In Re : M/s. Power Build Private Limited
GST
2018 (6) TMI 515 – AUTHORITY FOR ADVANCE RULINGS, GUJARAT – 2018 (14) G. S. T. L. 85 (A. A. R. – GST), [2018] 2 GSTL (AAR) 88 (AAR)
AUTHORITY FOR ADVANCE RULINGS, GUJARAT – AAR
Dated:- 13-12-2017
ADVANCE RULING NO. GUJ/GAAR/R/2017-18/2 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2017-18/AR/8 )
GST
Mr. R.B. Mankodi, Member And Mr. G.C. Jain, Member
For The Applicant : Shri A.K. Pandey, DGM And Shri Rashmin Vaja, CA
RULING
1. The applicant M/s. Power Build Private Limited has submitted that in manufacturing of 'Geared Motors', Electric Motors are assembled with Gear Boxes manufactured by them. Commercially, a Gearbox cannot have any use without being rotated and coupled with motor affixed to it. Utility of motor is to facilitate the running of any machine or conveyors in industries, whereas the speed of motor is fixed and it needs to be controlled, Gears are used to control the speed of final machine. As many custome
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r HSN Code of 8501 charging 18% of GST.
2. The applicant submitted that they are engaged in supplying 'Geared Motor', which is an assembly product of the 'Electric Motor' and 'Gear Box'. Electric Motor is covered under HSN code 8501 attracting GST at 18%, while Gear Box falls under HSN code 8483 attracting GST at 28%, however, HSN code and tax rate for product 'Geared Motor' is not provided under law.
3. The applicant has raised following question for advance ruling in their application :-
What is the HSN Code and GST Tax Rate of a product 'Geared Motor'?
4.1 The Commissioner of Central Excise & GST, Vadodara – I Commissionerate informed that it is a fact that the HSN code and GST Tax Rate of product 'Geared Motor' is not clearly mentioned in the GST Tariff, therefore, for determining the HSN code and GST Tax rate of the product, one need to go through the major inputs, process of manufacture and end use of the product, through which an inference can be drawn about the same. It wa
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. Agriculture
b. Pharma
c. Cement
d. Pulp and Paper
e. Fertilizer
f. Textile
g. Rice Mill
h. Food Industries
4.2 It is submitted that from the above inputs, process and end use of the product, it is inferred that the Geared Motor is a device in which an Electric Motor is fixed with the Gear Box for changing its speed and torque. In addition, the very first paragraph of the catalogue of the Geared Motor of applicant company mentions as follows :-
“Geared Motors and Gearboxes are the heart of any engineering product. It is not just the torque and speed but the reliability of the Geared Motor that defined the performance of your product or equipment.”
Gear Box is a device which is used to transmit mechanical power and speed from one shaft to other shaft. Gear Box helps in changing the direction as well as output RPM with the help of various combination in gearing. Gear box is mechanical power device. HSN code of Gear box is 8483 and GST rate of Gear box is 28%.
Electri
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GST rate of 28%. There is no specific entry for 'Geared Motor' in GST Schedule.
5.2 It is further informed that by assembly of 'Gear Box' and 'Electric Motor', a distinct product 'Geared Motor' is manufactured, which has no direct use, but it is used as parts in Machinery, Tools, Appliances industries. As there is no specific entry for 'Geared Motor', the rate of tax may be determined on the basis of its uses e.g. in the erstwhile VAT Act, the Gearbox used in machinery were known as Machinery Parts, Gearbox used in Automobiles were known as Auto Parts and Gearbox used in Tractor were known as Tractor parts and even though these three were Gearbox, as per different designs and use in different sectors, the tax rates were applicable accordingly.
5.3 It is also informed that the applicant has given information about 'Geared Motor' in Annexure A – Brief about company and Annexure B – Statement of interpretation by applicant, but it has not been clarified the sectors in which the said pr
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tted by the Commissioner of Central Excise & GST, Vadodara – I Commissionerate and the Assistant Commissioner, State Tax, Ghatak-51, Anand.
7.1 The issue involved in this case pertains to classification of the product 'Geared Motor' i.e. whether 'Geared Motor' falls under Chapter Heading 8483 or 8501 of the Customs Tariff Act, 1975. On the basis of the classification of the said product, it will be leviable to appropriate rate of Goods and Services Tax prescribed under Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 issued under the Central Goods and Services Tax Act, 2017 (herein after referred to as the 'CGST Act, 2017') and corresponding Notification issued under the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the 'GGST Act, 2017') or the Integrated Goods and Services Tax Act, 2017.
7.2 It is observed that the Explanation (iii) and (iv) of the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 provides as follows :-
“Explanation. –
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f Act, 1985, the Central Excise Tariffs are based on the Harmonious System of Nomenclature (HSN) and the internationally accepted nomenclature was taken into account to reduce disputes on account of tariff classification. Accordingly, for resolving any dispute relating to tariff classification, a safe guide is the internationally accepted nomenclature emerging from the Harmonious System of Nomenclature (HSN). Although, the decision in the case of Woodcraft Products (supra) dealt with the interpretation of the provisions of the Central Excise Tariff there can be no doubt that the HSN Explanatory Notes are a dependable guide even while interpreting the Customs Tariff.”
8.1 It is observed that 'Gears and gearing; gear boxes and other speed changers, including torque converters' fall under Chapter Heading 8483 whereas 'Electric Motors' fall under Chapter Heading 8501. The product 'Geared Motor' is an assembly product of the 'Electric Motor' and 'Gear Box'. It is submitted that there is n
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xplanatory Notes for 'Electric Motors' under Tariff Heading 8501 of the Harmonised System of Nomenclature, inter-alia, provides as follows :-
“(I) ELECTRIC MOTORS
Electric motors are machines for transforming electrical energy into mechanical power. ………
(A) ………
Motors remain classified here even when they are equipped with pulleys, with gears or gear boxes, or with a flexible shaft for operating hand tools.
………
(B) ……
[underlining supplied]
8.4 Thus, the Tariff Heading 8483 does not cover Gear Boxes or other variable speed changers combined with a motor. Motor remain classified under Tariff Heading 8501 even when they are equipped with pulleys, with gears or gear boxes, of with a flexible shaft for operating hand tools.
8.5 Therefore, on the basis of the Explanatory Notes of HSN under Tariff Heading 8483 and 8501, it is evident that the product 'Geared Motor', which is an assembly product of the 'Electric Motor' and 'Gear Box', will appropriat
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