2021 (12) TMI 467 - AAAR - GST

Classification of goods - coach work like switch board cabinet for railway coaches and locomotives - classified under HSN 8537 or not - HELD THAT - As per the appellant, the product in question is specifically designed as per specifications of Indian Railways and they supply it to Indian Railways only and nowhere else. It is also observed that though the Advance Ruling Authority has classified the products under Chapter Heading 8537 but the fact that aforesaid product is specifically designed as per specification of Indian Railways and supplied only to the Indian Railways is not discussed by the Authority. Though the Advance Ruling Authority differs with the appellant in the classification of the product in question, however the Authority was in unison with the appellant that the said Switch Board Cabinet which are specifically designed for Indian Railways, would be used for coach work only and nowhere else - Switch Board Cabinet merits classification under Chapter Heading 8607. In the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. 1999 (9) TMI 284 - CEGAT, NEW DELHI the Hon'ble Tribunal has observed that Sanitary wares are also designed for fitment into the coach and they would be classifiable under Heading 86.07 . The Switch Board Cabinet , specially meant for the Railways, as per the design and layout provided by them, are integral part of the coach and rightly classifiable under chapter heading 8607 of the Customs Tariff Act, 1975.

Summary

Issues Involved:
1. Classification of "Switch Board Cabinet" for railway coaches and locomotives.
2. Application of tariff interpretation and relevant circulars for classification.
3. Consideration of specific design and use for Indian Railways.
4. Reliance on case laws for classification of railway parts.

Detailed Analysis:

1. Classification of "Switch Board Cabinet" for Railway Coaches and Locomotives:
The primary issue is whether the "Switch Board Cabinet" should be classified under Chapter Heading 8537 or 8607. The appellant argued that the product should be classified under HSN 8607 as it is exclusively made as per specifications provided by RDSO and for Indian Railways. The Advance Ruling Authority initially classified it under HSN 8537.

2. Application of Tariff Interpretation and Relevant Circulars for Classification:
The appellant contended that the Advance Ruling Authority misinterpreted Circular No. 30/04/2018-GST dated 25/01/2018, which pertains to the rate of tax on goods supplied to Indian Railways but does not specify the classification of goods. The appellant argued that the classification should be under HSN 8607, as the product is defined as parts of coach work in the maintenance manual for LHB Coach.

3. Consideration of Specific Design and Use for Indian Railways:
The appellant emphasized that the "Switch Board Cabinet" is designed and manufactured strictly according to Indian Railways' specifications and is supplied exclusively to them. This specificity was not adequately considered by the Advance Ruling Authority in their initial classification under HSN 8537.

4. Reliance on Case Laws for Classification of Railway Parts:
The appellate authority reviewed several case laws to support the appellant's claim:
- Westinghouse Saxby Farmer Ltd Vs. Commissioner of Central Excise, Calcutta: The Supreme Court recognized the "suitability for use test" for parts used solely or principally with railway equipment, supporting classification under Chapter 86.
- Commissioner of Central Excise, Bangalore Vs. Sri Ram Metal Works: The Tribunal held that parts fabricated to specific railway designs fall under Chapter 86.
- Commissioner of C.Ex., Bangalore Vs. Ramsons Udyog (P) Ltd: Sanitary wares designed for railway coaches were classified under Heading 86.07.
- Sunflex Auto Parts Vs. Commissioner of C.Ex. (Appeals) Mumbai-II: Parts made for Indian Railways were classified under Sub-heading 8607.00.
- Mechanico Enterprises Vs. Commissioner of C.Ex, Calcutta-II: Aluminum water tanks designed for railway coaches were classified under 86.07.
- Diesel Components Works Vs. Commissioner of C.Ex. Chandigarh: Parts of internal combustion engines used exclusively for railway locomotives were classified under Chapter 86.
- Rail Tech Vs Commissioner of Central Excise, Chandigarh: Aluminum windows and doors made for railway coaches were classified under Heading 86.07.

Ruling:
The appellate authority concluded that the "Switch Board Cabinet," manufactured as per the specific design and layout provided by Indian Railways and supplied exclusively to them, should be classified under Chapter Heading 8607 of the Customs Tariff Act, 1975. The authority emphasized the product's specific use for railway coaches, aligning with the legal precedents and the "suitability for use test."

In summary, the appellate authority overruled the initial classification under HSN 8537 and determined that the correct classification for the "Switch Board Cabinet" is under Chapter Heading 8607, considering its exclusive design and use for Indian Railways.