2022 (2) TMI 712 - AAR - GST

Classification of supply - rate of GST - supply of Outboard Motors to unregistered fishermen - to be classified under 8407 or 8408? - HELD THAT - The transaction relating to the question sought by the applicant is verified. It is an admitted fact that marine engines under Customs Tariff Heading 8407 21 00- Outboard motors -Marine Propulsion engines. Further the Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and is liable to GST at the rate of 5% as per entry at SI.No.247 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017 - In the instant case, the applicant admitted to be supplying marine engines (HSN 8407 21 00) and spares for fishing vessels (HSN 8902) as parts of the same. Thus, marine engines and spare parts used for fishing vessels (being part of the fishing vessel) attract 5% GST. If marine engine is supplied for use other than as parts of fishing vessels, the rate of GST is applicable under the respective Customs Tariff Headings in which they are classified. The Outboard motors (marine engine) and its spare parts supplied for fishing vessel (for use as part of the fishing vessel- CTH 8902) shall attract GST at the rate of 5% as per entry at Sl.No.252 of Schedule I of Notification No.01/ 2017 Central Tax (Rate) dated 28.06.2017. If it is supplied for use other than as parts of fishing vessels GST shall be applicable at the rate of tax on such goods under the respective Customs Tariff Heading classified.

Summary

Issues:
Rate of GST on supply of Outboard Motors to unregistered fishermen and HSN Code classification.

Analysis:
The applicant, a Partnership Firm engaged in retail and wholesale supply of marine equipment, sought an advance ruling on the GST rate and HSN code for Outboard Motors supplied to unregistered fishermen. The admissibility of the application was confirmed under Section 97(2)(a)(e) of the CGST/KGST Act 2017. The applicant clarified that they import Outboard Motors at 28% and sell them to fishermen at 5% GST. They also provided examples of spare parts classifications and referenced relevant circulars and AAR rulings.

During the personal hearing, the applicant's Chartered Accountant reiterated the contentions. The Authority noted the similarity between CGST and SGST Acts and considered all submissions and facts. It was established that Outboard Motors fall under Customs Tariff Heading 8407 and Fishing vessels under Heading 8902, attracting 5% GST. The applicant supplies marine engines and spare parts as parts of fishing vessels, subject to 2.5% CGST as per Schedule I of Notification No.01/2017.

The CBIC circular clarified that marine engines and spare parts for fishing vessels attract 5% GST. If used for other purposes, GST applies as per the respective Customs Tariff Headings. Consequently, the ruling stated that Outboard Motors and spare parts supplied for fishing vessels attract 5% GST. If used differently, GST applies based on the relevant Customs Tariff classification.

In conclusion, the ruling determined that Outboard Motors and spare parts supplied for fishing vessels are subject to 5% GST, while other uses are taxed based on the respective Customs Tariff classification.