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2021 (1) TMI 495 - AAR - GSTClassification of supply - rate of GST - HSN Code - supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing directly to the Railway Authorities as per the Order received from M/s Trio Enterprise - fall under HSN 86040000 classified under Chapter 86 and should be taxed GST @ 5% or otherwise? - HELD THAT - The applicant is having factory at Survey No. 428/1, Village-Nana Fofalia, Dabhol, Vadodara, Gujarat-391210, engaged in the manufacture of Wear plats Tampering tools. The Wear Plates and the Tamping Tools' are used in the Ballast Cleaning Machine and the Tie Tamping Machine, respectively. These machines are used for the servicing and maintenance of the railway track lines - Further, we have also perused the photographs of both the products, viz. Wear Plates Tamping Tools' along with the photographs of Railway Track Maintenance Machines viz. Ballast Cleaning Machinery Tie Tamping Machinery, the place where both the products are fixed in the abovementioned machineries and working of the same and it is found that the Ballast Cleaning Machine and the Tie Temping Machine are self-propelled Track Maintenance Vehicles of the Railway. The Ballast Cleaning Machine is used to clean ballast (Grit/Kapachi) and without Wear Plates it cannot run. Whereas, the Tie Tamping Machine is used for ballast (Grit/Kapachi) tamping work. Tamping Tools is the key component of the Tie Tamping Machine, which get wear out after few days of working due to friction between ballast and tools. These tools required being replaced time to time to keep the machine and in turn the railway track working. Thus, Wear plates and Tamping tools supplied by the applicant are having specific use and are essential parts of the Ballast Cleaning Machine and the Tie Tamping Machine of railways, respectively. Thus, the applicant has specifically manufactured the products, viz. Tamping Tool and Wear Plates as per RDSO drawings of the Railway and supplied the same to M/s Trio Enterprise, which ultimately supplied as a back to back supply to the Railways by M/s Trio Enterprise. Said Wear plates and Tamping tools are having specific use and are essential parts of the Railway Track Maintenance Vehicles viz. the Ballast Cleaning Machine and the Tie Tamping Machine. As per Explanatory Notes to HSN code 86.04, the vehicles covered by this heading, whether or not self-propelled, are specially designed for use e.g. in the installation, servicing and maintenance of the permanent way and structures alongside tracks. It further states that the heading includes Self-propelled Vehicles for track maintenance (in particular, railway track lines) equipped with one or more engines which not only power the working machines mounted thereon (i.e. track-setters, ballast tampers etc.) and propel the vehicle while work in progress but also enable it to travel rapidly along the track, as a Self-propelled Unit, when the working machines are not in operation - Thus, the Chapter sub-heading No.8604 00 00 covers only the Railway or Tramway Maintenance or Service Vehicles whether or not Self Propelled . However, this sub-heading is totally silent about the parts of the said vehicles. The classification of the Wear plates and Tamping Tool manufactured specifically as per RDSO Drawing and supplied to the Railways through M/s Trio Enterprise, being a parts of a self-propelled track maintenance vehicles (viz. the Ballast Cleaning Machine the Tie Tamping Machine), under chapter sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock), and, hence, same will attract GST @ 5% under S. No. 241 of the Schedule I till 30.09.2019 and w. e. f. 01.10.2019, @12% under S. No.205G of the Schedule-II to the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017, as amended.
Issues Involved:
1. Classification of Wear Plates and Tamping Tools under HSN code. 2. Applicable GST rate for Wear Plates and Tamping Tools. Detailed Analysis: Issue 1: Classification of Wear Plates and Tamping Tools under HSN code Applicant's Submission: - The applicant is engaged in manufacturing Wear Plates and Tamping Tools as per RDSO specifications, used in Ballast Cleaning Machines and Tie Tamping Machines for railway track maintenance. - The applicant argued that these items should fall under HSN code 86040000, classified under Chapter 86, as they are parts of track maintenance vehicles. Authority's Discussion and Findings: - The Wear Plates and Tamping Tools are essential parts of Ballast Cleaning Machines and Tie Tamping Machines, which are self-propelled track maintenance vehicles used by railways. - The Chapter 86 sub-heading 8604 00 00 covers "Railway or Tramway Maintenance or Service Vehicles whether or not Self Propelled" but does not specifically mention parts of these vehicles. - Classification of parts and accessories of vehicles under Chapter 86 is provided under sub-heading 8607, which includes "Other Parts of railway or tramway locomotives or rolling stock." Conclusion: - The Wear Plates and Tamping Tools, being parts of the Ballast Cleaning Machine and Tie Tamping Machine, are classified under sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock). Issue 2: Applicable GST rate for Wear Plates and Tamping Tools Applicant's Submission: - The applicant cited Notification No. 1/2017-Central Tax (Rate) and Circular No. 30/4/2018-GST, claiming that the items should be taxed at 5% GST as they fall under Chapter 86. - The applicant also referenced Notification No.14/2019-Central Tax (Rate), which amended the tax rate to 12% w.e.f. 1st October 2019. Authority's Discussion and Findings: - Goods of Chapter heading 8604 and 8607 attract GST @ 5% as per entry Nos. 238 & 241 of Schedule I of Notification No.01/2017-Central Tax (Rate). - Circular No.30/4/2018-GST clarified that goods classified under Chapter 86 supplied to railways attract a 5% GST rate. - Notification No.14/2019-Central Tax (Rate) amended the GST rate for Chapter heading 8604 and 8607 to 12% w.e.f. 1st October 2019. Conclusion: - The Wear Plates and Tamping Tools, classified under sub-heading 860799, attract GST @ 5% under S. No. 241 of Schedule I till 30.09.2019 and @12% under S. No.205G of Schedule II w.e.f. 01.10.2019. Ruling: Question: Whether supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing, directly to the Railway Authorities as per the Order received from M/s Trio Enterprise, should fall under HSN 86040000 & classified under Chapter 86 and should be taxed GST @ 5%? Answer: No. The products, “Wear plates” and “Tamping Tool” manufactured specifically as per RDSO Drawing and supplied to the Railways through M/s Trio Enterprise, being parts of self-propelled track maintenance vehicles (viz. the Ballast Cleaning Machine & the Tie Tamping Machine), are classifiable under chapter sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock), and, hence, same would attract GST @ 5% under S. No. 241 of the Schedule I till 30.09.2019 and w.e.f. 01.10.2019, @12% under S. No.205G of the Schedule-II to the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017, as amended.
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