2022 (7) TMI 406 - AAR - GST

Scope of advance ruling - the issue is under investigation - Classification of goods - Air Spring Failure Indication cum Brake Application (FIBA) - goods proposed to be manufactured and supplied solely and principally for use in Railways - to be classified under 86072100 - Air Brakes and parts thereof of Section XVII or not? - HELD THAT - The DGGSTI, Coimbatore based on the intelligence that the applicant are supplying parts to Indian Railways classifying all the products uniformly under Chapter 86, while most supplies should have been classified under respective chapter 84/85, have visited the applicant factory on 02.05.2019 and has recorded Statements drawn Mahazar on the same day. Further DGGI vide letter dated 24.06.2019 has addressed the applicant to pay the short payment arising out of the wrong classification and the applicant has replied on 04.07.2019 as can be seen in the SCN No. 16/2022-GST dated 28.03.2022. Further, in the said notice from para 3.9 it is seen that a letter was addressed to the applicant seeking the details of clearance of goods @ 5% for the period from 01.07.2017 to 31.12.2019, which was furnished by them vide e-mail dated 11.06.2020 and on continuing communications, the applicant has provided the technical write-up for FIBA on 02.02.2022. The Investigation Agency has analysed the classification of FIBA (as can be seen in para 5.9.2 and 5.14 of the SCN), which is the clarification sought, as a part of the Proceedings initiated by them with the visit to the applicant factory on 02.05.2019, based on the Intelligence collected by them. The first proviso to Section 98(2) of the Act, states that where the question raised is pending or decided in any proceedings under this Act, the same is not eligible for admission before this authority. It is clear that classification of FIBA, manufactured and supplied to Indian Railways by the applicant has been a part of the investigation proceedings under Authorisation for Inspection dated 01.05.2019 issued under Section 67 of the Act which establishes that the question raised before us is a part of the proceedings of DGGSTI and therefore squarely covered under proviso to Section 98(2) of the Act. The application is not admissible before this authority for ruling on merits and accordingly not admitted.

Summary

Issues:
Classification of Air Spring Failure Indication cum Brake Application (FIBA) for use in Railways under Section XVII.

Analysis:
The applicant, a registered vendor of Indian Railways, sought an Advance Ruling on the classification of FIBA solely for Railways use. FIBA is a customized product for Indian Railways, indicating air spring failure and applying brakes. The applicant argued FIBA qualifies under Section XVII, Chapter 86, as it is exclusively for Air Brakes of railways, citing the Westinghouse Saxby Farmer Ltd case. The applicant clarified no dispute existed on FIBA's classification as per SCN No. 16/2022.

The Centre Jurisdictional Authority issued a demand notice for classifying products under Chapter 84 instead of 86, demanding a substantial amount. The State Jurisdictional Authority confirmed no pending proceedings. The ruling authority examined the admissibility of the application under Sections 97/98 of the CGST Act. It was noted that the question on FIBA's classification was already part of an investigation by DGGI, making the application inadmissible as per Section 98(2) proviso.

The ruling concluded that the application was not admissible under the first proviso to Section 98(2) of the CGST/TNGST Act 2017 due to the ongoing investigation by DGGI. Therefore, the ruling authority could not provide a decision on the classification of FIBA.