2018 (12) TMI 1153 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 475 (A. A. R. – GST) – Classification of goods – interpretation of statute – Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907” in entry number 252 of the schedule 1 of the Notification No 01/2017-lntegrated Tax (Rate) – Rate of tax – specific list of inputs raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship – Procedure to be followed with Vendors if rate of tax applicable is as per entry no. 252 of the Schedule I – Input tax credit.
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Held that:- We have listed a list of items which cannot be considered as a part of a warship/ submarine. Other than that all the equipments/ tools, etc can be considered as parts of a submarine/warship, without which the same would not be complete and would not exist. These are very integral for the functioning of the submarine/ warship – except for the items listed by us above from the Annexure B and Add
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ax 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 Shandong Heavy Industry India Pvt. Ltd, the applicant, seeking an advance ruling in respect of the following questions. 1. Whether the expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry number 252 of the schedule 1 of the Notification No 01/2017-lntegrated Tax (Rate) covers specific list of goods attached herewith (Refer Annexure B)? 2. Also, what will be the rate of tax for the specific list of inputs raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship? 3. What procedure is required to be followed with Vendors if rate of tax applicable is as per entry no. 252 of the Schedule I. 4. If the rate of tax applicable to all or any of these items is 5% and if the vendor has charged higher r
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activities are construction of state-of-the-art warships and submarines with facilities situated at Mumbai. MDL has earned a reputation for quality work and established a tradition of skilled and resourceful service to the shipping world in general and the Indian Navy, Coast Guard & ONGC in particular. MDL had also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessel, water tankers, tugs, dredgers, fishing trawlers, barges & border out posts for various customers in India as well as abroad. MDL have also fabricated and delivered jackets, main decks of wellhead platforms, process platforms, jack-up rigs for ONGC. 2. Currently, MDL is involved in manufacture of warships and submarines as per the specifications/requirements provided by Indian Navy. All the inputs including raw materials, parts, consumables etc. required for constructing the warships and submarines are directly procured/ imported by the MDL (List of the Inputs are mentioned at Annexur
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4/95 dated 16th March 1995, subject to certain conditions and procedures. S.No. Description of goods Conditions 1 2 3 21. All goods If- (a) the said goods are supplied for use in construction of warships of the Indian Navy or Coast Guard; and (b) before clearance of the said goods, a certificate from an officer not below the rank of a Rear Admiral of the Indian Navy or Coast Guard or Director General of Coast Guard or any other officer of the Indian Navy or Coast Guard; equivalent to the Joint Secretary to the Government of India, to the effect that the said goods are intended for the said use, is produced to the proper Officer. 6. Simiilar exemption was there under sr. no. 306C of Notification No.12/2012-CE, Similar exemption was there under Customs Law also at sr. no. 469A of Notification No. 12/2012-Customs as amended by Notification 54/2015-Customs dated 24h November, 2015. Under Sr No 306 C of Notification No 12/2012-CE exemption was given for raw material & parts of goods. Th
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ception, the basic criteria of the parts being classifiable under the parent machine would hold good. b. In Eureka Forbes v. CCE 2001 (130) ELT 146 (CEGAT) = 2000 (8) TMI 567 – CEGAT, NEW DELHI, it was held that a hose specifically designed for a particular product and not capable of general use will be classified as part of that machine and not as a hose . c. In G S Auto International v. CCE 2003 (152) ELT 3 (SC) = 2003 (1) TMI 700 – SUPREME COURT, it was held that If a part solely or primarily suitable for automobiles will be classified as automobile part (under heading 87.08) and not under general heading. This was followed in CCE v. Basmark Components (2007) 213 ELT 533 (CESTAT) = 2007 (3) TMI 50 – CESTAT, CHENNAI, where it was held that plastic goods designed specifically for automobile with high precision are to be classified as automobile parts. d. In Hallmark Industries v. CCE 2000 (122) ELT 540 (CEGAT) = 2000 (6) TMI 802 – CEGAT, CALCUTTA, Elgi ultra Appliances v. CCE 2001 (13
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achine. – Audio Vision Electronics v, CC – 1987 (31) ELT 796 (CEGAT) = 1987 (7) TMI 254 – CEGAT, NEW DELHI. g. Part of refill is also a part of ball point pen (as refill is part of ball point pen) – Naianda Manufacturing co. v. CCE 1998 (102) ELT 289 27 RLT 150 (CEGAT) = 1997 (12) TMI 381 – CEGAT, NEW DELHI – quoted and followed in B D Sanghvi v. CCE 1999(113) ELT 571 (CEGAT) = 1998 (8) TMI 363 – CEGAT, NEW DELHI, where it was held that brass tip used in refill is part of ball point pen, as refill is essential part of ball point pen. 9. Attention is also invited of the facts that there is no precise definition provided for Parts of goods & therefore going to the dictionary definition which say a separate piece of something, or a piece that combines with other pieces to form the whole of something or One of the pieces that together form a machine or some type of equipment 10. Attention is also invited in the para 13 of advance ruling in case of M/s. CS India steel Pvt ltd vs The Com
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applicable. However, since there are no conditions or procedures prescribed for entry no. 252 of Schedule I which was provided in the erstwhile law & to avoid litigation & to clear our ambiguity, advance ruling is sought in relation to question raised under Sr-14 of the application. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- In this connection, the point wise comments on para 14 of the application are as under: 1) The meaning of expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry no 252 of the Schedule 1 of the Notification No.1/2017 – Int. Tax is the parts, which are exclusively used for these goods only. 2. Whether the expression Parts of goods will include all the inputs including raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship and submarines – No 3) The rate of tax for inputs raw materials, parts and consumables etc., purchased or i
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The jurisdictional officer, Sh. K.W. Thaware, Supdt., appeared and stated that they have made a written submissions on which be taken on record and be considered. The applicant has filed reframed application on 14.05.2018 and admitted. The final hearing in the matter is held on 27.06.2018, Sh. Viren Thakkar, C.A. along with Sh. A. B. Shetty, Manager Taxation, Sh. S. P. Shenoy, GM., Sh. Rajiv Rathare, DG, Design, Sh. Punam Chand, ET Finance, appeared and made written and oral contentions as per details in their ARA. They submitted detailed list of items for submarines and warships on which they have requested for classification with respect to whether these items would be treated as parts of submarines and warships and elibible for benefits @ 5% GST. The jurisdictional officer, Ms. Surekha Walavalkar, Suptt., Division – IV, Range -3, Mumbai Central Commissionerate appeared and stated that they would be making written submissions . 05. OBSERVATIONS We have perused the documents on record
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s of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 . Against this entry of the Schedule I in rate notification under the heading 8906 the rate of GST prescribed is 5%. We find that the issue that is raised before us by the applicant is whether the inputs mentioned in Annexure B of the application, which are used for constructing the warships and submarines are forming parts of such warships/ submarines and therefore chargeable to reduced tax @ 5% under Sr.No.252 Of Notification No-I/ 2017 Central Tax (Rate) dated 28.06.2017. There are 3 Annexure B s submitted by the applicant. The first Annexure B containing 96 entries pertains to P-15 B EQUIPMENT LIST. The second Annexure B containing 6 entries pertains to P-15 B MATERIAL LIST. The third Annexure B containing 35 entries pertains to P-15 B CONSUMABLES LIST. To deal with the limited issue before us i.e. to find out whether the goods/ spares used by the applicant are parts of a warships/ submarines first of all we need to examine
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nt of failed units. Spare parts are an important feature of Logistics Engineering and Supply Chain Management. Thus in view of the above meanings/definitions of part/ parts/ Spare Part, we will be required to examine as to what are the parts of Goods of CTH 8901, 8902, 8904, 8905, 8906 and 8907 and whether the subject goods/ spares as mentioned by the applicant listed in Annexure B of this ARA application can be taken to be covered within the meaning of Parts for Sr. No. 252 of Notification no. 1/2017 Integrated Tax (Rate) dated 28.06.2017. We find that items like Anchor, Bow, Bowsprit, Fore and Aft, Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Bridge, etc. are very essential parts of a ship or vessel and are quite clearly parts of a vessel/ ship and a ship cannot be imagined to be in existence without these parts. However, in addition to the above there are some additional equipments that are required to be made available on a ship as a measure of st
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etail above, we find that part is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly the second definition of part also defines part as one of the pieces that together form a machine or some type of equipment. While interpreting the issues like the one at hand, we may refer to certain judgments which throw light on the disputed issue. In case of Saraswati Sugar Mills Vs Commissioner of Central Excise Civil Appeal No.5295 of 2003 decided on 2nd Aug 2011 = 2011 (8) TMI 4 – SUPREME COURT OF INDIA Hon. Supreme Court of India observed: 12. In order to determine whether a particular article is a component part of another article, the correct test would be to look both at the article which is said to be component part and the completed article and then come to a conclusion whether the first article is a component part of the whole or not. One must first look at the article itself and consider what its uses are and whether its onl
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nstituent part of paper and would thus fall within the term "component parts" used in the Notification in so far as manufacture of paper in rolls is concerned. Paper core, however, cannot be said to be used in the manufacture of paper in sheets as component part. We are conscious that the relevant tariff item uses the word "paper" but since paper in rolls and paper in sheets are nothing but different forms of paper, both of them would be excisable goods as paper under the relevant tariff item." 15. In Modi Rubber Ltd. v. Union of India, (1997) 7 SCC 13 = 1997 (8) TMI 75 – SUPREME COURT OF INDIA, the appellant had set up tyre and tube manufacturing plant and imported various plants and machineries. While using the plants and machineries, PPLF (Polypropylene Liner Fabric) was used as a device in the form of liner components to various machinery units to protect the rubber-coated tyre fabric from atmospheric moisture and dust. This Court held that the PPLF was not
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n of the expression. In the State of Uttar Pradesh vs M/s. Kores (India) Ltd on 18 October, 1976, Equivalent citations: 1977 AIR 132, 1977 SCR (1) 837 = 1976 (10) TMI 131 – SUPREME COURT OF INDIA. In this case the appellant contended before the Hon SC that carbon paper does not lose its character as paper in spite of being subjected to chemical processes, and that ribbon is not an accessory but an essential part of the typewriter. While dismissing the appeal Court held that A word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. It has to be understood according to the well-established canon of construction in the sense in which persons dealing in and using the article understand it. The Hon.SC further observed that Bearing in mind the ratio of the above mentioned decisions, it is quite clear that the mere fact that the word paper forms part of the denomination of a specialized article is not
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Where it was held: Whether a typewriter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commercial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essential part of a typewriter so as to attract tax as per entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957. In light of the above discussions, considering the meaning of an expression (Part) as given in the dictionary and also the ratio as adopted by the Hon ble Courts as mentioned above besides common parlance test, we now take up each and every input claimed by the applicant to be parts of a warship/ submarine [as listed in Annexure B Of this ARA application] and discuss and find out whether each of the subject goods/ spares can be considered as parts of warship/ submarine. The classification of goods under Sr. No. 252 depends solely on the nature of use to which the goods are put to. We first
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tting gases, etc.), therein cannot be considered as parts of a warship/ submarine. They are essentially in the form of consumables and for reasons mentioned above cannot be considered as parts of a ship. We also find that the applicant has filed four addendums to Annexure B submitted by them. The first addendum to Annexure B is a P-75 Equipment List consisting of 153 items. We find that except the equipments mentioned in Sr. Nos. 48, 49, 51, 52, 65, 91, 136, 137, 138, 139, 140, 145, 146, 147, all other equipments can be considered to be parts of a warship/ submarine., for reasons mentioned above. The second addendum to Annexure B is a P-75 Raw Material List consisting of 54 items. We find that except the equipments mentioned in Sr. Nos. 2, 3, 10, 14, 18, 19, 25 to 54, all other equipments, except the items mentioned in Sr. No. 24, can be considered to be parts of a warship/ submarine., for reasons mentioned above. In Sr. No. 24, the details submitted by the applicant are not very clear
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om the Annexure B and Addendums to Annexure B, all other items can be considered as parts of a ship and therefore would be eligible to concessional rate of GST as contended by the applicant. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-28/2017-18/B-64 Mumbai, dt. 11/07/2018 For reasons as discussed in the body of the order, the questions are answered thus – Question 1:- Whether the expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry number 252 of the schedule 1 of the Notification No 01/2017-Integrated Tax (Rate) covers specific list of goods attached herewith (Refer Annexure B)? Answer:- As mentioned in the discussions above only those Annexure B items which are not listed above will be considered as parts of warship falling under 8906 and will be covered under entry number
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