2021 (2) TMI 1226 - AAR - GST

Classification of goods - rate of GST - supply of below Duct to RDSO Ministry of Railways for use in Indian Railway Coaches - whether will fall under the HSN Code 8607 having GST Rate of 12% or will it fall under the HSN 8424 having GST Rate of 18%? - HELD THAT - The classification of goods under Chapter Heading 8607 does not include 'bellow Sets (or Bellow Ducts). It only refers to parts of railway such as bogies, bissel-bogies, axels, wheels, brakes, hooks and parts thereof, in a general way; whereas, Chapter Heading 8424 clearly includes 'Bellow' . Thus from a reading of Note 2 (e) to Section XVII of the Customs Tariff and Note 2 to Chapter 86 of the Customs Tariff, the applicant's product, 'Bellow Ducts' are classifiable under HSN 8424. Circular No. 30/4/2018-GST dated 25.01.2018 of the Government of India, Ministry of Finance, Department of Revenue (Tax and Research Unit), New Delhi has issued clarification on classification of supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86. As per the said Circular, only goods, classified under Chapter 86, supplied to the railways attract 5% GST rate with no refund of unutilised input tax credit and other goods falling in any other chapter , would attract the general applicable GST rates to such goods, under the aforesaid notifications, even if supplied to the railways. Therefore, it is very clear that, any product other than those covered under Chapter 86, supplied to the railways would not qualify for the HSN 8607 and are not to be considered as a parts of railway coaches, even if supplied to the railways. Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes. The subject Bellow Sets (or Bellow Ducts), though to be used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for Bellow and therefore, the Bellow Sets (Bellow Ducts) merit classification under HSN 8424 and it is covered in the Entry no. 325 of Schedule III of Notification No. 1/2017 C.T. (Rate) dt. 28.06.2017 and attract GST @18%.

Summary

Issues:
Classification and GST rate on the supply of "Bellow Duct" to RDSO Ministry of Railways for use in Indian Railway Coaches.

Analysis:
The applicant, engaged in the supply of "Bellow Duct" for Indian Railway Coaches, sought an advance ruling on the HSN Code and GST rate for their product. The applicant believed that the supply falls under Chapter 86 of the CGST Rate Schedule, attracting a GST rate of 12%. However, the Jurisdictional GST Officer opined that the correct classification should be under sub-heading 8607, with a GST rate as per the present tariff. The applicant presented their case, emphasizing the relevance of Chapter 86 to their product.

Upon detailed examination, the Authority noted discrepancies between the applicant's product description and the Customs Tariff Act. The Customs Tariff Act classified Industrial Bellows under HSN 8424, which covers mechanical appliances for projecting liquids or powders. The applicant had considered HSN 8607 for their product, but this chapter pertains to parts of railway locomotives or rolling stock. The Authority highlighted that the applicant's product did not fit within the categories specified under Chapter 86.

Further, the Authority referred to Circular No. 30/4/2018-GST, clarifying that only goods classified under Chapter 86 and supplied to railways attract a reduced GST rate. Products falling under other chapters, even if supplied to railways, are subject to general GST rates. Therefore, the Authority concluded that the applicant's "Bellow Ducts" should be classified under HSN 8424, attracting an 18% GST rate. This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh, subject to relevant provisions of the CGST Act, 2017.