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2022 (7) TMI 1097 - AAR - GSTClassification of goods - Roof Mounted AC package Unit - to be classified under chapter 86079910 or not? - HELD THAT - Ongoing through the exclusion clause of the Chapter 86 of the GST Tariff, it is found that the product Roof mounted AC package unit is not covers in the exclusion clause of Chapter 86 and parts of Railway and tramway is covers under chapter 86. In the case of COMMISSIONER OF C. EX., BANGALORE VERSUS SRI RAM METAL WORKS 1997 (11) TMI 265 - CEGAT, MADRAS the Hon'ble Tribunal has observed that In the case of railways, it goes without saying that the provision of water in the coach is a necessity and the coach can be taken to be complete with the fitment of the water tank. More so, when the water tank becomes ports of the coach itself Tariff Heading 8607 for assessment of the water tank - By applying the same analogy in the instant case also, we observe that the Roof Mounted AC Package Unit , 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 86.07. Further, applying the same analogy, in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. 1999 (9) TMI 284 - CEGAT, NEW DELHI the Hon'ble has observed that the Sanitaryware are also design for fitment into the Coach they would be classifiable under Heading 86.07 . Thus, the Roof Mounted AC package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in Railway coaches and nowhere else - further, it is observed that as per Section Notes and Chapter Notes, parts suitable for use solely or Principally with the articles of those chapters are covered under chapter 86 to 88. Thus, the classification of the Roof mounted AC package Unit manufactured as per the specific design and layout provided by the railways (RDSO) and supplied to the Indian Railways only and no where else, falls under chapter 86.07 of the GST Tariff.
Issues Involved:
1. Classification of Roof Mounted AC Package Unit under GST Tariff. 2. Applicability of Chapter 86 of GST Tariff for parts and accessories used solely or principally with railway coaches. Detailed Analysis: Issue 1: Classification of Roof Mounted AC Package Unit under GST Tariff The applicant, M/s Daulat Ram Engineering Services Pvt Ltd, sought an advance ruling on whether the Roof Mounted AC Package Unit, manufactured as per specifications and drawings issued by organizations under the Ministry of Railways, falls under Chapter Heading 8607 of the GST Tariff. The applicant argued that the product is designed exclusively for railway coaches and cannot be used elsewhere, thus fitting the criteria of Chapter 86. Issue 2: Applicability of Chapter 86 of GST Tariff for parts and accessories used solely or principally with railway coaches The applicant referenced Note 3 of Section XVII of the GST Tariff, which states that parts and accessories suitable for use solely or principally with the articles of Chapters 86 to 88 should be classified under those chapters. They argued that the Roof Mounted AC Package Unit, being designed exclusively for railway coaches, should be classified under Chapter 8607. Analysis and Findings: Classification under Chapter 8607 The Authority for Advance Ruling (AAR) examined Chapter 86, which covers "Railway or Tramway Locomotive, Rolling-Stock and Parts thereof; Railway or Tramway Track Fixtures and Fittings and Parts thereof; Mechanical (Including Electro Mechanical) Traffic Signaling Equipment of all kinds." According to Chapter Note 2 of Chapter 86, heading 8607 applies to various parts of railway rolling stock, including coach work. Exclusion Clause The exclusion clause of Chapter 86 specifies items not covered under this chapter, such as railway sleepers of wood or concrete and electrical signaling equipment. The Roof Mounted AC Package Unit does not fall under these exclusions. Judicial Precedents The applicant cited several judicial precedents supporting their view that parts designed exclusively for use in railway coaches should be classified under Chapter 86. These include: - Mak Controls vs Commissioner Of Central Excise (1998): Emphasized that classification should be determined by the principal use of the equipment. - Diesel Components Works vs Commissioner Of C. Ex (2000): Clarified that parts used solely or principally with railway locomotives should be classified under Chapter 86. - Pragati Silicons Pvt. Ltd vs Commissioner Of Central Excise (2007): Reinforced the principle of classifying goods based on their principal use. Comments from Jurisdictional Officer The Deputy Commissioner of State Tax, Circle Mandideep, also supported the classification of the Roof Mounted AC Package Unit under Chapter 86079910, "Parts of Coach work of Railway running stock." Conclusion The AAR concluded that the Roof Mounted AC Package Unit, manufactured as per the specific design and layout provided by the Indian Railways and meant solely for use in railway coaches, is classifiable under Chapter 8607 of the GST Tariff. The ruling is valid subject to the provisions under section 103(2) until declared void under section 104(1) of the GST Act. Ruling The Authority ruled that the Roof Mounted AC Package Unit falls under Chapter 8607 of the GST Tariff, aligning with the applicant's and jurisdictional officer's views. This comprehensive analysis ensures that the classification of the Roof Mounted AC Package Unit under Chapter 8607 is well-founded based on the principal use criterion, judicial precedents, and specific design requirements for railway coaches.
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