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TMI Blog2021 (1) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... e same and it is found that the Ballast Cleaning Machine and the Tie Temping Machine are self-propelled Track Maintenance Vehicles of the Railway. The Ballast Cleaning Machine is used to clean ballast (Grit/Kapachi) and without Wear Plates it cannot run. Whereas, the Tie Tamping Machine is used for ballast (Grit/Kapachi) tamping work. Tamping Tools is the key component of the Tie Tamping Machine, which get wear out after few days of working due to friction between ballast and tools. These tools required being replaced time to time to keep the machine and in turn the railway track working. Thus, Wear plates and Tamping tools supplied by the applicant are having specific use and are essential parts of the Ballast Cleaning Machine and the Tie Tamping Machine of railways, respectively. Thus, the applicant has specifically manufactured the products, viz. Tamping Tool and Wear Plates as per RDSO drawings of the Railway and supplied the same to M/s Trio Enterprise, which ultimately supplied as a back to back supply to the Railways by M/s Trio Enterprise. Said Wear plates and Tamping tools are having specific use and are essential parts of the Railway Track Maintenance Veh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to back order. Here, the applicant is instructed to manufacture wear plates and tamping tools as per RDSO drawing No. mentioned in the Work Order as given by M/s Trio Enterprise, for South Eastern Railway and also instructed to deliver the same to them. 2.1 In view of above backdrops, the applicant has put forward his question on which advance ruling is required, as under: Whether supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing directly to the Railway Authorities as per the Order received from M/s Trio Enterprise, should be fall under HSN 86040000 classified under Chapter 86 and should be taxed GST @ 5%? 3. Statement containing the applicant s interpretation of law and/or fact: 3.1 The applicant submitted that they are involved in the manufacturing of Wear plats Tampering tools specifically manufactured as per RDSO specifications and used by Railways as a part of Ballast Cleaning Machine and Tie Tamping Machine. 3.2 Wear Plates used in Ballast Cleaning Machine: Considering the vertical thrust coming on railway track, the track is required to be cushioned with specific size of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. Wear Plates and Tamping Tools are specifically manufactured for and used by Railways and should fall under Chapter 86. 3.6 The applicant has lastly submitted that as the order is given by M/s Trio Enterprise to the applicant on back to back basis and also supply is to be made by the applicant directly to the Railways only. To justify the same, they have attached the copy of the Work Order as received by M/s Trio Enterprise from Railways and the copy of the Work Order as issued by M/s Trio Enterprise to the Applicant. 4. At the time of personal hearing held through Video Conferencing on 09.07.2020, the Authorised Representative of the applicant, CA Rachit Shah, reiterated the facts as stated in the Application. 5. The applicant, vide their letter dated 11.07.2020 stated that during the last hearing conducted on 09-07-2020 through Whatsapp calling in which they have been asked to provide various details and photographs of the product specific along with the RDSO drawings on the basis of which the said products are manufactured and the justification regarding usage of the product is only limited to Railways only. Accordingly, their further submission is as below: PHO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gure 1, which are as below: 1 Rear Measuring Trolley; 2 Satellite (Continuous Action) 3 Tamping Unit Frame; 4 Tamping Unit/s; 5 Centre Measuring Trolley; 6 Lifting and Lining Unit; 7 Front Measuring Trolley. Figure 1: Working Components of Tamping Machine (09-3X Continuous Action Tamping Machine illustrated) Figure 2: provides a schematic illustration of the tamping process in 4 simplified steps. Step 1 A basic tamping machine indexes forward and comes to a standstill with the tamping tines of the tamping unit straddling the sleeper to be tamped on both sides. Step 2 The lifting and aligning unit works in conjunction with the measuring system and grips the rail under the crown, lifts the track to a predetermined height while correcting any vertical alignment defects in the track and at the same time slews the track to correct the horizontal alignment (simultaneous levelling and aligning). Step 3 The tamping units are lowered. The vibrating tines/tamping tools enter the ballast and stop at a pre-determined depth. The tines/tamping tools are vibrating in order to fluidise the ballast ston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tern Central Railway by mentioning the said RDSO drawing numbers in the work order given to Clad Weld Technologies Pvt Ltd. by order dated 13-7- 2018. The copies of both the work orders have already been furnished to the authorities in their earlier submissions. So, the RDSO drawing numbers can be easily identified from it. 7.4 Now, with this they have attached RDSO Drawings as required by the authorities. There is RDSO drawing as mentioned in the work order which are as under: RDSO Drawing No. TM/9415/9 REV-1 THE DRAWING IS ATTACHED HEREWITH The RDSO Drawing No. is mentioned at the bottom of the right side of the drawing. 7.5 PHOTO GRAPH OF BALLAST CLEANING MACHINE WHERE WEAR PLATE IS FIXED: BALLAST CLEANING MACHINE 7.6 Arrangements of fixing wear plates in ballast cleaning machines is shown in sketch below. These wear plates are solely used in BCM machines of railway and are not useful in any other machines elsewhere as can be seen from the arrangement sketch below: 8. DETAILS REGARDING RDSO DRAWING: SO is the sole R D organisation of Indian Railways and functions as the technical advisor to Railway Board Zonal Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to justify that both the products are ultimately manufactured as per Railway s RDSO drawing specification and would be supplied to Railways only by M/s Trio Enterprise for usage of Railway Track Maintenance machinery only. Scan Image of the letter dated 7-3-2019 obtained from M/s Trio Enterprise 12. DETERMINATION OF RATE OF TAX AND ENTRY FALLING IN CHAPTER 86: Chapter 86: Railway or Tramway Locomotives, rolling Stock and parts thereof; Railway or Tram Way Track fixtures and Fittings and parts thereof; Mechanical (Including electro Mechanical) Traffic signalling Equipment of all kinds. HSN-86040000: Railway or tramway maintenance or service vehicles whether or not self-propelled (For Example, workshops, Cranes, Ballast Tampers, Track liners, Testing coaches and track inspection vehicles) From abovementioned details, it is very clear that both the items wear plates and tamping tools are specifically manufactured for and used by Railways and should fall under Chapter 86. 12.1 Now, as per Notification No. 1/2017-Central Tax(Rate), dated 28th June, 2017, entry No. 238 covers rate of tax liable @ 2.5% CGST and @ 2.5% SGST in total taxable @ 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ujarat-391210, engaged in the manufacture of Wear plats Tampering tools. 16. The applicant submitted that: (i) M/s Trio Enterprise has got order from Railways and given as a back to back order to the applicant for manufacturing of Tamping Tool and Wear Plates as per RDSO drawings as mentioned in the work order as received from Railways. Copy of the POs as received by M/s Trio Enterprise from Railways and as issued by M/s Trio Enterprise to the Applicant for said supply also submitted by them. So, both the products are specifically manufactured as per RDSO drawings by the applicant and supplied to M/s Trio Enterprise, which ultimately supplied as a back to back supply to the Railways by Trio Enterprise. So, there is no general usage of the said product as covered above. (ii) In their submission supra, they have attached photographs of both the products along with the photographs of Railway Track Maintenance Machines (Ballast Cleaning Machinery Tie Tamping Machinery) along with the place where both the products are fixed in the abovementioned machinery and working of the same. This also justifies the usage of the products is only for Railways and not for general use. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Track Maintenance Vehicle used to clean ballast. Ballast below track is removed by cutter bar and conveyed up to screens thru TURF (Red arrow marked line shows the movement of ballast) by chain. The TURF is lined with various wear plates as per machine design and due to continuous friction between ballast, wear plates and chain, the wear plates get wear out during working, which needs to be replaced time to time to protect basic body of machine. As the machine cannot work without wear plates and BCM machine is a very important self-propelled track maintenance vehicle, wear plates of BCM should fall under HSN code 86040000 as a part of track maintenance vehicle. Tamping Tool used in Tie Tamping Machine: Railway track is cushioned with ballast to absorb the vertical thrust generated by the train running on it with high speed. Due to continue jerks and vibration, it gets loose and unorganized which is required to be tamped time to time. Tie Tamping Machine is another self-propelled track maintenance vehicle which does ballast tamping work and Tamping Tools is the key component of machine which get wear out after few days of working due to friction between ballast and tools ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rate) dated 28.06.2017 containing the sub-headings as well as the rates of Central GST applicable to various goods, which are covered under 6 Schedules, as below: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (vi) 0.125 per cent. in respect of goods specified in Schedule VI. Further, Explanations (iii) and (iv) of the said Notification read as under: (iii) Tariff item , sub-heading heading and Chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 21. As claimed by the applicant that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: 8607 parts of railway or tramway locomotives or rolling stock: 860711 Truck assemblies for self-propelled vehicles 860712 Other truck assemblies 860719 Other, including parts Axles and parts thereof 860721 Air brakes and parts thereof 860729 Other Brakes and parts thereof 860730 Hooks and other coupling devices, buffers and parts thereof 860791 Other parts of locomotives 860799 Other Parts of railway or tramway locomotives or rolling stock. 25. As already mentioned that the Ballast Cleaning Machine and the Tie Tamping Machine are used for the servicing and maintenance of the railway track lines. Both are self-propelled Track Maintenance Vehicles of the Railway. Therefore, undoubtedly, both the Ballast Cleaning Machine and the Tie Tamping Machine will fall under sub-heading No.8604 00 00. Further, the applicant has specifically manufactured the products, viz. Tamping Tool and Wear Plates as per RDSO drawings of the Railway and supplied the same to M/s Trio Enterprise, which ultimately supplied as a back to back supply to the Railways by M/s Trio Enterprise. Said Wear plates and Tamping tools are parts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 We further note that the Notification No.14/2019- Central Tax (Rate) dated 30th September, 2019 amended the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 (w. e. f. 1st October, 2019), resulting that the goods of Chapter heading 8604 and 8607 would be liable to be taxed @ 6% CGST and @ 6% SGST (in total taxable @ 12%) as per new entry Nos. 205D 205G in Schedule II, as extracted below: Schedule II- 6% S. No. Chapter/Heading/ Subheading/ Tariff item Description of goods 205D. 8604 Railway or tramway maintenance or service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, track-liners, testing coaches and track inspection vehicles) 205G. 8607 Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof. It can be seen from above that goods of Chapter heading 8604 8607 would attract GST @ 12% w. e. f. 01.10.2019. 27. In view of the above, we hold the classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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