In Re: Taraltec Solutions Private Limited
GST
2018 (10) TMI 682 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (18) G. S. T. L. 168 (A. A. R. – GST), [2019] 70 G S.T.R. 338 (AAR)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 22-6-2018
GST-ARA-47/2017-18/B-54
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER
PROCEEDINGS
(under section 98 of the Central Goods and Service Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present 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 MGST Act”] by TARALTEC SOLUTIONS PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the following questions.
1. Classification of goods (i.e Reactor used in Hand Pump for water disinfection)
2. GST Rate Applicability on reactor machine which is used in Hand Pump for water disinfection
At
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fluid dynamics and kills microbes in water from bore well hand pump eliminating water borne diseases such as diarrhea, cholera & typhoid.
The Reactor can be easily retrofitted into the India mark 2 model (the most widely used hand pump in the world) within an hour by a local plumber with no special tools. With its nil operational expense and low capital investment, the Taraltec Reactor for hand pumps is ideal for all under-served remote areas. The Reactor once fitted needs no maintenance. There is no need for specialized personnel, nor for separate electricity.
The game-changing technology has a range of other applications. With minimum moving parts, it can be brought online in variable/pulsating fluid flows to create targeted process intensification in a modular way. None of the applications require any maintenance, or specialized personnel for fitting.
Each can be retrofitted into existing setups with minimum pipeline modification, and with no plant Stoppage.
In rural areas : The
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104 (1) of the CGST Rules, 2017 seeking advance ruling on the Classification of goods i.e. Reactor used in Hand Pump for water disinfection.
2. The applicant state that they are manufacturers of reactor used in Hand pump for water disinfection. The Reactor harness fluid dynamics & Kills microbes in water bore well hand pump & motorised water lines- eliminating water borne diseases such as diarrhoea, cholera & Typhoid. They further state that their commodity is forming part of Hand pump, it should be classified as HSN No. 8413, 8413 91 as Hand pumps and parts thereof.
3. The scrutiny of the application reveals that the applicant has furnished only the end use of the product. It is settled principle of law that classification of the product cannot be decided solely on the basis of its end use. The details like design, characteristics, nature, functions etc. are essential requirements to decide the classification of the product. It is found that the applicant has not submitted any mater
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ecific machine. This HSN note particularly applies to heading 8413. Therefore, although catalogue and further details are required, from whatever sketchy details of the product provided by the applicant, it prima facie appears that the product in question will not fall under Chapter Heading 8413 as parts of the Hand Pumps and more appropriately will be covered under Chapter Heading 8419.
5. Hence, the final comments can be given only if the applicants provides the complete information like the catalogue of the product containing the product Characteristic, its functions etc.
PRAYER
6. It is prayed that,
i) Since the applicant has not provided vital details essential to determine classification, the application filed may be rejected or it shall not be admitted till the applicant furnishes full facts along with the product catalogue with description/ basic characteristic.
ii) Applicant be directed to furnish the details of the product.
Additional Written Submissions dated 27.03.2
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cteristics of the said product appears to be as under:-
i) The assessee is engaged in manufacture of 'Reactors', which is essentially used for purification of water being supplied from Hand Pumps. The Reactor is retrofitted on to the 'Bore well Hand pumps'. According to the assessee, the said device requires no spares or consumables.
ii) Working/ Principle: The device converts kinetic energy of fluid into millions of targeted micro bubbles each acting as localized reactors. They are packed with extreme heat, pressure and turbulence that release intense energy packets during the collapse of the bubbles. A jet of water flow into the reactor, the resultant shock waves physically kills microbes and deliver the purified water to those drawing it up.
4. In the instant case, the reactors have entirely different function than the water pumps, even if meant to be used with water pumps, the radiators merit classification under Tariff Heading 84212190. The Reactor is altogether a different m
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per HSN Note-(II) part (Section Note 2) of the Section XVI in general parts which are suitable for use solely or principally with the machines or apparatus are classified under same heading. However, the said Rule does not apply to the parts which in themselves constitute an article covered by heading of the Section XVI, shall be classified in their own appropriate heading even if specially designed to work as a part of specific machine. This HSN Note particularly applies to the heading No. 8413.
Thus, it is also evident that, even if the items are specifically designed for Hand Pump, they shall not be classifiable under 8413 91. Therefore, from the HSN, it is clear that parts fitted in pumps has to be classified separately which in themselves constitute an article. In this case it is 'Reactors'.
6. From the description of the product provided by the applicant, the correct position of law is that the 'Reactors' are more appropriately classifiable under Chapter sub heading No. 8421.2
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irector along with Sh. Sanjay Makhija and Sh. Amit Desai C.A. appeared and made written and oral submissions. The jurisdictional officer, Ms. Sunita Bhalerao Supt., Mumbai East Commissionerate also appeared and made written submissions.
05. OBSERVATIONS
We have perused the records on file and gone through the facts of the case and the submissions made by the applicant and the department.
The applicant has submitted that they are manufacturers of Reactors which are used in Hand pump for Water Disinfection. The Reactor harnesses fluid dynamics & kills microbes in water from bore well hand-pump & motorized water lines-eliminating water borne diseases such as diarrhea, cholera & typhoid.
They have further submitted that the Reactor can be easily retrofitted into the India mark 2 model (the most widely used hand pump in the world) with no special tools and is ideal for all under-served remote areas. The Reactor once fitted needs no maintenance, no specialized personnel and no electrici
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nsidered as a part of the hand pump.
Further, it is observed that the basic function of the Reactor is 'purifying the water' which is different from the function Of the hand pump which is 'withdrawal and delivery of water from the underground'. The applicant has also submitted that their Reactor can be used:-
i) to be fitted to motorized pipelines drawing water from for wells, ponds, lakes etc.
ii) to be fitted in pipelines extending from and to overhead tanks for supply of water in buildings.
iii) in pipelines attached to swimming pools/ fountains.
iv) in sewage water treatment in townships, hotels, hospitals etc.
From the submissions made by the applicant it is also observed that the said Reactors are not exclusively used in hand pumps. They are also used with other machinery, and their main function is to purify water.
The applicant has raised the query that their Reactors should be classified under HSN 8413, 8413 91 as hand pumps and parts thereof. It is seen that the sa
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to work as a part of specific machine. This HSN Note particularly applies to the heading No. 8413.
Thus, it is also evident that, even if the present item is specifically designed for Hand Pump, it shall not merit classification under CTH 8413 91. Therefore, from the HSN, it is clear that parts though fitted in hand pumps has to be classified separately as an article in itself. In this case the item 'Reactors' have an independent identity and function which is not solely as part of a hand pump.
From the above discussions we find that Reactors are apparatus/ machinery which are used to purify water and as per the submissions made by the applicant, it can be used with various machinery including hand pumps. Hence the arguments of the applicant for considering 'Reactors' as part of Hand Pumps is not tenable and sustainable as Reactors have a use of their own as compared to that of a Hand Pump and thus have an identity of their own. Secondly, from the submissions made by the applicant it
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9%
18%
Nil
8421 21 10
Ion exchanger plant or apparatus
u
9%
9%
18%
Nil
8421 21 20
Household type filters
u
9%
9%
18%
Nil
8421 21 90
Other
u
9%
9%
18%
Nil
8421 22 00
for filtering or purifying beverages other than water
u
9%
9%
18%
Nil
8421 23 00
Oil or petrol-filters for internal combustion engines
u
9%
9%
18%
Nil
8421 29 00
Other
u
9%
9%
18%
Nil
We find that Reactor, in the case of the applicant is nothing but a filtering or purifying machinery/ apparatus for liquids. Apparatus used for filtering or purifying water falls under Heading 8421 21 attracting 9% CGST and SGST each. The Reactor is neither an Ion exchanger plant or apparatus, Household type filter and therefore would fall under the others category i.e. 8421 21 90, thus attracting 9% CGST and SGST each.
In view of the above discussions we find that the Reactor used by the applicant, in handpumps, for purifying water is classifiable under Tariff Heading 8421 21 90 and they are lia
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