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2021 (10) TMI 151 - AAAR - GSTClassification of goods - Marine-pressure tight and Non-Pressure tight cables, specially made and designed for use in the warship - whether the goods/parts used by the appellant are essential and integral parts of a submarine warship? - liable for GST @ 5% in terms of Sr. No. 252 of Notification No. 01/2017-CT (rate) dated 28.06.2017 or otherwise? - HELD THAT - Marine-Pressure Non-Pressure Tight Cables are essential and integral part of the warship as such these cables are customized and specially designed for use in submarine warship only under the sea and do not have any commercial application. These cables are used to supply the power to the various parts and equipments of the submarine warship for their functioning in Submarine Warship and also used in weapon launcher of the submarine warship. The use and application of the Marine-Pressure Non-Pressure Tight Cables clearly suggest that these cables are very much essential and integral parts of the submarine warship as such these cables are used ONBOARD warship and without these cables all the essential equipment would be rendered nonoperational and submarine warship would be ineffective during war operation. The use of cables for electrical or mechanical and instrumental functioning of the submarine warship is very essential and without these cables the supply of power would not be possible and all the equipment and machinery of submarine warship become non-functioning or we can say submarine warship itself may become non-operational and ineffective. Hence, Marine Pressure Tight cable and non-pressure tight cable are integral and essential for the functioning of the submarine warship. The marine pressure tight cables and non-pressure tight cables manufactured and supplied by the applicant to the Indian Navy are essential and integral parts of the submarine warship and hence the benefit of reduced rate of GST of 5% is available to the appellant as per Sr. No. 252 of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017.
Issues Involved:
1. Classification of Marine-Pressure Tight and Non-Pressure Tight Cables. 2. Applicability of GST rate @5% under Notification No. 01/2017-CT (Rate) dated 28.06.2017. 3. Determination of whether the cables are essential and integral parts of a warship. Issue-Wise Detailed Analysis: 1. Classification of Marine-Pressure Tight and Non-Pressure Tight Cables: The appellant, engaged in the manufacture and supply of various goods, including Marine-Pressure Tight and Non-Pressure Tight Cables, claimed these cables are essential parts of warships. These cables, classified under Tariff Heading No. 8544, are specially designed for use in warships. The Gujarat Authority for Advance Ruling (GAAR) initially ruled that the appellant did not provide sufficient evidence to classify these cables as integral parts of warships, citing the lack of details on their specific use and necessity in warships. 2. Applicability of GST rate @5% under Notification No. 01/2017-CT (Rate) dated 28.06.2017: The appellant argued that the supply of these cables should attract a GST rate of 5% as per Sr. No. 252 of Notification No. 01/2017-CT (Rate) dated 28.06.2017, which applies to parts of goods under headings 8901, 8902, 8904, 8905, 8906, and 8907. The GAAR initially denied this benefit, stating that the appellant failed to prove that the cables were essential and integral parts of warships. 3. Determination of whether the cables are essential and integral parts of a warship: The appellant provided a technical write-up and an End-User Certificate from the Rear Admiral of the Indian Navy, explaining that these cables are customized for warship applications, possess unique characteristics, and are essential for the functioning of various equipment on the warship. The cables are used in areas with high saltwater content and severe weather conditions, making them crucial for the operational effectiveness of the warship. Appellate Authority's Findings: The Appellate Authority reviewed the technical specifications, the End-User Certificate, and the clarification provided by the Indian Navy. It was noted that these cables are designed exclusively for warship applications, have no commercial use, and are integral to the operation of essential equipment on the warship. The authority concluded that the cables are indeed essential and integral parts of the warship, thereby qualifying for the reduced GST rate of 5%. Conclusion: The Appellate Authority modified the GAAR's ruling and held that the appellant is eligible to avail the benefit of GST @5% for the supply of Marine-Pressure Tight and Non-Pressure Tight Cables as per Sr. No. 252 of Notification No. 01/2017-CT (Rate) dated 28.06.2017. The ruling emphasized the importance of these cables in ensuring the operational effectiveness of warships, thereby justifying their classification as essential and integral parts.
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