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2025 (3) TMI 728 - AAR - GSTClassification of fish finders - whether the product Fish Finder sold by them which are used by the fishermen to locate fish in the water forms parts of vessels falling under Chapter 8901 8902 8904 8905 8906 or 8907 and therefore chargeable to reduced tax @ 5% under Sr.No.252 of N/N. 1/2017 Central Tax (Rate) dated 28.06.2017? - HELD THAT - The Hon ble Supreme Court in the case of COMMISSIONER OF INCOME-TAX VERSUS VENKATESWARA HATCHERIES (P.) LTD. AND OTHERS 1999 (3) TMI 12 - SUPREME COURT has held that when the word is so defined in the Act it may be permissible to refer to dictionary to find out the meaning of that word as it is understood in common parlance . Explanatory Notes to Section XVII at General (III) Parts and accessories provides that Chapter 89 make no provisions for parts (other than hulls) or accessories of ships boats or floating structures. Such parts and accessories even if identifiable as being for ships etc. are therefore classified in other chapter in their respective headings. Whether the product Fish finder can be considered as a part of the vessels falling under Chapter heading 8901 8902 8904 8905 8906 or 8907? - HELD THAT - The items that are discussed as essential parts of a ship/vessel are such essential components of a vessel/ship without which the vessel would not be complete and would not exist. These are very integral for the functioning of the ship and can also be separated from the ship for repair/replacement. Refering to the definition of the word part it is found that part is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly the second definition of part also defines part as one of the pieces that together form a machine or some type of equipment. It is a fact that Fish Finders are manufactured for use on fishing vessels yachts and other vessels. However the vessels are complete even without the Fish Finders affixed on them. The case laws cited by the applicant in the case of GS Auto International Vs. CCE 2003 (1) TMI 700 - SUPREME COURT Hallmark Industries Vs. CCE 2000 (6) TMI 802 - CEGAT CALCUTTA Elgi Ultra Appliances Vs. CCE 1999 (7) TMI 422 - CEGAT CHENNAI were in respect of classification of the said goods under the Central Excise Tariff and to decide whether they should be classified as parts of the main goods for which they were designed or in their individual capacity. In the present case the issue involved is not the classification of Fish Finders but to decide the whether the Fish Finder is a part of vessels of Chapter headings 8901 8902 8904 8905 8906 or 8907. Conclusion - Fish Finders cannot be considered as a part of a vessel falling under headings 8901 8902 8904 8905 8906 or 8907.
1. ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is whether fish finders, used for locating fish underwater, qualify as "parts of goods" under headings 8901, 8902, 8904, 8905, 8906, and 8907, thereby falling under Entry 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, which would subject them to a 5% GST rate. 2. ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The legal framework involves the interpretation of Entry 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate), which provides a 5% GST rate for parts of goods under specified headings. The term "part" is not defined in the GST legislation, thus requiring reliance on common parlance and judicial precedents for interpretation. Various dictionary definitions and judicial decisions, such as those from the Supreme Court, were considered to understand the term "part" in its ordinary sense. Court's interpretation and reasoning: The Court examined whether fish finders could be considered as integral parts of vessels classified under headings 8901 to 8907. It emphasized that a "part" should be an essential component without which the main article (in this case, the vessel) cannot function. The Court referred to precedents where the meaning of "part" was discussed, emphasizing that it should be integral and necessary for the functioning of the whole. Key evidence and findings: The Court noted that fish finders are electronic devices used to enhance the functionality of fishing operations by detecting fish underwater. They are not essential for the basic operation or construction of a vessel. The Court also referenced guidelines from the Ministry of Agriculture and Farmers Welfare, which listed fish finders as part of a safety kit but not as mandatory equipment for vessels. Application of law to facts: The Court applied the definition of "part" to the facts of the case, concluding that fish finders do not meet the criteria of being integral components of vessels under the specified headings. The Court found that vessels can function without fish finders, which are auxiliary equipment rather than essential parts. Treatment of competing arguments: The applicant argued that fish finders are crucial for fishing vessels and should be classified as parts under the specified headings. The Court, however, found that the applicant's reliance on various judicial decisions was misplaced, as those cases dealt with classification issues under different contexts. The Court also noted that the applicant's interpretation of the guidelines was incorrect, as fish finders were not mandatory components. Conclusions: The Court concluded that fish finders do not qualify as parts of goods under the specified headings and are not eligible for the 5% GST rate under Entry 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate). 3. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "A part of a vessel is that piece of equipment/apparatus without which the vessel would be incomplete and would not be able to function." Core principles established: The judgment reinforced the principle that for an item to be considered a "part" of a larger whole, it must be integral and essential to the functioning of that whole. Auxiliary or optional equipment, even if used frequently, does not qualify as a "part" under the relevant legal framework. Final determinations on each issue: The Court determined that fish finders do not merit classification as parts of goods under headings 8901, 8902, 8904, 8905, 8906, and 8907, and therefore do not qualify for the reduced GST rate of 5% as per Entry 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate).
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