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2019 (6) TMI 1584 - AAR - GSTClassification of goods - rate of GST - Filter Elements Air Filter Assembly as parts for Diesel Electric Locomotives for Indian Railways - classified under Tariff Heading - 8607 in GST regime or not? - HELD THAT - The Indian Railways had placed Purchase Orders for the manufacturing of Low mean pore size Primary Secondary Filter Elements , Air Filter 975 MR Filter Element by the party which they subsequently supplied to Indian Railways under the cover of invoices - After going through the Quality Assurance Plans (QAP) for low Mean Pore Size Primary Secondary Fuel Oil Filter Elements for Diesel Electric Locomotives and for Filter Air Dryer MR for ALCO (American Locomotive Company) Locomotives EMD (Electro-motive diesel) Locomotives as submitted by the party along with their said Advance Ruling Application, it is noticed that the said Quality Assurance Plans were duly approved by the competent Railway Authorities. It, therefore, appears that the party had manufactured the said goods as per the specifications of Railways, which they subsequently supplied to Railways. The term parts or accessories mentioned in Chapter 86 to 88 is applicable to those parts or accessories which are solely or principally being used with the articles of those chapters. Since, the aforesaid items manufactured by the party are being principally used for railway locomotives as per aforesaid Quality Assurance Plans duly approved by the competent Railway Authority, the same appears to be appropriately covered under Customs Tariff Heading No. 8607 as Parts of railway locomotives - It is also pertinent to mention that in pre-GST regime, the party in their ER-1 return for the month of March, 2017, as provided by them, had mentioned the clearances of goods as Parts of Railway or Tramway or Rolling Stock under CSH No. 8607 99 20. Applicability of tax rule under the GST Tariff/Act - HELD THAT - On the basis of the classification of the said product, it will be leviable to appropriate rate of Goods and Services Tax under the Heading No. 8607 prescribed under Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 issued under the Central Goods and Services Tax Act, 2017.
Issues involved: Classification of Filter Elements & Air Filter Assembly for Diesel Electric Locomotives under Tariff Heading 8607 in GST regime and applicable Tax Rate under the GST Tariff/Act.
Classification Issue Analysis: The applicant sought clarification on whether the Filter Elements & Air Filter Assembly are correctly classified as parts for Diesel Electric Locomotives under Tariff Heading 8607 in the GST regime. The applicant is licensed and approved by Indian Railways for manufacturing parts of locomotives to specific designs and drawings. The products supplied are exclusively used as parts for locomotives manufactured by Indian Railways. The applicant submitted relevant facts, including being an approved vendor with RDSO and supplying items under HSN Code 8607. The products are manufactured as per QAP approved by Indian Railways and are not commercially viable elsewhere. The Authority examined purchase orders, invoices, and Quality Assurance Plans submitted by the applicant, finding that the goods were manufactured as per Railway specifications and supplied accordingly. The Customs Tariff Heading No. 8607 covers 'Parts of railway or tramway locomotives or rolling-stock,' and the products being principally used for railway locomotives are appropriately classified under this heading. Tax Rate Issue Analysis: Regarding the applicable tax rate under the GST Tariff/Act, the Authority ruled that the products classified under Tariff Heading 8607 will be leviable to a 5% GST rate (2.5% SGST + 2.5% CGST) as prescribed under Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017 issued under the Central Goods and Services Tax Act, 2017. The ruling concluded that the Filter Elements & Air Filter Assembly are correctly classified as parts for Diesel Electric Locomotives under Tariff Heading 8607, and the applicable GST rate for these items is 5%. This detailed analysis of the judgment addresses the issues involved comprehensively, covering the classification of the products and the determination of the applicable tax rate under the GST Tariff/Act based on the specific facts and legal provisions considered by the Authority for Advance Ruling.
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