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2018 (11) TMI 1267 - AAR - GSTClassification of manufactured item - automotive chains (i.e., silent chains used in petrol engines and roller chains used in diesel engines) - whether classified under HSN 8409 or 7315? Held that - It is evident that the items are transmission chains which are used in automotive engines and machinery for transmitting mechanical power from one shaft to another and are made of steel. They are articulated chains i.e. made of a series of links or plates which are driven by external sprockets and do not have any other assembly. The Applicant supplies these mainly to automotive industries where they are used in internal combustion engine, they synchronizes the rotation of the crankshaft and the camshaft(s) so that the engine s valves could open and close at proper time - It is seen that articulated link chains of steel such as roller chain, inverted tooth (silent) chains are included under 7315 irrespective of their intended use and whether they are cut to length or intended for particular use. In the instance case, the items are intended for internal combustion engines of automobiles, motorcycles etc. It is evident that Heading 7315 includes articulated link chains such as roller chains or silent chains which are used as transmission chains for engines of automobiles or machinery. Though these form parts of engines under Chapter 8407 or 8408, they are covered under definition of parts of general use which are specifically excluded from chapter heading 8409 - Therefore, articulated link chains ie. Roller chains supplied by the applicant are classifiable under CTH 73151100 and Inverted tooth chains or silent chains under CTH 73151290 of the Customs Tariff made applicable to GST. Ruling - Roller chains supplied by the applicant are classifiable under CTH 73151100 and Inverted tooth chains or silent chains under CTH 73151290 of the First Schedule to the Customs Tariff Act, 1975 as applicable to GST as per Explanation (iii) to Notification 1/2017 -Central Tax (Rate) dt 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dt 29th June 2017.
Issues Involved:
1. Classification of automotive chains (silent chains used in petrol engines and roller chains used in diesel engines) under HSN 8409 or 7315. Issue-Wise Detailed Analysis: 1. Classification of Automotive Chains: Applicant's Submission: The Applicant, engaged in the manufacture and sale of automotive chains used in motor engines, initially classified their products under HSN 8409, which pertains to parts suitable for use solely or principally with the engines of heading 8407 or 8408. However, due to customer insistence and industry feedback, they reclassified these products under HSN 7315, which pertains to chains and parts thereof, of iron or steel. They argued that automotive chains, despite being made to engine specifications, should be classified under HSN 7315 as per international classification and CBIC FAQs. Technical Write-Up and Examination: The automotive chains in question are timing chains or transmission chains used for transmitting mechanical power in automotive engines. These chains are made of steel and are articulated, consisting of a series of links or plates driven by external sprockets. The Applicant supplies these chains mainly to automotive industries where they synchronize the rotation of the crankshaft and camshaft(s) in internal combustion engines. Legal Provisions and Interpretation: The classification of goods under GST is guided by the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes. Chapter 7315 covers "Chain and parts thereof, of Iron and Steel" and includes articulated link chains such as roller chains and inverted tooth (silent) chains. These chains are explicitly mentioned under tariff headings 73151100 and 73151290, respectively. Exclusivity from Chapter 8409: Chapter 8409 covers parts suitable for use solely or principally with internal combustion engines of headings 8407 or 8408. However, Note 2 to Section XV defines "parts of general use" to include articles of heading 7315, which are excluded from Chapter 8409. The General Notes to Section XV further clarify that parts of general use, even if specialized for a particular use, are classified under their respective headings and not as parts of other articles. Conclusion: Given that articulated link chains such as roller chains and silent chains are specifically covered under heading 7315 as parts of general use, they are excluded from Chapter 8409. Therefore, the correct classification for the Applicant's products is under CTH 73151100 for roller chains and CTH 73151290 for inverted tooth (silent) chains. Ruling: "Roller chains" supplied by the applicant are classifiable under CTH 73151100, and "Inverted tooth chains or silent chains" are classifiable under CTH 73151290 of the First Schedule to the Customs Tariff Act, 1975, as applicable to GST per Explanation (iii) to Notification 1/2017 - Central Tax (Rate) dated 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dated 29th June 2017.
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