2021 (12) TMI 724 - AAR - GST

Classification of goods - CNG Dispenser manufactured and supplied by the Applicant - covered in SL. No. 422, Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017 as amended and corresponding notification issued under integrated GST and State GST Act - HELD THAT - The impugned product causes the CNG to flow from the filling station to the CNG Tank of the vehicle. Thus there is a flow of gas in one particular direction and it is the CNG Dispenser which is causing the CNG to move from one place to another. Thus the impugned product is also functioning as a pump in view of the definitions. It can therefore be said that CNG fuel dispensers are used for distribution of Compressed Natural Gas (CNG) which is a fuel and as per the submissions of the applicant, they are equipped with electronic counters of quantity and price of pumping. Chapter Heading 8413 11 of the GST Tariff covers Pumps for dispensing fuel or lubricants of the type used in filling stations or garages . The impugned product is designed to dispense fuel, in this case CNG, which are used in filling stations, and acts as a pump which causes CNG, a gas, to move from one place to another. Thus the impugned product can be said to be a type of pump which are used for dispensing fuel and are therefore classifiable under HSN 8413 11 91 of the GST Tariff - Section XVI of the GST Tariff covers Chapter Heading 84 and 85 of the GST Tariff. Note 1 (m) of the Section Notes states that, articles of Chapter 90 of the GST Tariff are not covered under Section XVI i.e. Chapters 84 and 85 of the GST Tariff. Further primary function of the impugned product is to dispense CNG Fuel and has an inbuilt mechanism to constantly measure and regulate the mass of Gas being transferred to the vehicle. The impugned product is covered under Chapter Heading 8413.11 of the GST Tariff, it is not covered under in SL. No. 422, Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017 as amended as the impugned product cannot be classified under Chapter 90.32 of the GST Tariff.

Summary

Issues Involved:
1. Classification of CNG Dispenser under GST Tariff.
2. Determination of the appropriate HSN code for CNG Dispenser.
3. Applicability of specific GST rates based on classification.

Detailed Analysis:

1. Classification of CNG Dispenser under GST Tariff:
The applicant, M/s. Parker Hannifin India Pvt. Ltd., manufactures and supplies Compressed Natural Gas (CNG) Dispensers used in CNG dispensing stations for vehicles. The primary function of the CNG Dispenser is to measure and regulate the mass and pressure of CNG being transferred to the vehicle to ensure the rated pressure capacity of the CNG tank is not exceeded. The applicant initially classified the CNG Dispenser under Heading 84.13, which covers "pumps for dispensing fuel of the type used in filling stations or garages." However, the applicant contends that the CNG Dispenser does not have a pump or a pumping function and therefore should not be classified under Heading 84.13.

2. Determination of the Appropriate HSN Code for CNG Dispenser:
The applicant argues that the CNG Dispenser should be classified under Heading 90.32, which covers "Automatic regulating or controlling instruments and apparatus." According to the applicant, the CNG Dispenser meets the criteria for classification under Heading 90.32 as it measures, regulates, and controls the flow and pressure of CNG being dispensed into the vehicle. The applicant further supports their argument by referencing the HSN Explanatory Notes, which state that Heading 90.32 includes instruments and apparatus for automatically controlling the flow, level, pressure, or other variables of liquids or gases.

3. Applicability of Specific GST Rates Based on Classification:
The jurisdictional officer argues that the CNG Dispenser should be classified under Heading 84.13 as it is used to dispense fuel, and therefore, it falls under the category of "pumps for dispensing fuel or lubricants of the type used in filling stations or garages." The officer contends that the primary function of the CNG Dispenser is to transmit fuel, and as per Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017, it should be classified under Heading 84.13, making it liable to a GST rate of 14% CGST and SGST each or 28% IGST.

Observations and Findings:
The Authority for Advance Ruling (AAR) examined the definitions of "pump" from various dictionaries and concluded that the CNG Dispenser functions as a pump by causing the CNG to flow from the filling station to the CNG tank of the vehicle. The AAR noted that the CNG Dispenser is designed to dispense fuel (CNG) and is equipped with electronic counters for measuring the quantity and price of the fuel being dispensed. The AAR referred to Chapter Heading 8413 11 of the GST Tariff, which covers "Pumps for dispensing fuel or lubricants of the type used in filling stations or garages," and concluded that the CNG Dispenser falls under this category.

Conclusion:
The AAR ruled that the CNG Dispenser manufactured and supplied by the applicant is correctly classified under Heading 8413 11 of the GST Tariff as a pump for dispensing fuel. Consequently, the CNG Dispenser is not covered under Sr. No. 422, Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017, and the appropriate classification is under Heading 8413 11, making it liable to the applicable GST rate for this heading.

Order:
The question of whether the CNG Dispenser is correctly covered in Sr. No. 422, Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017, is answered in the negative.