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2022 (9) TMI 727 - AAR - GSTClassification of goods - roof mounted Air-conditioning unit especially for use in railway coaches (manufactured as per railway design) - classifiable under HSN- 8415 1090- IGST @ 28% or under HSN 8607 99 - IGST @ 18% as parts of Railway Coaches; Locomotives? - HELD THAT - It can be inferred that Roof Mounted Air Conditioning unit manufactured and supplied by the applicant is squarely covered under HSN 84.15 irrespective of field of industry in which they are used. On perusal of chapter note 2 of chapter 86, it can be observed that Roof Mounted Air-conditioning units are not covered specifically under HSN 8607. As the word inter alia. is mentioned in chapter note 2, it is necessary to go through the Explanatory Notes to HSN 8607 - it is evident that for a part to be covered under HSN 8607, the above-said two conditions need to be fulfilled in toto. The second condition prescribed is that the parts will get classified under HSN 8607 only if they are not excluded by the provisions of the Notes to Section XVII. Note 2 read with Explanatory Notes specifically excludes Air Conditioning Machines (heading 84. 15) from falling under HSN of Section XVII and more so, from HSN 8607. Therefore, by virtue of Note 2 (e) to Section XVII read with Explanatory Notes, Air Conditioning Machines (heading 84.15) are excluded from this Section . Therefore, the very first condition is not satisfied in the case of applicant. Further, the three conditions, as enumerated above. show that any parts made specifically for railways and not covered under headings 84 01 to 84.79 - Moreover, three conditions prescribed for any Item to be classified as a part in Chapter 86 are also not Fulfilled in the instant case. The Roof Mourned Air-Conditioning unit manufactured by the applicant are classifiable under HSN Heading 8415 and the classification of the goods shall not after on account of supply by them to Railways.
Issues Involved:
1. Classification of roof-mounted air-conditioning units for railway coaches under HSN 8415 or HSN 8607. 2. Applicability of GST rates based on classification. Issue-wise Detailed Analysis: 1. Classification of Roof-Mounted Air-Conditioning Units for Railway Coaches: The applicant sought an advance ruling on whether the roof-mounted air-conditioning units, specifically designed for railway coaches, should be classified under HSN 8415 1090 (attracting IGST @ 28%) or under HSN 8607 99 (attracting IGST @ 18%). Eligibility of the Application: The application was deemed eligible under Section 97(2)(a) of the CGST/PGST Act, which pertains to the classification of goods or services. Applicant's Submissions: The applicant argued that the air-conditioning units, being exclusively designed and used for railway coaches, should be classified under HSN 8607 99. They cited Note 3 to Section XVII of the Customs Tariff Act, which states that parts suitable solely or principally for use with the articles of Chapters 86 to 88 should be classified under the heading corresponding to their principal use. The applicant also referenced several judicial decisions supporting their stance. Jurisdictional Authority's Submissions: The jurisdictional authority supported the applicant's classification under HSN 8607 99, citing a similar decision by the Authority for Advance Ruling in Uttar Pradesh and a Supreme Court judgment in favor of the appellant. Discussion and Findings: The Advance Ruling Authority examined the relevant HSN codes and chapter notes to determine the correct classification. HSN 8607: This heading covers parts of railway or tramway locomotives or rolling stock, provided they are suitable for use solely or principally with such vehicles and are not excluded by the Notes to Section XVII. HSN 8415: This heading includes air-conditioning machines comprising a motor-driven fan and elements for changing temperature and humidity, used in various settings including motor vehicles. Analysis: The authority noted that the roof-mounted air-conditioning units are covered under HSN 8415, irrespective of the industry in which they are used. Chapter Note 2 to Chapter 86 does not specifically include air-conditioning units. Furthermore, Section Note 2 to Section XVII explicitly excludes items classified under Headings 84.01 to 84.79, including air-conditioning machines under Heading 84.15, from being considered parts of railway rolling stock. Conclusion: The authority concluded that the roof-mounted air-conditioning units are classifiable under HSN 8415. The classification remains unchanged even when these units are supplied to railways. 2. Applicability of GST Rates Based on Classification: Ruling: The roof-mounted air-conditioning units manufactured by the applicant are classifiable under HSN Heading 8415, attracting a GST rate of 28% (CGST @ 14% and PGST @ 14%). Appeal: An appeal against this order can be made to the Punjab Appellate Authority for advance rulings within thirty days from the date of communication of this order. This comprehensive analysis ensures that the classification of the goods is based on the correct interpretation of the HSN codes and applicable GST rates, preserving the legal terminology and significant phrases from the original judgment.
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