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2019 (4) TMI 455 - AAR - GSTClassification of goods - Geared Motor - combination of gear box and electric motors' - the product Gear Box is classified under the HSN Code 8483 , Electric Motors are classified under the HSN Code 8501 - whether the Geared Motor would be classified under the HSN Code 8483 or HSN code 8501? - Held that - The product Geared Motors is a combination of gear box and electric motors. Vide Notification No. 1/2017 C.T. (Rate) dated June, 28, 2017, tariff rates have been notified for the purpose of levy and collection of GST which has classified goods into 4 digit codes as per HSN. In the said Notification it has been specified that for the purpose of classification of goods, the section notes, chapter notes and the General Explanatory notes mentioned under Customs Tariff Act, 1975 would apply to classification of goods under the GST Act. Therefore the classification of the product is to be decided in terms of HSN. From the harmonious reading of Section notes 4 and 5 to Section XVI and the inclusion Note in 8501 and the exclusion Note in heading 8483 referred to above, the geared motors being a combination of machines that is Electric Motors and Gear Box intended to contribute together a cleared defined function to run industrial machineries with speed controlling mechanism, the Geared Motor is appropriately classifiable in the heading 8501. The jurisdictional officer has different view. He submits that Geared Motor is a machine consisting of two individual components interconnected. His view is that electrical motors when attached to Gear Box will no longer remain an electrical motor but a geared motor with altogether a different function that is transmission of mechanical power and speed from one shaft to another. Though the contention of the jurisdictional officer appears convincing, in view of the exclusion note under chapter heading 8483 and inclusive note to 8501, it would be against the scheme of HSN to agree with the jurisdictional officer s view. Thus, the Geared Motors supplied by the applicants fall under Tariff Heading 8501.
Issues Involved:
1. Correct classification of 'Geared Motor' supplied by the applicant under GST. Issue-wise Detailed Analysis: 1. Correct Classification of 'Geared Motor': Applicant’s Contentions: - Background: The applicant, M/s Premium Transmission Private Limited, manufactures and supplies industrial products, including 'Geared Motors,' a combination of gearboxes (HSN 8483) and electric motors (HSN 8501). Under the previous tax regime, the product was classified under HSN 8483 and taxed at 12.5%. - Technical Details: Geared Motors combine gearboxes and electric motors to control speed and increase torque. The primary function of the gearbox is to control the speed of the electric motor, converting speed into torque. - Manufacturing Process: The process includes material issuance, gear cutting, heat treatment, chamfering, grinding, assembly, testing, painting, and dispatch. - Legal Interpretation: The applicant argues that 'Geared Motors' should be classified under HSN 8501 based on the harmonized system of nomenclature (HSN) and section notes of the Customs Tariff Act, 1975. They cite a recent ruling by the Gujarat Authority of Advance Ruling, which classified a similar product under HSN 8501. - Explanatory Notes: The applicant refers to explanatory notes indicating that gearboxes combined with motors are classified under the same heading as the motor (HSN 8501). Concerned Officer’s Contentions: - Current Classification: The officer maintains that 'Geared Motors' should be classified under HSN 8483, as they are a combination of gearboxes and electric motors, and the primary function is mechanical power transmission. - Section Notes: The officer refers to section notes stating that composite machines contributing to a clearly defined function should be classified under the heading appropriate to that function. They argue that after attaching the gearbox to the electric motor, the product should be classified under HSN 8483. Authority’s Observations: - Competing Headings: The authority examines HSN 8483 (gearboxes) and HSN 8501 (electric motors). - Section Notes: They refer to section notes 4 and 5 of HSN, which state that machines consisting of individual components contributing to a clearly defined function should be classified under the heading appropriate to that function. - Explanatory Notes: They highlight the explanatory notes indicating that gearboxes combined with motors are classified under the same heading as the motor (HSN 8501). - Conclusion: Based on the section notes and explanatory notes, the authority concludes that 'Geared Motors' should be classified under HSN 8501, as they are a combination of gearboxes and electric motors intended to contribute to a clearly defined function of speed control and torque conversion. Final Order: - Classification: 'Geared Motors' supplied by the applicant fall under Tariff Heading 8501. - Tax Rate: The product is chargeable to tax at the rate of 18% under the GST regime. Conclusion: The Authority for Advance Ruling, Maharashtra, determined that 'Geared Motors' should be classified under HSN 8501 based on the harmonized system of nomenclature, section notes, and explanatory notes, and are subject to an 18% tax rate under GST.
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