9911796707
TMI Blog2019 (7) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/MGST Act would be mentioned as being under the "GST Act" 02. FACT'S AND CONTENTION - AS PER THE APPLICANT "STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE OUESTION(S) ON WHICH ADVANCE RULING IS REOUIRED. 1. M/s. Hyva India Pvt. Ltd. ('Applicant) having its corporate head office at EL-215, Mahape, Navi Mumbai - 400710 and having various manufacturing units across the country, is engaged in the manufacture and supply of hydraulic kits, tippers, compactors, cranes, tail lifts, hook loaders, control valves etc. 2. The present application is filed in respect of one of the products namely "Hydraulic Kit". Hydraulic Kit is a combination of various items including Hydraulic front end cylinder, Gasket, washers, MTG Kit valves, hose, pipes, Oil tanks, cables, etc. along with other parts which are used for the fixing / mounting on a motor vehicle chassis. The hydraulic kit is of a kind used to fixed on a mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aulic Kit in its factory/ premises, to be fitted on the chassis of the vehicle. In some case, the Hydraulic Kit is cleared with or without pump to the dealers / distributors or OEMS. 8. In case of sale of Hydraulic Kits to OEMs, the applicant receives chassis from the OEMs for fitting of body along with Hydraulic kit. In such cases, applicant supplies the body with Hydraulic Kit as a complete product/solution to the customers (OEMs) and clears the resultant product i.e. Body + Hydraulic Kit under Chapter Heading No.87.07 of the First Schedule of the Customs Tariff Act attracting GST @28%. In some instances, the applicant also clears/supplies the body alone to the OEMs under Chapter Heading No.87.07 of the First Schedule of the Customs. Tariff Act attracting GST @ 28%. 9. In the present application, the applicant is seeking the clarification regarding the correct classification of Hydraulic Kit supplied to Dealers / Distributors or body builders as such from the factory of the applicant. 10. As per the understanding of the applicant, there is an ambiguity regarding the correct classification of Hydraulic kit' supplied as such to dealers / distributors or body builders cleared as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tax (Rate) dated 28.6.2017 in exercise of the powers under Section 9(1). This Notfn., in Sch. I to VI specifies goods, which will be levied to tax at the rate of 2.5%, 6%, 9%, 14%, 1.5% & 0.125%. C.3 Chapter Heading No. 84.12 of the Customs Tariff is the relevant heading for the present matter and reads as under: Tariff Item Description of goods Unit Rate Standard Preferential Areas (1) (2) (3) (4) (5) 8412 OTHER ENGINES AND MOTORS 8412 10 00 - Reaction engines other than turbo-jets 8412 21 00 - Hydraulic power engines and motors: 8412 29 -- Other: 8412 29 10 -- Hydrojet (hydraulic jet engines) 8412 29 90 -- Other C.4. The relevant entry in Schedule-III of Notification No. 1/2017-CentraI Tax (Rate) dated 28.06.2017, for the purpose of the applicant's product in question, reads as under: Sch. SL.No. Chapter Heading Sub-Heading Description of Goods Rate of Tax (GST) III. 317 8412 Other engines and motors (Reaction engines other than turb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) ... ... ... (6) Hydraulic systems consisting of a hydraulic power unit (comprising essentially a hydraulic pump, an electric motor, control valves and an oil tank), hydraulic cylinders and the pipes or hoses needed to connect the cylinders to the hydraulic power unit, the whole forming a functional unit within the meaning of Note 4 to Section XVI (see the General Explanatory Note to that Section). These systems are used, e.g., to operate civil engineering structures. C.10 For sake of reference, Note 4 to Section XVI of HSN reads as under: 4. Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the heading appropriate to that function. C.11 As per the Explanatory Note, Heading No.84.12 of HSN covers "hydraulic systems" consisting of a hydraulic power unit (comprising essentially a hydraulic pump, an electric motor, control valves and an oil tank), hydraulic cylinders an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s having individual functions, not specified or included elsewhere in this chapter, parts thereof: Other machines and mechanical appliances: Other: Other: Other". The Explanatory Notes to heading 84.79 state, in pertinent part, that "This heading is restricted to machinery having individual functions, which....(c) Cannot be classified in any other particular heading of this Chapter ...". As the device under consideration is specifically provided for elsewhere in Chapter 84, classification in leading 8479, HTSUS, is precluded. The applicable sub-heading for the HEADIM Hybrid System will be 8412.29.8075, HTSUS, of the United States (HTSUS), which provides for other engines and motors, and parts thereof, hydraulic power engines and motors, other, other, other. The rate of duty will be free...." HYDRAULIC KIT WILL BE EXCLUDED FROM CHAPTER HEADING NO.87.08 D.1 Chapter 87 of the HSN covered "vehicles other than railway or tramway rolling stock, and parts and accessories thereof', D.2 Chapter Heading 87. 08 covers "Parts and accessories of the motor vehicles of headings 87.01 to 87.05". To understand the scope of goods covered under heading 8708, it is relevant to refer Explanatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions mentioned in Heading No.8708 are not satisfied in the present case and hence, the product in question i.e. Hydraulic Kit will not be covered under Heading No.8708, COMPLETE HYDRAULIC KIT IS CLEARED FROM THE FACTORY OF THE APPLICANT IN UNASSEMBLED/DISASSEMBLED CONDITION. E.1 Applicants are clearing complete Hydraulic Kit from their factory in unassembled/disassembled condition. The Hydraulic Kit is a combination of various items including Hydraulic front-end cylinder, Gasket, washers, MTG Kit valves, hose, pipes, Oil tanks, cables, etc, E.2 To decide the classification of an item in disassembled form, rule 2(a) of the Interpretative Rules has to be invoked. The applicant submits that in terms of Rule 2(a) of the General Interpretative Rules, the classification of Hydraulic Kit cleared in unassembled condition has to be under Heading No.8412 only. The applicant relies upon Rule 2(a) of the General Interpretative Rules which reads as under: Rule 2(a) of GIR Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, in some cases it has been noticed that the various bodies of the Government like the Secretariat of Industrial Approvals, FIPB etc., have approved the projects for the manufacture of such articles, with permission to in port SKD kits in the initial period. Though the import licence is a must in these cases also, still if by mistake the importers have not obtained the licence. prior to the imports, they may be advised to obtain the same and the cases need not be adjudicated without giving this opportunity. In genuine cases, like in the cases of reputed manufacturers with a proper infrastructure for manufacturing activities in respect of the goods being imported and having industrial approvals for SKD imports; clearance of goods under ITC bonds may also be considered pending production of licences. E.4 Thus, when any article such as Hydraulic Kit is cleared in CKD/SKD condition, its classification for purpose of assessment would be done as complete or finished article in terms of the said Rule 2(a). In view of Rule 2(a) read with CBEC Circular dated 30.5.1995, it is clear that unassembled/assembled articles will fall under Heading No: 84.12. E.5 To support the above submission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The rate of duty is free. In your request you also inquire about the required country of origin marking for the imported components that are assembled by Swanson in the United States. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of19 USC 1304. Section 134.1 (d), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported 19 CFR 134.1 (d) (1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if the manufacturer subjects the imported article to a process which results in a substantial transformation of the article, An articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, for the purpose of this opinion as in Schedule - III is as under: Sl.No. Chapter/Heading/Sub-Heading/Tariff Item Description of Goods 366 8479 Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter [other than Passenger boarding bridges of a kind used in airports (8479 71 00) and other (8479 79 00)]. F.3 Heading No .84.79 of Chapter 84 is a residuary entry which covers mechanical equipment which have individual purpose and are not covered anywhere in Chapter 84. F.4 It is informed that the Hydraulic Kit is installed in the various places to lift and control the movement of the item to be lifted in vertical or horizontal direction. Thus, the purpose of "Hydraulic Kit" is specific and individual i.e. is specialized to the product itself. As such, "Hydraulic Kit" is classifiable under Chapter Heading No. 84.79 of the Customs. Tariff. Thus, the applicant, without prejudice to its contentions contained elsewhere in the application, alternatively submits that the Hydraulic Kit will fall under Heading No-84,79 of the Customs Tariff and attract GST @18% by virtue of Sl. No.366 of Schedule-III to Notification No.1/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f "Index - 1" submitted during the admission PH) upheld the "Test of Common Parlance" laid out in the case of Commissioner of Trade Tax, U.P. vs. Kartos International 2011 (268) EL.T. 289 (S.C) (Refer Page no. 129-13 7 of "Index - 1 "submitted during the admission PH). The court held as under: "31. Therefore, what flows from a reading of the aforementioned decisions is that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words they have to be constructed in the sense that the people conversant with the subject matter of the statute, would attribute to it. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances." 1.8.2 The court was thus of the view that that to identify whether a particular article will fall within a particular tariff heading or note, the same has to be decided on the basis of the of the tangible material or evidence to determine how such an article is understood in common parlance. 1.8.3 In the case of Commr. Of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Drive (Suite 1000) Atlanta, GA 30328 RE: The tariff classification of a spoiler drive mechanism from Germany Dear Mr. Resetar: In your letter dated March 3, 2009 you requested a tariff classification ruling. A photograph and technical drawing were submitted. The article in question is described as a spoiler drive mechanism used to raise and lower the rear spoiler on a motor vehicle. You indicate that the components, which include two hydraulic telescoping linear cylinders, a hydraulic fluid power pump, hydraulic hose line and mounting parts, are imported together as a set. The spoiler is not included in the set. In your request you suggest that components be classified as a set in accordance with General Rule of Interpretation GRI) 3. However the components in their condition as imported, when assembled together form a hydraulic system consisting of a hydraulic power unit i.e. the fluid pump and two hydraulic cylinders. Heading 8412 Harmonized Tariff Schedule of the United States (HTSUS), provides for hydraulic system. GRI 2(a) extends the scope of that provision to hydraulic systems that are entered unassembled. The applicable subheading (or the spoiler drive mecha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned for use in specific applications on VCENA wheel loaders. You indicate that these parts are identified internally by VCENA as part numbers VOE11172221, VOE 11173847, VOE11015677, VOE11172470, and VOE11023340. Technical drawings of the parts were submitted. Part Number VOE11172221 is a steel oil pipe, which is designed for the hydraulic system of a VCENA wheel loader. Specifically, the part is designed for the lift function of the hydraulic system. The pipe is cold-worked steel of seamless construction, which is bent several times and manufactured with flanges at either end to achieve the requisite configuration for its application in the hydraulic system. Part Number VOE 11173847 is a pipe designed for the return line in the transmission system of the VCENA wheel loader. The pipe is cold-worked steel of seamless construction, which is bent and shaped for its application in the transmission system. We assume from the information made available that the "transmission system" is a hydraulic power system and that the pipe is used to connect the components of that system. Part Number VOE11015677 is similar to Part Number VOE11172221 as it is specifically designed for the lift f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above stated submissions, it is humbly submitted that "Hydraulic Kit" is classifiable under Chapter Heading 84.12 of the CTA. B. HYDRAULIC KIT IS NOT CLASSIFIABLE UNDER CHAPTER HEADING 87.08 OF THE CUSTOMS TARIFF ACT 1975 2.1 In the alternative, it may be argued that "Hydraulic Kit" may form a part of a motor vehicle and it may be classified under Chapter Heading No.87.08 of the CTA. In this respect, reference is made to para D.1 to D.7 of the Advance Ruling Application wherein it is submitted that "Hydraulic Kit" is specifically excluded from Chapter Heading No.87.08 of the CTA. 2.2 In furtherance to the said submission, it is submitted that as stated in para D.2 of the Advance Ruling Application, the HSN Explanatory Notes to Chapter Heading 87.08 states as under: "This heading covers all the motor vehicles of heading 8701 to 8705, provided the parts and accessories fulfill both the following conditions: i) They must be identifiable as being suitable for use solely or principally with the abovementioned vehicles; and ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note). 2.3 It is thus noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulic front-end cylinder, Gasket, washers, MTG kit valves, hose; pipes, oil tanks, cables, etc. along with other parts which are used for the fixing/mounting on a motor vehicle chassis: The hydraulic kit is of a kind fixed on a motor vehicle chassis and can be used to lift the body of truck, tipper, etc. Further, the Hydraulic Kit is used in bodies/platform, detaching sides, tipper bodies falling under Chapter Heading No. 87.09 as well as for other trailers of transport of goods such as agricultural, public works etc., trailer (whether or not tipper) falling under Heading No. 87.16. All the aforesaid items of Hydraulic Kit (except Hydraulic cylinder and Valve which are manufactured by the applicant) are commonly known as "wet kit" by the applicant. The frond-end hydraulics are the best choice for front end tippers and tipping trailers. 4. As per para 3 of Annexure A of the Application, all the items of wet kit except valve, are purchased and received from various vendors and are classified under different headings of the Customs Tariff which is adopted for the specification of GST rates in the notification issued under the CGST Act. The applicant supplies the "Hydraulic Kit" which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vehicles of Heading Nos. 87.01 to 870.5, interalia, states as under: i. This heading covers parts and accessories of the motor vehicles of headings 87.01 to 87.05, provided the parts and accessories fulfil both the following conditions: ii. They must be identifiable as being suitable for use solely or principally with the above mentioned vehicles, and ii. They must not be excluded by the provisions of the Notes to Section XVII. 9. Section Notes 2 (e) and 3 of Section XVII excludes the following: 2(e) Machines or apparatus of heading 84.01 to 84.79, or parts thereof articles of heading 84.81 or 84 82 or provided they constitute integral parts of engines or motors, articles of heading 84: 83; 10. Further, Section Note 3 to Section VII reads as under: 3. References in Chapter 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part of accessory which answers to a description in two or more of the headings of those; Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. 11. Hydraulic Kit is a mechanical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling under Heading No. 8716. All the aforesaid items of Hydraulic. Kit (except Hydraulic cylinder and Valve which are manufactured by the applicant) are commonly known as "wet kit" by the applicant. All the items of wet kit except Valve, are purchased and received from various vendors. The Hydraulic system in unassembled form comprising of Hydraulic cylinder, wet kits in loose forms are supplied by the applicant to their clients who generally are (i) dealers distributors (body builders and (ii) OEMs (namely Tata Motors, Eicher Motors, etc) along with body fitted on the chassis received from OEMs. In the case of sale of Hydraulic Kits to OEMs, the applicant receives the chassis from the OEMs for fitting of body along with Hydraulic kit and then the applicant supplies the body with Hydraulic Kit as a complete product/solution to the OEMs clearing the resultant product i.e. Body + Hydraulic Kit under Chapter Heading No,87.07 of the First Schedule of the Customs Tariff Act attracting GST @28%. In some instances, the applicant also clears/supplies the body alone to the OEMs under Chapter Heading No.87.07 of the First Schedule of the Customs. Tariff Act attracting GST @28%. The subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " A doubt may arise that since the 'hydraulic kit' being fitted to a motor vehicle could merit classification as part of motor vehicle. However this doubt gets cleared by exclusions provided in the Explanatory notes to Section XVII and heading 8708, 8714 and 8716 which relate to the classification of parts of different kinds of motor vehicles. The Explanatory Notes to headings 8708, 8714 and 8716 are stated below: "To be classified as parts and accessories they fulfill both the following conditions: i) They must be identifiable as being suitable for use solely or principally with the abovementioned vehicles; and ii) They must not be excluded by the provisions of the Notes to Section XVII (see the corresponding General Explanatory Note)....... From the above explanations, it should be noted that the Heading 8708, 8714 and 8716 apply only to those parts and accessories which comply with the all the three following conditions: a) They must not be excluded by Note 2 to Section XVII; b) They must be suitable for use solely or principally with motor vehicles; and c) They must not be more specifically included else where in the nomenclature. In the present case, the Hydrau ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
