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2019 (10) TMI 560 - AAR - GSTClassification of goods - rate of GST - Railway Seat Parts Thereof exclusively used by Railways - HELD THAT - Central Board of Excise Customs has also vide Circular No. 15/90-CX.1 dated 07.05.1990 issued from F.NO. 13/2/90-CX.1 has Clarified that seats used in Railway Coaches are correctly classifiable under heading 9401. The applicant prior to GST regime were also classifying their product Seats for Railway Coaches under Heading 9401 and clearing the same to M/s. Railway Coach Factory. Further the Heading 9401 Seats (Other Than those of Heading 9402) Whether or Not Convertible Into Beds And Parts Thereof is exhaustive. Hence Seats even if they are meant to be fitted in railways coaches would be covered under this heading - Therefore the product Seats for Railway Coaches would be covered in this heading only under 94018000.
Issues Involved:
1. Classification of 'Railway Seats' and parts thereof under the GST regime. 2. Applicability of GST rate on the supply of 'Railway Seats' to Rail Coach Factory (RCF). Detailed Analysis: Classification of 'Railway Seats' and parts thereof under the GST regime: The applicant, M/s. Sutlej Coach Products Pvt Ltd., is an exporter of various engineering goods including railway seats. They were previously paying Central Excise Duty at 12.5% under HS Code 9401. With the introduction of GST, there is a dispute regarding the correct GST rate applicable to railway seats supplied to Rail Coach Factory (RCF). The applicant contends that the GST rate should be 18% under HS Code 9401, while RCF asserts it should be 5% under HS Code 8607. Applicability of GST rate on the supply of 'Railway Seats' to Rail Coach Factory (RCF): The applicant sought an advance ruling on the classification and GST rate applicable to railway seats and parts thereof exclusively used by Railways. Eligibility for Advance Ruling: The application is deemed eligible under Section 97(2)(a) of the CGST Act, 2017, which pertains to the classification of goods. Submissions by the Applicant: The applicant reiterated their stance on the classification and GST rate, highlighting the discrepancy between their interpretation (18% under HS Code 9401) and that of RCF (5% under HS Code 8607). Hearing: During the hearing, the applicant's representative presented clarifications from the CGST office. Despite attempts to resolve the issue, RCF did not cooperate, leading the applicant to seek a final ruling. Discussions and Findings: 1. Importance of Classification: The classification of goods under GST is crucial due to the multi-rate tax structure. It must be done according to the Harmonized System of Nomenclature (HSN) and the rules of interpretation. 2. Supreme Court Precedents: The classification should follow the rules of interpretation rather than trade parlance, as established in CCE vs Wood Polymers Ltd and OK Play (India) Ltd v CCE. 3. Tariff Act Sections: Chapters 94 and 86 fall under different sections of the Tariff Act. Chapter 94 covers "Miscellaneous Manufactured Articles" including seats, while Chapter 86 covers "Vehicles, Aircraft, Vessels and Associated Transport Equipment." 4. Specific vs. General Description: Rule 3(a) of the Rules for Interpretation of Customs Tariff favors headings with specific descriptions over general ones. Chapter Heading 9401 specifically classifies seats, while Chapter Heading 8607 does not. 5. Sub-heading Details: Detailed examination of sub-headings under 9401 and 8607 reveals that 9401 explicitly covers various types of seats, whereas 8607 pertains to parts of railway rolling stock, not seats. 6. Chapter Note 2 of Chapter 86: This note clarifies that seats are not included under Chapter 86, which deals with parts like axles, wheels, and brakes. 7. CBEC Circular: A 1990 circular from the Central Board of Excise & Customs confirmed that seats used in railway coaches should be classified under heading 9401. 8. Exhaustive Nature of Heading 9401: This heading covers all types of seats, including those for railway coaches, aircraft, and motor vehicles. Therefore, railway seats should be classified under 9401. Ruling: The product 'Seats for Railway Coaches' manufactured by M/s. Sutlej Coach Products Pvt Ltd. for M/S Rail Coach Factory falls under Heading 9401 and attracts GST at 18%.
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