9911796707
TMI Blog2021 (1) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated that they have received orders and are expecting future orders from the Defence Machinery Design Establishment (DMDE), Department of Defence Research and Development under the Ministry of Defence, Government of India for the supply of Marine-pressure tight and Non-Pressure right cables, specially made and designed for use in the warship as 'parts' of warship; that these cables are though universally classified under Tariff Heading No.8544, but made and designed for use in Warship as it's integral parts, without which warship cannot function and cannot be treated as complete in all respects and at the same time the same is capable of being separated from warship for repairs and replacement and that the Rear Admiral of the Indian Navy, an officer equivalent in rank to the Joint Secretary of the GOI, has issued a Certificate of End User, vide F.No.HLC/85/PT-10 Cables (32 Types)/S4" dated 10.06.2019, to that effect, clearly showing therein the use of cables in warship application and applicability of GST@5%. They have also stated that they being manufacturer and supplier of goods and an applicant in the present case for Advance Ruling seeks an immediate authority/order about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pected). However, the applicant has submitted photocopies of Purchase order mentioned at Sr.No.(i) above only as well as End Use Certificate issued by the Real Admiral and Director, DMD Establishment, Post Box No.2043, Secunderabad on 10.06.2019 from File F.No.HLC/85/PT-10 Cables (32 Types) S4* in respect of the said purchase order. 5. The applicant has stated that since the marine/pressure tight cables/non-pressure tight cables, to be supplied by them are very essential and integral part of the warship, without which warship cannot function and cannot be completed and at the same time the said goods supplied and used in the warship are capable of being separated as such for the purpose of repairs and replacement and hence an End User Certificate duly signed by the Rear Admiral of Indian Navy/Defence Ministry, an officer equivalent to the rank of Joint Secretary to the Government of India has issued a certificate certifying theirein the intended use of the said goods as "parts of warship" vide their File No.HLC/85/PT-10 Cables (32 Types)/S4* dated 10.06.2019; that therefore their claim of applicability of GST@5% on their above supply in terms of Sr.No.252 of Schedule-I of the Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above along with the photocopies of contracts/agreements. The applicant has asked the following question seeking Advance Ruling on the same: "Whether the applicability or determination of liability to pay Tax on our said goods at 5% GST rate is legally correct and in order in terms of Schedule-I of Notification No.1/2017-Integrated Tax(Rate) or not?" CONTENTION-AS PER THE CONCERNED OFFICER: 8. The contentions of the concerned officer are reproduced hereunder in brief: (1) "End user certificate mentioned that the goods to be procured is intended for warship application vide Srls.250 and 252 of Schedule-I of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 and the said notification attracts 5% of GST on Marine pressure tight cables and Marine non-pressure tight cables. Since the notification clearly mentions that goods of any chapter which will be used as parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907 will attract 5% GST, to determine the parts, the following categories may also be considered on which the goods are to be supplied under the rate of 5%: a. The bifurcation of goods into equipment, raw material and consumables. b. Essentiality of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts/discussions made by their representative Shri D P Bhave , Advocate of the applicant at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. We have also taken into consideration the contention of the concerned officer. 10. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act. However, since the present application submitted by the applicant deals with inter-state supply of goods, we will be required to make references to the IGST Act, 2017 as well as the Notifications of Integrated Tax(Rate) issued under the said Act. 11. As per the submission of the applicant, the marine/pressure tight cables/non-pressure tight cables, to be supplied by them are very essential and integral part of the warship, without which warship cannot function and cannot be completed and at the same time the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments/discussions made by the representative of the applicant during the course of personal hearing, we find that the main issue to be decided is whether the marine-pressure tight and non-pressure tight cables manufactured and designed by the applicant are for use by the Ministry of Defence in their warship as parts of warship as stated by the applicant and whether the concessional rate of GST@5% is available to the applicant as per Entries No.250 and 252 of Schedule-I of the Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017. 13. We have gone through the Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017, it is seen that Entry No.250 which appears in Schedule-I of the said notification represents "Other vessels, including warships and lifeboats other than rowing boats" and against this entry, the rate of GST prescribed under the heading 8906 is 5%. Further, Entry No.252 of Schedule-I represents "Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907", and against this entry, the rate of GST under this heading is 5%. The same reads as under: Schedule-I Sr.No. Chapter/Heading/Sub-heading/Tariff item Description of goods 250. 8906 Other vessels, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on etc. which are required for the comfort of the officers and crew of the ship but do not come under the essential parts or equipments of a vessel/ship. 16. We find that the essential items that are discussed as essential parts of a ship/vessel are such essential components/parts of a vessel/ship without which the ship/vessel would not be complete and without which the ship would not exist. While referring to the definition of the word 'part', we find that it is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly, the second definition of part also defines 'part' as one of the pieces that together forms a machine or some type of equipment. However, interpreting the issues like the one on hand, we feel the need to refer to certain judgements which can throw light on the issue: (1) In the case of Saraswati Sugar Mills vs. Commissioner of Central Excise Civil Appeal No.295 of 2003 decided on 2nd August of 2011, Hon'ble Supreme Court of India observed as under: "12. In order to determine whether a particular article is a component part of another article, the correct test would be to look both at the article which is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs." The Hon SC further observed that "Bearing in mind the ratio of the above mentioned decisions, it is quite clear that the mere fact that the word 'paper' forms part of the denomination of a specialized article is not decisive of the question whether the article is paper as generally understood, the word 'paper' in the common parlance or in the commercial sense means paper which is used for printing, writing or packing purposes. We are, therefore, clear of opinion that Carbon paper is not proper as envisaged by entry 2 of the aforesaid Notification. Regarding ribbon also to which the above mentioned rule construction equally applies, we have no manner of doubt that it is an accessory and not a part of the typewriter (unlike spool) though it may not be possible to use the latter without the former, just as aviation petrol is not a part of the aero-plane nor diesel is a part of a bus in the same way, ribbon is not a part of the typewriter though it may not be possible to type out any matter without it. The very same question with whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps of the Indian Navy or Coast Guard; and (b) Before clearance of the said goods, a certificate from an officer not below the rank of a Rear Admiral of the Indian Navy or Coast Guard or Director General of Coast Guard or any other officer of the Indian Navy or Coast Guard equivalent to the Joint Secretary to the Government of India, to the effect that the said goods are intended for the said use, is produced to the proper officer. 19. A plain reading of the above entry shows that exemption from Central excise duty was available only to those goods which were supplied for use in the construction of Warships of the Indian Navy or the Coast Guards. No such exemption was available to goods which were used as parts of warship. However, it is seen that there is no such similar provision available in the GST regime i.e. nowhere is it envisaged in the Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 that the benefit of reduced rate of 5% GST as per Schedule-I of the aforementioned notification is available on the basis of a certificate issued by an officer of the level of Rear Admiral of Navy or an officer not in rank below Joint Secretary to the Government of India stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,861/1, 862/1 & 863/1, Manekpur Road, Khatalwada, Tal:Umbergaon, Walsad(Dist.), Gujarat, Pin Code:396120.) by this establishment for supply of 32 types of Pressure Tight (PT)-10 cables for S4*. 2. GST is applicable @5% for goods intended for Warship application vide Sls.250 and 252 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) dated 28th June, 2017 issued by the Department of Revenue, Ministry of Finance, Government of India. 3. It is certified that the goods being procured vide DMDE Purchase Order mentioned at Para '1' above are in line with stipulations mentioned at Para '2' above and hence GST is applicable @5% for goods for Purchase order ibid." 20. On going through the above, we find that although there is an indirect reference to Entries No.250 and 252 of Schedule-I of the Notification No.01/2017-Integrated Tax (Rate) dated 28th June, 2017 in para-2 which states that "GST is applicable @5% for goods intended for Warship application vide Sls.250 and 252 of Schedule-I of Notification No.01/2017-Integrated Tax (Rate) dated 28th June, 2017", there is no specific mention in the said certificate to the effect that the subject goods are integral parts of warshi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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