018-19/B-77
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER
PROCEEDINGS
Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The resent application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act, and the MGST Act”] by M/s. Mukand Limited, the applicant, seeking an advance ruling in respect of the following questions:
Whether the “Electric Overhead Traveling Grab Crane (EOT Grab Crane) to be supplied by the applicant to the buyer for use in the waste-to-energy project is covered under SI. No 234 of Schedule I of Notification 1/2017 dated 28.06.2018- IGST (Ra
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rane (and parts thereof) solution for handling waste for Industrial Captive. The Applicant manufactures crane lifting capacity up to 500 tons.
B.2 The Applicant is a manufacturer of various type of crane for heavy materials handling solutions, providing solutions specifically for Biomass, steel industries, heavy equipment handling, handling cargo at ports, Co-generation, Waste-to-energy etc. Apart from manufacturing, the Applicant also provides aftermarket services to its customers.
B.3 The Applicant enters into agreements with their customers for design, manufacture, and supply of crane and also for commissioning and installation of cranes at the site of the Customers.
B.4 As a part of Swachh Bharat Mission and to comply with Solid Waste Management Rules 2016. The Andhra Pradesh Government has been promoting generation of power from Municipal Solid Waste (“MSW”). In this context, the Andhra Pradesh Government awarded the project for development of MSW (municipal solid waste) Waste-
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ctricity.
* Air cooled condensers,
* Balance of plant and other associated auxiliary facilities.
Hereto Annexed & Marked as EXHIBIT – “B” is the copy of Project specification
documents issued by M/S. Korus Engineering Solutions Pvt. Ltd.
Process Description
B.7 The Waste to Energy project will be an integrated facility for processing Municipal Solid Waste delivered by the Municipal Corporation and other urban local bodies forming a part of the cluster.
B.8 Mixed MSW will be transferred to the receiving pits from the transport vehicles. After separation of the leachate, further drying will take place in the storage pits. Manual and mechanical segregation of inert and hazardous material will be carried out before delivery of processed MSW feedstock to buffer storage pits for boiler feeding.
B.9 The MSW is used as a fuel in the boiler for generating steam. In this process, the combustion energy present in the MSW is transformed to steam. The steam is made to expand in the turb
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vices Rules, 2017 (“MGST Rules”).
C.2 Sections 97(2)(b) of the MGST Act provides that the question in respect of which Advance Ruling is sought shall be inter-alia in respect of the applicability of a notification issued under the provisions of the GST Act.
C.3 In the instant application for advance ruling, the Applicant seeks to determine the applicability of Schedule I of the Notification No. 01/2017-1. Tax (Rate) dated 28.06.2017 to the supplies of Overhead Travelling Cranes to be made by the Applicant to waste-to-energy projects and the rate of tax applicable on such supplies. The Applicant therefore submits that question on which the present advance ruling is sought fulfils the requirement under Section 97(2) (b) of the MGST Act.
D. APPLICANT'S UNDERSTANDING:
D.1 The Applicant submits that the Electric Overhead Travelling Grab Cranes that are to be supplied to the waste to energy projects fall under Sl. No 234 of Schedule I of Notification No. 1/2017-lntegrated Tax (Rate) dat
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g under the tariff item, subheading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Schedules.
E.2 Explanation (iii) to Notification No. 1/2017-IGST provides that “Tariff item”, “sub-heading” “heading” and “Chapter” shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975.
E.3 Further, Explanation (IV) provides that the rules for the interpretation of the First Schedule to the Customs Tariff Act, 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.
E.4 It is submitted that the product proposed to be supplied will undisputedly be covered under tariff heading 84 of the Customs Tariff Act, 1975, which deals with Nuclear Reactors, boilers, machinery, and mechanical appliances; parts thereof.
E.5 Schedule I of the Notification
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scope of entry 234 of Schedule I and therefore attracts IGST at the rate of 5%.
WASTE TO ENERGY PLANTS
E.8 A waste-to-energy (“WTE”) plants a waste management facility that combusts wastes to produce electricity. This type of power plant is sometimes called a trash-to-energy, municipal waste incineration, energy recovery, or resource recovery plant.
E.9 Waste-to-energy is renewable because its fuel source-garbage or Municipal solid waste – is sustainable and non-depletable.
E. 10 The National Electricity Policy of the Government of India dated 12.02.2005 encourages for setting up of municipal solid waste energy projects in urban areas with a view to reducing environmental pollution apart from generating additional energy. According to the United States Environmental Protection Agency, waste-to-energy is a “clean, reliable, renewable source of energy.”
E.11 According to the Waste-to-energy Research and Technology Council, founded by the European Economic Community, the WTE plants
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…..
Control and Instrumentation For ease of operation the entire plant has been divided in the following sub plants like:
* Steam Turbine Generator STG along with its auxiliaries, vacuum and condensate system etc. (Operation, Control and Monitoring from DCS at CCR).
* Steam Generator (SG) along with feeding system etc. (Operation, Control and Monitoring from DCS at CCR).
* Auxiliary Electrical System (Operation, Control and Monitoring from DCS al CCR).
* Compressed Air system (Control from Local with status monitoring at DCS)
* Fire Alarm and detection system (Al Fire House and Repeat Alarm at CCR.
* Cooling Water System (Operation, Control and Monitoring from DCS at CCR
* The I & C System will be configured to perform the following basic functions
[Emphasis supplied)
E.15 A pictorial representation of the process is extracted below for ease of understanding:
* POWER GENERATION
* END PRODUCTS
* COMBUSTION
* MATERIAL PROCESS
* Electrical Overhe
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evice or parts are required to either produce or 'convert' energy. Therefore, the present IGST Notification not only includes the Electric Overhead Travelling Grab Cranes used in conversion of waste to 'heat energy' but also includes all the equipment falling under Chapter headings 84, 85 or 95 of the Customs Tariff Act, 1975 used in the entire process of converting waste to energy from the dumping pit to electricity generator.
F.3 Therefore, it is the submission of the Applicant that the rationale of the Electric Overhead Traveling Grab Crane to be supplied by the Applicant for use as a part of the Waste to energy plant falls under SI. No. 234 of Schedule I of Notification 1/2017- Integrated Tax (Rate) attracting IGST at the rate of 5%.
** Further applicant has also submitted his written contention for OPERATION OF CRANE IN WASTE TO ENERGY PLANT ON 11.7.2018 as under
1. WASTE TO ENERGY MANAGEMENT PLANT
Waste-to-Energy (W t E) plant is waste management facility where Municipal Sol
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from 7 meters high ramp forms heap near receiving area and needs to be spread in entire MSW storage pit using cranes.
The MSW in storage pit is re-shuffled daily for faster drying. Thereafter crane will grab to lift MSW into 2 nos. hoppers at height of 23 meter above ground level.
5. HEIGHT AT WHICH THE CRANES ARE INSTALLED.
Area of movement and height hopper requires Cranes to be installed at height above hopper. Accordingly cranes are installed at 31.5 metres above ground level.
6. QUANTITY OF MSW TO BE HANDLLED BY CRANES
Handling of heterogeneous nature of MSW from unloading area to storage area for stacking is 89 tons per hour + 105 ton per hour for feeding into shredded hopper +82 ton per hour RDF stacking + 100 ton feeding into boiler hopper.
7. MSW CAN BE HANDLED BY CRANES
Such large quantity of MSW per day to be handled and that too from level ranging from 7 meters below and 23 meter above ground it is necessarily needs a crane. When MSW comes to plant is entangle
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un-hygienic surrounding above MSW storage pits cranes are operated from control station at fixed remote location using monitoring with help of cameras because of.
11. ESSENTIAL REQUIRMENT OF CRANE IN WEE PLANT –
Looking at nature, volume, handling of MSW and operation of the WtE plants installation of crane is EOT crane can't be avoided and it is indispensable.
03. CONTENTION – AS PER THE CONCERNED OFFICE
M/s. Mukand Limited vide their application dated 2/5/2018, has applied for advance ruling on the issue – Whether the Overhead Traveling Crane to be supplied by the applicant to the buyer for use in the waste-to-energy project, for generation of Power from Municipal Solid Waste is classifiable as 'Renewable energy devices and parts for the manufacture of waste to energy Plants/devices” attracting 5% levy under SI. No.234 of Schedule I of Notification 1/2017 dated 28/6/2017.
In support of their contention, it is stated by them that the product proposed to be supplied is undispu
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eof) for handling waste for Industrial Captive. Apart from manufacturing, the Applicant also provides aftermarket services to its customers.
As per the question on which advance ruling is required by the applicant is “Whether the Overhead traveling Crane to be supplied by the applicant to the buyer for use in the waste-to-energy project is classifiable as 'Renewable energy devices and parts for the manufacture of Waste to energy plants/devices', attracting 5% levy under SI. No. 234 of Schedule I of Notification 1/2017-lntegrated Tax (Rate) dated 28.06.2017. As per the Duty conditions given by the assesse the EOT Cranes with Hydraulically operated Grabs are proposed to be used for the following operations:
Crane – 1
* Handling of fresh mixed Municipal Solid Waste (MSW) from heaps formed in pit by tipping vehicles
* Moving MSW from unloading area to storage heaps within the pit.
* Transferring partially dried MSW from storage heaps to hoppers for processing/segregation.
Crane -2
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e of machine, generally equipped with a hoist rope, wire ropes or chains, and sheaves, that can be used both to lift and lower materials and to move them horizontally. It is mainly used for lifting heavy things and transporting them to other places.
As per harmonized system of Nomenclature, the classification of goods shall be governed by General Interpretative Rules (GIR) and Rule 3 (a) of GIR states that by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected, the heading which provides the most specific description shall be preferred to headings providing a more general description.
Further, the predominant or principal or primary use which has to be taken into consideration i.e. lifting of the Municipal Solid Waste (MSW) cannot be classified under Renewable energy devices and parts for the manufacture of Waste to energy plants/devices. Therefore the end use is not relevant for classific
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unt to the definition of “manufacture” as per Section 2 (72) of CGST Act, 2017. Hence the Overhead traveling Crane to be supplied by the applicant to the buyer for use in Waste to energy project is not classifiable as 'Renewable energy devices and parts for the manufacture of waste to energy Plants/devices.
In view of all the above contentions, it is opined that the Overhead travelling Cranes proposed to be supplied to the waste-energy project cannot be classified under SI. No. 234 of Schedule I of Notification No. 1/2017- Integrated Tax (Rate) dated 28/6/2017.
04. HEARING
The Preliminary hearing in the matter was held on 26.06.2018, Sh. Jai Singh Yadav, applicant along with Sh. Upendra Maskar Accountant appeared and made oral & written contentions as per their ARA. Jurisdictional Officer Ms. Shruti Vijay Kumar Asstt. Comm., Division – VI, Thane Commissionerate along with Ms. Sujaya Vaidyanathan, Supt. appeared and stated they have made written submissions and would be making anoth
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Jindal Urban Waste Management [Guntur] Ltd for design, manufacture, and supply of Waste TO Energy [W t E] plants EOT Grab crane package to JULL's Guntur Waste to Energy Projects for on site Basis as per their PO no 4500015564 dt.20.2.2018 . The customer has placed the order for two cranes having capacity of 15 T EOT crane with 8.0 CUM Smag peiner make Grab and 2 years , O and M spares for 2 *600 TPD Guntur, AP India project. Thus present transaction is a proposed transaction for which applicant is seeking an advance ruling.
3. Applicant submitted that the Electric Overhead Travelling Grab Cranes that are to be supplied by the Applicant to the waste to energy project forms a device /part of the “Waste-to-energy plant”. Therefore, it is the understanding of the Applicant that the product “Electric Overhead Travelling Grab Cranes” to be supplied by the Applicant falls under SI. No. 234 of the Notification No. 01/2017-IGST (Rate) dated 28.06.2017 and consequently, is liable to IGST at the
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tracting IGST at the rate of 5%. In view of this the applicant has asked following question on which advance ruling is required –
Whether the electrical Overhead travelling grab Crane to be supplied by the applicant to the buyer for use in the waste-to-energy project is classifiable as 'Renewable energy devices and parts for the manufacture of Waste to energy plants/devices', attracting 5% levy under SI. No. 234 of Schedule I of Notification 1/2017-lntegrated Tax (Rate) dated 28.06.2017.”
5. In view of this we need to examine notification number 1/2017-lntegrated Tax Rate) dated 28 the June 2017 and specifically the entry at serial number 234 which specifies that renewable energy devices and parts for their manufacture are liable to IGST @5%. For the sake of understanding the notification entry is reproduced as under-
234.
84 or 85 or 94
Following renewable energy devices & parts for their manufacture
(a) Bio-gas plant
(b) Solar power based devices
(c) Solar power generating sy
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.
Chapter heading 84 is related with Nuclear reactors, boilers, machinery, and mechanical appliances, parts thereof. The relevant Tariff heading with sub heading and Tariff Items are produced herewith.
The Tariff heading 8426 covers the items SHIP'S DERRICKS; CRANES INCLUDING CABLE CRANES; MOBILE LIFTING FRAMES, STRADDLE CARRIERS AND WORKS TRUCKS FITTED WITH A CRANE. The details as under thus-
327.
8426
Ship's Derricks ; Cranes Including Cable Cranes; Mobile Lifting Frames, Straddle Carriers And Works Trucks Fitted With A Crane
SHIP'S DERRICKS ; CRANES INCLUDING CABLE CRANES; MOBILE LIFTING FRAMES, STRADDLE CARRIERS AND WORKS TRUCKS FITTED WITH A CRANE
8426
SHIP'S DERRICKS ; CRANES INCLUDING CABLE CRANES; MOBILE LIFTING FRAMES, STRADDLE CARRIERS AND WORKS TRUCKS FITTED WITH A CRANE
–
Overhead travelling cranes , transporter cranes , gantry cranes, bridge cranes, mobile lifting frames and straddle carriers :
&n
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ng Grab Cranes [ 2 quantity] to the waste to energy project. The above cranes are the overhead travelling cranes on fixed support. It is attached to the main plant, at the project site. From the above table we find that the impugned product is classifiable under Tariff heading 84261100 as 'overhead travelling cranes on fixed support'. Thus applicant satisfies first condition that the goods are covered chapter 84.
Now we turn to the next aspect of the notification to find out whether the impugned goods i.e. Electric Overhead Travelling Grab Cranes is a device or parts for the manufacture of especially waste to energy plants / devices. The Word devices and parts are not defined under the provision of IGST Act or Rules or the notifications issued thereunder. We may refer to the dictionary meaning of the words. The dictionary meaning of devices is as – The Devices means – an object or machine that has been invented to fulfill a particular purpose:
Noun
Plural noun: devices
1. I. a th
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ergy plant as proposed and details submitted before is authority. The essentiality and integral nature of this device cum part of waste to energy plant get support from details pertaining to operation of cranes in waste to energy plant as presented and detailed in their submissions by the applicant before this authority. Thus we find that EOT Grab Cranes are integral part of the Waste to Energy Plants project for manufacturing and generation of end product of electricity and therefore the EOT Grab Cranes being used in waste to energy plant as per details given in present case clearly fall under serial no. 234 of schedule of notification 1/2017 – Integrated Tax (Rate) and liable to IGST @5%.
Applicant has referred to various case laws in their submission which are duly considered in the present proceeding. Since as per detailed discussions above we find that the EOT Grab Cranes fall under serial no. 234 of schedule of notification 1/2017 – Integrated Tax (Rate) and liable to IGST @5%,
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