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TMI Blog2019 (4) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... From the harmonious reading of Section notes 4 and 5 to Section XVI and the inclusion Note in 8501 and the exclusion Note in heading 8483 referred to above, the geared motors being a combination of machines that is Electric Motors and Gear Box intended to contribute together a cleared defined function to run industrial machineries with speed controlling mechanism, the Geared Motor is appropriately classifiable in the heading 8501. The jurisdictional officer has different view. He submits that Geared Motor is a machine consisting of two individual components interconnected. His view is that electrical motors when attached to Gear Box will no longer remain an electrical motor but a geared motor with altogether a different function that is transmission of mechanical power and speed from one shaft to another. Though the contention of the jurisdictional officer appears convincing, in view of the exclusion note under chapter heading 8483 and inclusive note to 8501, it would be against the scheme of HSN to agree with the jurisdictional officer s view. Thus, the Geared Motors supplied by the applicants fall under Tariff Heading 8501. X X X X Extracts X X X X X X X X Extracts X X X X ..... egime - Goods and Service Tax (GST) has been introduced in India by way of introduction of following legislation: I. Central Goods and Service Tax Act, 2017 (CGST) II. State wise Goods and Service Tax Legislation (SGST) III. Integrated Goods and Service Tax Act, 2017 (GST) * In recent decision of Gujarat Authority of Advance Ruling, in respect of a similar matter, it had been held that the product 'Geared Motor' would be classified under the HSN Code '8501 * In light of the same, Applicant has analysed classification and applicability of CGST, SGST and IGST under the new legislation. For classification, it has been clarified in the rate notification of respective legislation that rule for interpretation of the First Schedule to the Customs Tariff Act, 1975 including Section notes and Chapter notes and general explanatory notes of the said First Schedule would be applicable for the purpose of classification under GST. The classification under the Customs Tariff Act, 1975 is based on the harmonized system of nomenclature adopted worldwide. * The HSN Codes 8483 and 8501 are taxable at the rate 28% and 18% respectively under the GST legislation. * Applicant has sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of Geared Motor includes below Activity Description of the Process Material issue from store In this process CNC (Computerised Numerical Control) blank and casting will be issue to machine shop as PPC (Production Planning and Control) PIan. Hobbing It is a gear cutting process on outer diameter of CNC gear blank by using tool called as hob For this operation the applicant is using hobbing machine. Heat-Treatment It is process where material will be heated up to 900 degree and hardness will be created also including pre-heating and tempring. For this process the applicant is using seal quenched furnace. Chamfering It is process where after hobbing and heat treatment hard burr will be removed from teeth of the gear. For this the applicant is using tooth chamfering machine. ID/OD Grinding 1. It is process where internal diameter of gear will be doing machining with the help of grinding wheel. 2. It is process where outer diameter of shaft will be doing machining with the help of Grinding wheel. In this process the applicant is using LMW& Parishudh machine. Profile Grinding It is process where finishing of the teeth of gear will be done with the help of Grinding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED IN ANNEXURE-1:- (i) 'Geared Motor' to get covered under Schedule III of IGST Rate Notification No. 1/2017 Integrated Tax (Rate) dated 28 June 2017 (as amended) and liable to (a) In order to deliberate on the question being sought, it is pertinent to analyse the classification of 'Geared Motor' supplied by Applicant in detail. Technical features of the product are relevant for such analysis. (b) Accordingly, applicant submits that 'Geared Motor' is combination of Gearbox and Electric Motor. Many industrial machineries require electric motors to run at a specific speed which is lesser than the speed at which the motor normally runs. The gearbox reduces the speed of the motor and convert the same into torque. Torque' is a force that causes rotation. The 'Gearboxes' are thereby fitted to electric motor for its effective functioning. Gear Box is a device which is used to transmit mechanical power and speed from one shaft to other shaft. Gear Box helps in changing the direction as well as output RPM with the help of various combination of gearing. (c) It can be deliberated that the clearly defined function of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls to be classified in the heading appropriate to that function. (c) Thus based on the technical specification of the product, 'Geared Motors' appear to be classifiable under heading 8501, since, the products gearboxes and electric motors are fitted together for clearly defined function of providing intended output from the electric motors as is suitable to the machines it is attached to. Hence, as per section note 4 of the section XVI of Customs Tariff Act, 1975 this combined product is classifiable under the heading appropriate to that function. Hence, the applicant submits that the product be classifiable under Sr. No. 372 of Schedule III of Notification No. 1/2017 Integrated Tax (Rate) dated 28 June 2017 (d) The applicant, mainly being the business of manufacture of Gearboxes, had adopted the HSN classification of that of the Gearboxes i.e. 8483 for 'Geared Motors' as well in the Central Excise Regime. Under the Central Excise Regime, since both the tariff headings 8483 and 8501 were dutiable at the rate 12.5%, the classification was neither revisited by the Applicant nor was it questioned by the authorities. The applicant has adopted the same HSN classification of 'Gear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of tax 1 Schedule I 5% 2 Schedule II 12% 3 Schedule III 18% 4 Schedule IV 28% 5 Schedule V 3% 6 Schedule VI 0.25% (b) As IGST Rate Notification directs to adopt classification in terms of Customs Tariff Act, 1975, Applicant has adopted classification of 'Geared Motor' under heading 8483. The same is included in Entry number 135 of Schedule IV of IGST Rate Notification No. 1/2017-lntegrated Tax (Rate). (c) However, the applicant intends to adopt classification of 'Geared Motor under heading 8501. Entry number 372 of Schedule Ill of IGST Rate Notification No. 1/2017-lntegrated Tax (Rate) which reads as under: SI.No. Chapter / Heading / Sub- heading / Tariff item Description of Goods 372 8501 Electric motors and generators (excluding generating sets) Applicant wishes to draw your kind attention to the fact that Entry 372 reproduced above is applicable to 'Electric motors and generators' falling under heading 8501. The same is chargeable to tax at the rate 18%. Accordingly, a product which is classifiable under this heading would fall under entry 372 and hence would be liable to IGST. (d) Sample copy of invoice and Lorry Receipt which was issued, have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notification of respective legislation that rule for interpretation of the First Schedule to the Customs Tariff Act, 1975 including Section notes and Chapter notes and general explanatory notes of the said First Schedule would be applicable for the purpose of classification under GST. The classification under the Customs Tariff Act, 1975 is based on the harmonized system of nomenclature adopted worldwide and the HSN Codes 8483 and 8501 are found taxable at the rate 28% and 18% respectively under the GST legislation vide IGST Rate Notification No. 1/2017-lntegrated Tax (Rate)dated 28 June 2017 (as amended) as under, S.No. Chapter /Heading/Sub-heading/Tariff item Description of Goods (1) (2) (3) Schedule 3-18% 372 8501 Electric motors and generators (excluding generating sets) Schedule 4-28% 8483 Transmission shafts (including cam shafts and crank shafts)and cranks; bearing housings and plain shaft bearings, gears and gearing; ball or roller screws; gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft couplings (including universal joints) -------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of individual components interconnected by transmission devices intended to contribute together. As described by the applicant the Gear box is fitted to reduce the speed of the motor and convert the same into torque. 'Torque' is a force that causes rotation. The 'Gearboxes' are thereby fitted to electric motor for its effective functioning. Gear Box is a device which is used to transmit mechanical power and speed from one shaft to other shaft. Gear Box helps in changing the direction as well as output RPM with the help of various combination of gearing which is a main functions. Thus from the above, it appears that after attaching the Gear Box to Electric Motor, it will correctly fall under the heading of Chapter 8483 - "TRANSMISSION SHAFTS (INCLUDING CAM SHAFTS AND CRANK SHAFTS) AND CRANKS; BEARING HOUSINGS AND PLAIN SHAFT BEARINGS; GEARS AND GEARING; BALL OR ROLLER SCREWS; GEAR BOXES AND OTHER SPEED CHANGERS, INCLUDING TORQUE CONVERTERS; FLYWHEELS AND PULLEYS, INCLUDING PULLEY BLOCKS; CLUTCHES AND SHAFT COUPLINGS" and it will no longer fall under the heading 8501 which is "ELECTRIC MOTORS AND GENERATORS (EXCLUDING GENERATING SETS)" since it will no longer remain an Electric Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared and requested for admission of application as per contentions made in their application. Jurisdictional Officer was not present. The application was admitted and called for final hearing on 12.122018. She Nitin S Shah, Advocate appeared, made oral and written submissions. Jurisdictional Officer Sh. Abhinav Chaubey, Inspector Division- I,(MaIegaon), Pune - I Commissionerate appeared and made written submissions. The contention of both the parties were heard on this issue. 05. OBSERVATIONS We have gone through the facts of the case and written submissions made by both the applicant and the concerned officer. The issue put before us is determination of classification of "Geared Motor" which would be on the lines thus - Applicant is engaged in manufacture, supply and export of various industrial products such as geared boxes, geared motors, fluid couplings etc. With respect to the classification of products such as 'Electric Motor' or 'Gear box' under the HSN, the applicant does not find any difficulty since there is specific mention of the products under the said system. However, with respect to 'Geared Motor', a combination product manufactured, the applicant has reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the motor will operate (e.g., dust proof, drip proof or flame proof motors; non-rigid mountings for belt driven motors, or for motors which will be subject to much vibration). Many motors may incorporate a fan or other device for keeping the motor cool during running. With the exception of starter motors for internal combustion engines (heading 85.11), the heading covers electric motors of all types from low power motors for use in instruments, clocks, time switches, sewing machines, toys, etc., up to large powerful motors for rolling mills, etc. Motors remain classified here even when they are equipped with pulleys, with gears or gear boxes, or with a flexible shaft for operating hand tools." (Page XVI- 8501-2) (iii) Further to the above, it is relevant to refer to the exclusion clause at the end of the Explanatory Note (E) to headings 8483 which is reproduced as below(Page No.XVI-8483-(3) stated below: "(E) GEAR BOXES AND OTHER SPEED CHANGERS, INCLUDING TORQUE CONVERTERS 'The heading does not cover gear boxes or other variable speed changers combined with a motor; these are classified in the same heading as the motor. From the harmonious reading of Section n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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