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TMI Blog2019 (10) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 - Central Tax (Rate) dated 18 th August 2017 clearly mentions the products, their HSN Codes and if for tractors are taxed at 9% (CGST) and if not then they are taxed at appropriate rates for the said HSN. The notification reduces the rate of tax based on the usage and it is incumbent upon the supplier of these products to prove that they are for tractors only to take advantage of the said notification. The Rotary tiller is covered under HSN 8432 80 20 and the parts of these tillers are generally covered under 8432 90 90. Section Note 2, to Section XVI, provides at (b) that parts which are suitable for use solely or principally with a particular kind of machine or with a number of machines of the same heading are to be classified with the machines of that kind or in heading or 8538 as appropriate. Further (c) provides that all other parts are to be classified in heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or, failing that, in heading 8487 or 8548. The section Notes, are thus very clear that if the tiller parts are of specific use in tillers only then the classification would be 84329090. If the parts do not answer to this then they are lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bee keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders. 3.2 Some of the Tractor and tillers products attracts 18% consolidated GST notified vide Notification bearing No. 19/2017 dated 18th August 2017 (also referred to as HSNs under reference) 4011 70 00 Tyre for tractors 4013 90 10 Tube for tractor type 8408 20 20 Agricultural Diesel Engine of cylinder capacity exceeding 250 cc for Tractor 8413 81 90 Hydraulic Pumps for Tractors 8708 10 10 Bumpers and parts thereof for tractors 8708 30 00 Brakes assembly and its parts thereof for tractors 8708 40 00 Gear boxes and parts thereof for tractors 8708 50 00 Transaxles and its parts thereof for tractors 8708 70 00 Road wheels and parts and accessories thereof for tractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also used by automobile sector generally gets taxed at peak rate of 28%. Hence the applicant states that they are constrained to pass on the burden as such to the farmers to the extent these are sold as spare parts. Hence farmers being the end users and without any scope for passing on the tax burden suffer the higher taxation. 3.7 The applicant states that at the same time, they as manufacturers of tillers and tractors are helpless in convincing their suppliers to charge them lower rate of 12% GST, as they sell the same products to other general automobile sectors also. However, most of such high value items, though identified generically are exclusively manufactured for our brands and can never be sold in open market for use other than in our tractors and tillers. This reiterates that such specific goods though clearly being used in the farm sector are taxed at higher rate due to its nature of common use. 3.8 Hence the applicant, in order to give effect to the intents of law and to stay put on the convention of taxing farm sector at lower rate, wants to get clarification as to whether: (a) they can collect lower rate of GST @ 12% (or 18% as the case may be) on sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles of hearing 8701 to 8705 Brakes and servo-brakes; arts thereof 8708 30 00 Brakes assembly and its parts thereof for tractors 7 8708 40 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Gear boxes and arts thereof 8708 40 00 Gear boxes and parts thereof for tractors 8 8708 50 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Drive-axles with differential, whether or not provided with other transmission components, non-driving axles; parts thereof 8708 50 00 Transaxles and its parts thereof for tractors 9 8708 70 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Road wheels and parts and accessories thereof 8708 70 00 Road wheels and parts and accessories thereof for tractors 10 8708 91 00 Parts and accessories of motor vehicles of hearings 8701 to 8705 - Radiators and parts thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re exclusively manufactured by their suppliers to their specific requirements and drawings. Therefore most of the parts cannot be used in general or used in any other general automobiles. More so, the tyres bear their brand Shakti embossed over it and their suppliers are contractually obligated not to sell such proprietary products to anyone other than the applicant. 4.4 The applicant has also given the undertaking stating as under: UNDERTAKING Recitals: We, VST Tillers Tractors Limited (also referred to as VST hereinafter), are in the business of manufacturing and marketing of Tillers and Tractors for the past 50 years. Our products have an immense brand value in the market due to the high degree of quality we deliver to our customers. Our quality policy is driven by sole consideration of optimizing customer satisfaction in terns of utility and economies. We therefore strive innovatively to cater to the dynamic customer expectations and requirements. Such market expectations demand VST s product Development team to innovatively design our products and product engineering followed by stringent quality driven procurement policy. It is hence most of the inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore state and undertake that, Our procurement policy is end-to-end encrypted and none of our inputs specifically manufactured could be generally bought and sold in the open market; Due to our unique design of components and parts used in our equipments, such parts cannot be generally used for any other automotive application. As we have implemented delivery mechanism which is tamper proof due to legal bindings and well defined and monitored after sales and maintenance programs, there is no scope for our custom made parts being available in open markets for use other than in our equipments; However, the above undertaking excludes general items like Bearings, Fasteners including Washers, Electrical Fittings. V-belts, Name Boards, Number Plates, Mirrors. FINDINGS AND DISCUSSION: 5. We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Sowmithri, Consultant during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. 6. At the outset, we would like to state that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 452L 8708 93 00 Clutch assembly and its parts thereof for tractors 452M 8708 94 00 Steering wheels and its parts thereof for tractors 452N 8708 99 00 Hydraulic and its parts thereof for tractors 452O 8708 99 00 Fender, Hood, wrapper, Grill, Side Panel, Extension Plates, Fuel Tank and arts thereof for tractors 7.2 Hence it is clear that the above commodities, if they are for tractors, would be liable to tax at the rate of 18%, else would be liable to tax at the rate appropriate to the classification of the commodity as per the HSN in the Customs Tariff Act. 7.3 As the applicant himself agrees that some of these parts are not specific to the tractors and hence could be used as parts of other goods. But the applicant has given an undertaking that most of these products are made to their design and for exclusive use of the applicant as parts of tractors and their suppliers are contractually obligated not to sell the products manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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