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TMI Blog2018 (9) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... es, stores, materials and/or consumables for goods ONLY covered under entry no. 1 to 23 is not clear from the documents and evidences submitted by the dealer. Even the applicant seems not sure of its uses. Concessional rate is conditional to terms and conditions of Notifications - It is a clear possibility that there are other machine and equipment and their accessories, stores, materials and consumables which though being used in process of petroleum operation but are not enjoining concessional rate as they are not covered under entry no. I to 23 of the notification yet being supplied electricity by these electrical cables to make them functional . Electrical Cables are generally used to set up a network of wires and cables which are usually permanent in nature through which electricity can flow, distributed and supplied to various points. To regard Electrical Cables as “accessories, stores, materials or consumables for running of the goods specified in the List” as mentioned in entry no. 24 of the notification is not rational by any stretch of imagination - If we regard Electrical Cables as accessories, stores, materials and/or consumables for running of the goods specified in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India/State Government to Cairn Energy India Pvt. Ltd. in the State of Rajasthan which was vested in Vedanta after the merger of Cairn India Pvt. Ltd. in Vedanta. For carrying out such petroleum operations, it uses various kinds of machines and equipment. Almost all machines and equipment used by Vedanta for petroleum operations run on electricity and thus, electric cables are required for providing electricity to such machines and equipment, 4. M/s. Vedanta issues tender notice for supply of power cables required for its petroleum operations and further selects a supplier who is required to supply power cables in accordance with the specifications of the cables viz. the cable type, length, thickness, material, color, etc. provided by M/s. Vedanta in the order sheet issued for this purpose. 5. The Applicant had been selected by M/s. Vedanta for supplying cables to it by raising Purchase Order No. 4500030187 and 4500030182 both dated 14.11.2017 and amended rev-01 dated 12.01.2018. Directorate General of Hydro carbons certifies that these goods i.e. power cables of various specifications, which are required for the petroleum operations. 6. It is to be noted that in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 9 of CGST Act as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to the notification .A corresponding benefit is given under Rajasthan Goods and Services Tax Act vide File No. F.12 (56)FD/Tax/2017-Pt-1-42 dated 29.06.2017. Similar benefit on inter-state supplies is given under IGST Act vide Notification No. 03/2017-lntegrated Tax (Rate) dated 28.06.2017. 12. Further, Sl. No. I of Notification No. 03/2017-CT provides that the said benefit would be available for the goods provided in List 1 of Notification No. 03/2017-CT. The List of goods appended to Notification No. 03/2017CT specifies various goods including, "24. sub-assemblies, tools, accessories, stores, spares, materials, supplies, consumables for running, repairing or maintenance of the goods specified in this List". 13. The Applicant stated that the concessional rate benefit would be available to the goods specified in the list to Notification No. 03/2017-CT provided the goods are used for the activities mentioned in the entry i.e. petroleum operations which are undertaken under the contracts/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petroleum operations referred in the Sl. No.1. 19. Applicant submitted that the term 'Indian Company' has not been defined in Notification No. 03/2017-CT. Moreover, it is also not defined in the CGST or IGST Act. In common parlance, an 'Indian Company' would mean any company who is established and registered in India in accordance with the relevant laws prevailing at that time. 20. To substantiate the same, reference is made to the definition provided in the Income Tax Act, 1961, which defines Indian Company under section 2(26) as under: "(26) "Indian company" means a company formed and registered under the Companies Act, 1956 and includes................" 21. Dealer stated that in view of the above, it can be concluded that to claim benefit of concessional rate of tax under Notification No. 03/2017-CT the following conditions are required to be satisfied cumulatively in the instant case: i. The goods must be covered under the list to the Notification No.03/2017-CT; ii. The goods must be supplied in connection with petroleum operations undertaken under specified contracts; iii. The goods are supplied to an Indian company or a foreign company or a consortium or a contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate 26. Applicant insisted that in view of the above, it can be safely concluded that in the instant case, condition no. 2, 3 and 4 as discussed above, are satisfied by the Applicant. 27. As far as condition no. 1, he stated that a detailed analysis of the same is given in the following paragraphs. The power cables supplied by the Applicant qualify' as accessories which are required for running the goods (machines) specified in the list 28. According to him, benefit of concessional rate of duty is extended to the accessories used for running machines covered under the List appended to Notification No. 03/2017-CT. However, the term 'accessories' is also not defined in Notification No. 03/2017-CT. so applicant has relied on the dictionary meaning of the term 'accessories', which have been extracted here under: (i) The New Merriam-Webster 's Dictionary "a person or thing that aids subordinately, an adjunct, appurtenance, accompaniment" (ii) The Oxford Advanced Learners Dictionary "an extra piece of equipment that is useful but not essential" (iii) The Collin's Co build English Dictionary for Advanced Learners "accessories are items or equipment that are not usually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The same item may be an accessory of more than one kind of instrument. ……Emphasis Supplied 31. He further stated that in view of the above discussions and the judicial decisions relied upon, it is submitted that the power cables supplied by the Applicant to Vedanta in the instant case qualify as accessories for running the machines given in the list annexed to Notification No. 03/2017-CT. The power cables supplied by the Applicant also qualify as material for running the goods (machines) specified in the list 32. Further according to him entry no. 24 of the list appended to Notification No. 03/2017-CT also covers the materials required for running, repairing or maintaining the machines provided in that list. The term 'material' used in the list is not defined in Notification No. 03/2017-CT. Thus, it becomes imperative to refer to the dictionary meaning of this term. Some of them are extracted below for reference: (i) The New Merriam-Webster 's Dictionary "highly important, significant" (ii) The Oxford American Desk Dictionary, New edition, 2000 "important, essential, relevant" (iii) The Chambers Dictionary, New edition "that out of which anything is or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Notification No. 03/2017-CT. 37. Applicant contents that intention on the part of the Applicant and M/S Vedanta to supply/procure such power cables for the purpose of running machines to be used in petroleum operations. 38. Based on above the applicant states that it can be inferred that the power cables supplied by the Applicant to Vedanta which are meant to be used for running the machines would be covered under either of the several heads given under entry no. 24 of list to Notification No. 03/2017-CT. Therefore, supplies of power cables by the Applicant to Vedanta would be eligible for the benefit of concessional rate of duty as provided under Notification No. 03/2017-CT. 5. ISSUES REQUIRING ADVANCE RULING AND APPLICANT'S UNDERSTANDING: In the light of aforementioned, the Applicant seeks to enter the following question for Advance Ruling and its interpretation of the question will be as under: Question: Whether the power cables supplied by the Applicant are covered under the scope of Sl. No. 1 of Notification No. 03/2017-CT ? 6. Applicant's Understanding: The Applicant is supplying power cables to Vedanta which is covered under entry 24 of the list annexed to Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is undertaking petroleum operations in Rajasthan and electrical cables are needed for providing electricity to machines and equipments. c) Directorate General of Hydrocarbons certifies that goods i.e. power cables of various specifications are required for the petroleum operations. d) Applicant contends that power cable supplied to M/s. Vedanta for supplying electricity to the machines or equipments used in its petroleum operations would qualify as 'material', 'accessories', 'consumables', and/or 'stores' of SI. No. 1 of Notification No. 03/2017-CT for running machines listed in the list annexed to that notification. (Entry no.l to 23) and thus can be supplied at concessional rate as mentioned in the notification. e) Notification No. 03/2017 provides for the intra-State supplies of goods, the description of which is specified in column (3) of the Table with relevant List appended hereto and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table, from so much of the central tax leviable thereon under section 9 of CGST Act as is in excess of the amount calculated at the rate specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricted and related to those goods as specified in entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. l) On careful perusal of notification it is evident that Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. m) In Advance Ruling Application the applicant has citied certain judgements and citation from various courts for categorizing "Electrical cables" as accessories, stores, materials and/or consumables as mentioned in entry no. 24 of the notification, which were carefully examined. To qualify for concessional rate of tax, these Judgements and citations have to be analysed and applied strictly in light of condition laid down in Notification No. 03/2017-CT. Notification provides concessional rate only for the goods falling under entry no. 1 to 24 subject to certain other specific conditions. Electric Cables, being accessories, stores, materials, consumables does not automatically qualifies them for enjoying concessional rates as mentioned in Notification no.03/2017-CT. Entry no.24 of the list specifies "24. sub-assemblies, tools, accessorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aware off and has not clarified that "Electrical cables" supplied will be used as accessories, stores, materials and/or consumables to which goods falling under entry no. 1 to 23 of the list. 2) "Electrical cables" supplied can very well be used as by M/s. Vedanta as accessories, stores, materials or consumables for even those goods which are not covered under entry no. 1 to 23 of the list. 3) It is to be noted that in the instant case, the Applicant is not aware off the type, nature and functions, etc. of the machines or equipment for which the cables are required. The Applicant is supplying power cables to on the basis of the job sheet provided by M/s. Vedanta. q) It is to be noted that if we refer to certificate of Directorate General of Hydrocarbons dt. 18.01.2018 (purchase order no. 4500030187 & 450030182) it clearly states that "This Certificate would stand withdrawn in case the said good are used for purposes other than its intended use." r) Thus the notification restricts the entry no. 24 of List of goods vis-a-vis only to the goods falling under entry no I to 23 of the list for claiming concessional rate. Use of Electrical Cables supplied for all other purposes or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , insulators, transformers and all other equipments used to ensure flow of electricity at work site from the main source to the supply point are to be covered under this classification. v) Main function of Electric Cables is to supply and distribute electricity to various points at a worksite so electricity can be made available for all electrical, electronic, machines and mechanical equipments using electrical energy to function but these Electric Cables so supplied will whether be used to supply electricity ONLY to those goods which are covered under I to 23 of the list is not clear from documents submitted nor has any undertaking of this regard has been given by applicant. w) Thus to consider Electrical Wires to strictly fall under entry no. 24 vis-a-vis goods falling under entry no. 1 to 23 will not be correct. Apart from fulfilling other condition as mentioned in Notification No. 03/2017-CT to claim concessional rate, Electrical Cables supplied has to be accessories, stores, materials, consumables (entry no.24) strictly in context with list of goods mentioned in entry no. I to 23 of the list. x) The applicant has failed to identify/clarify as to under which category i.e. ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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