2020 (2) TMI 1471 - AAR - GST

Classification of goods - Coach Work like Roof Mounted AC Package Unit for passenger coaches - to be classified under Chapter Sub Heading 86079910 or otherwise? - HELD THAT - The Roof Mounted AC Package Unit , specially meant for the Railways, as per the design and layout provided by them, are integral part of the coach and rightly classifiable under chapter 86.07. In the instant case, the Roof Mounted AC Package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in railway coaches and nowhere else. Accordingly, we observe that the ratio of the above referred judgments is squarely applicable in the instant case that the Roof Mounted AC Package Unit are the interior fittings inside the Coach and they are suitably classifiable under Tariff heading 86079910 i.e. Parts of Coach work of railways running stock . The classification of the Roof Mounted AC Package Unit , manufactured as per the specific design and layout provided by the Railways (RDSO) and supplied to the Indian Railways only and no-where else, falls under Chapter 86.07 of the GST Tariff.

Summary

Issues: Classification of Coach Work like Roof Mounted AC Package Unit for passenger coaches.

Analysis:
The case involved M/s. Prag Polymers, a partnership firm manufacturing locomotive and coach parts approved by RDSO. The applicant sought clarification on the classification of the "Roof Mounted AC Package Unit" for passenger coaches under chapter heading 8607. The applicant argued that the item should be classified as Coach Work under Tariff heading 8607 based on Chapter note 2 of Chapter 86. The Jurisdictional GST Officer supported this classification.

The Authority for Advance Ruling examined the issue raised by the applicant, which fell under Section 97(2)(a) of the CGST Act related to the classification of goods. The Authority noted that Chapter 86 of the GST Tariff covers Railway or Tramway Locomotive, Rolling-Stock, and Parts thereof. It highlighted Chapter Note 2, which includes axles, wheels, frames, bogies, and coachwork under heading 8607. The exclusion clause under Chapter 86 was also considered.

The Authority referenced a Tribunal case regarding the classification of containers designed for fitment into coaches, emphasizing that items integral to the coach's functionality should be classified under chapter 86. Applying this analogy, the Authority concluded that the "Roof Mounted AC Package Unit," specifically designed for Railways and integral to the coach, should be classified under chapter 86.07 as parts of Coach work of railway running stock.

The Authority cited several Tribunal cases supporting the classification of items designed for fitment into coaches under heading 86.07. It emphasized that the "Roof Mounted AC Package Unit" manufactured as per Railways' specifications and solely for use in railway coaches should be classified accordingly. The ruling declared that the item falls under Chapter 86.07 of the GST Tariff, valid subject to relevant provisions of the CGST Act, 2017.