2019 (7) TMI 1453 - AAR - GST

Classification of goods - geared motor - whether classified under 8501 or under 8483 for the purpose of payment of GST? - gears and gearings or not? - rate of CGST/SGST as per N/N. 1/2017-C.T. (Rates) and GO (Ms) No. 62, dated 29-6-2017 - HELD THAT - The applicant is engaged in the manufacture of Geared motors which consists of Electric motor and Gear boxes. Electric Motor is a bought out item either locally or imported from their related party. Gear reducers or gear boxes are imported from their related party. Both are assembled in India by the applicant depending on the specifications given by their buyers. Gear motor is a single unit consisting of gear box and electric motor, coupled and integrated. Classification of Geared Motor - HELD THAT - The gear boxes of all kinds are classifiable under Tariff Heading 8483. The Explanatory Notes to 8483 clearly specify that this heading does not cover gear boxes combined with a motor and they are to be classified in the same heading as motor - composite machines with individual components intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, than the whole falls to be classified in the heading appropriate to that function and are to be classified as being that machine which performs the principal function. In the purchase order and sale invoice of the applicant it is seen that the supply is a geared motor which is a single supply and not two individual supply of gear boxes and electric motors. They are fitted together, assembled and supplied by the applicant. Therefore, this is not a mixed supply as claimed by the applicant. In view of the above, it can be held that the 'Gear Motor' is rightly to be classified under CTH 8501. Whether the gear motors can be considered as 'gears' and 'gearings'? - scope of Advance Ruling - HELD THAT - The Act limits the Advance Ruling Authority to decide the issues earmarked for it under Section 97(2) and no other issue can be decided by the Advance Ruling Authority. The question raised does not fit in any of the clauses of Section 97(2) of the CGST Act / Tamil Nadu GST Act (TNGST) and therefore not answered for the reason not within the ambit of this authority. Whether the rate of CGST/SGST as per Notification No. 1/2017-C.T. (Rates) and GO (Ms) No. 62, dated 29-6-2017 is - (a) 9% as per Schedule-Ill (Sl. No. 372); (OR) (b) 9% as per Schedule-Ill (Sl. No. 369A); (OR) (c) 14% as per Schedule-IV (Sl. No. 135)? - HELD THAT - The rate applicable to 'Gear motors' classifiable under CTH 8501 is 9% CGST/SGST as per Sl. No. 372 of Schedule III of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and Notification No. vide G.O. (Ms) No. 62, dated 29-6-2017 as amended.

Summary

Issues Involved:
1. Classification of geared motor under GST: whether under 8501 or 8483.
2. Consideration of geared motor as gears and gearings.
3. Applicable rate of CGST/SGST for geared motor.

Detailed Analysis:

Issue 1: Classification of Geared Motor under GST
The applicant, M/s Rossi Gear Motors India Private Limited, sought clarification on whether the geared motor should be classified under heading 8501 or 8483 for GST purposes. The applicant argued that the principal function of the geared motor is the transmission of power by changing speed and torque, which aligns with the function of a gearbox (8483). However, the ruling noted that the Explanatory Notes to 8483 exclude gearboxes combined with a motor, stating they should be classified under the same heading as the motor (8501). The geared motor integrates a gear reducer with an electric motor, thus performing the principal function of converting electrical energy to mechanical energy. Consequently, the ruling determined that the geared motor should be classified under CTH 8501.

Issue 2: Consideration of Geared Motor as Gears and Gearings
The applicant posed whether the geared motor could be considered as gears and gearings. The ruling found that the question did not fit within the scope of issues that the Advance Ruling Authority is authorized to address under Section 97(2) of the CGST Act / Tamil Nadu GST Act. Therefore, this question was not answered.

Issue 3: Applicable Rate of CGST/SGST for Geared Motor
The applicant sought to determine the applicable rate of CGST/SGST for the geared motor. Based on the classification under CTH 8501, the ruling referred to Sl. No. 372 of Schedule III of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017, which specifies a 9% CGST/SGST rate for electric motors and generators (excluding generating sets). Therefore, the applicable rate of CGST/SGST for the geared motor is 9% each.

Ruling:
1. The 'Gear Motors' supplied by the applicant are to be classified under CTH 8501.
2. The question of whether the gear motors can be considered as gears and gearings is not answered as it is not within the purview of Section 97(2) of the Act.
3. The rate of CGST/SGST applicable on the 'Gear Motors' is 9% CGST and 9% SGST as per Sl. No. 372 of Schedule III of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017.