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TMI Blog2021 (4) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... fically covered under the aforementioned sub-heading 7318 of the First Schedule to the Customs Tariff Act, 1975 - The goods finds place in Sub-heading 7318 which finds mention at Entry No.232 of Schedule-III of the said notification on which GST liability is 18%. Classification of goods - rate of GST - Frontal Frames - HELD THAT:- Looking to the description of the product given by the applicant as well as the photographs of the Frontal frames provided by the applicant and comparing the same to the above, it appears that the said product will be rightly covered under Sub-heading 7326 and specific tariff heading 73269080 of the First Schedule to the Customs Tariff Act, 1975 - The goods as per Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) is found under Sub-heading 7326 finding mention at Entry No.238 of Schedule-III of the said notification on which GST liability is 18% Classification of goods - rate of GST - Fascia Pads UHMW PE pads - HELD THAT:- Tariff heading 3920 covers plates, sheets, film, foils and strips of plastics combined with other materials and Tariff heading 392010 covers sheets of polyethylene. Images of UHMW PE pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T + 14% CGST) upto 14.11.2017 and 18% w.e.f. 15.11.2017 after amendment. Supply of few products such as frontal frames with fascia pads along with fixture as a complete set - composite supply or not - classification of this bundle and applicable tax rate thereon in accordance with Notification No. 01/2017 dated June 28, 2017 (as amended) - HELD THAT:- The supply is concluded to be a mixed supply - Mixed supply comprising of two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. However, it is found that the supply of all the three goods involved in the said supply i.e. frontal frames, fascia pads and fixtures are leviable to GST at 18% i.e. all of them attract equal rate of tax. Hence the said Mixed supply of goods can be considered to be the supply of any of the three supplies i.e. Frontal frames (Tariff heading 73269080) OR Fascia pads (Tariff heading 39201099) OR Fixtures (Tariff heading-73181500 / 73181600 / 73182200) and the GST leviability on the said supply will be 18%. Supply of goods i.e. fender panel system along with services such as assembly, installation supervision service - classification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant, being a trading entity, was not required to be registered under the Central Excise legislation; that since, the classification under Gujarat VAT is not derived by any Harmonized System of Nomenclature ( HSN ) except for specific/few goods, classification adopted by Applicant was a subject matter of dispute between VAT authorities and the Applicant; that under the classification mechanism provided under Gujarat VAT legislation, there were two predominant rates of VAT in force viz. 5% (4% + 1% additional tax) and 15% (12.5% + 2.5% additional tax) and for the former category, goods were specifically enlisted whereas the latter tax rate applied as a residual tax rate on all other goods; that in the erstwhile regime, the applicant had classified each product under its specific category provided under 5% tax rates but this classification was disputed by the VAT Department, without providing sufficient grounds for substantiation; that subsequent to the change in the Indirect tax legislation and considering the way in which the manner for classifying goods and services has undergone a change, they seek to understand the correct classification of their products under the GST regim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and in this regard, appeals have been filed for FY 2012-13 and 2013-14; that the applicant applied for Vera Samadhan Scheme for settlement of dispute and have paid required tax in accordance with the scheme and the appeals are withdrawn; that it is important to note that classification under VAT was not determined based on HSN as prescribed in GST regime; that Section 98 of the Central Goods and Services Tax Act, 2017 (hereafter referred to as CGST Act ) provides the procedure to be followed on the receipt of an advance ruling application by the Authority for Advance Ruling and the proviso to this Section, specifically states a situation when the advance ruling application will not be admitted. The relevant portion of the Act is reproduced hereunder: Provided that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act : 3.1 The applicant has submitted that the term this Act is the CGST Act 2017, is stated in Section 1 and it is also quite clear from the perusal of the aforementioned proviso that a combination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST, whatsoever. 24. Now, coming to the legal provisions relating to the maintainability of the Advance Ruling application, which have been laid out in Section 98(2) of the CGST Act, 2017 reproduced hereinabove in para 22, it is expressly clear that only those application will not be admitted before the Advance Ruling Authority, wherein the questions raised in the application are already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act. Since there is no issue pertaining to the GST Act which is pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act, the Advance Ruling application filed by the Respondent before the Advance Ruling Authority is clearly maintainable. 4. The applicant has submitted that the advance ruling application is maintainable and admissible; that VAT matters are not connected to HSN classification of the given products and hence, they also submit that the questions for which Ruling is sought is different from the question under consideration in those cases. The Applicant has stated that they are engaged in trading of goods which are used at por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7. The applicant has submitted that the rules for interpretation of the First Schedule to the Customs Tariff Act, 1975 would be applicable for interpretation /classification of goods in GST regime which means that in GST regime, the Customs Tariff has become relevant for the purpose of determination of classification for any supply of goods; that in order to draw persuasive value regarding classification of the products under consideration, it would be important to refer to the Explanatory Notes issued by the World Customs Organization; that the Explanatory Notes do not form an integral part of the Harmonized System Convention; that however, as approved by the World Customs Organisation Council, they constitute the official interpretation of the Harmonized System at the international level and are an indispensable complement to the System; that from the official website of the World Customs Organization, they find the following explanation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference: This heading covers all cast articles of iron or steel, not elsewhere specified or included. The heading includes , inspection traps, gratings, drain covers and similar castings for sewage, water, etc. systems, hydrant pillars and covers; drinking fountains; pillar-boxes, fire alarm pillars, bollards , etc . 5. Considering the above classification, the Applicant would like to draw reference to Schedule III of CGST Notification No. 01/2017 Central Tax (Rate) that prescribes GST rate of 18% for product falling under Chapter Heading 7325. The relevant extract has been provided hereunder for easy reference: S. No. Chapter / Heading / Sub-heading / Tariff item Description of goods 237 7325 Other cast articles of iron or steel 6. Therefore, the Applicant submits that the Bollards would merit classification under Chapter Heading 7325 99 and would attract GST at a rate of 18%. (B) Fixtures 1. The Applicant submits that fixtures would generally mean something that is used to set an article firmly in a place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nuts - 7318 16 Washers - 7318 22 Bolts - 7318 11 Anchor - 7318 11 or 7318 29 The relevant extract has been provided hereunder: 7318 SCREWS, BOLTS, NUTS, COACH-SCREWS, SCREW HOOKS, RIVETS, COTTERS, COTTER-PINS, WASHERS (INCLUDING SPRING WASHERS) AND SIMILAR ARTICLES, OF IRON OR STEEL AND SIMILAR ARTICLES, OF IRON OR STEEL - Threaded articles : 7318 11 -- Coach screws : 7318 11 10 --- Machine screws 7318 11 90 --- Other 7318 12 00 -- Other wood screws 7318 13 10 -- Screw hooks and screw rings 7318 14 00 -- Self-tapping screws 7318 15 00 -- Screw for use in manufacture of cellular mobile phone 7318 16 00 -- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from different vendor. 3. Moreover, the Applicant receives orders from the customers wherein the customer wishes to purchase frames along with the pads in complete sets. This scenario is discussed in Question-2 (Part-B) of this Advance Ruling application. 4. The photos are reproduced hereunder for easy understanding of the products. 5. The Applicant submits that frames are nothing but fabrication of steel plates as per specific drawing and design or to say, steel sheets are welded to make it like a box structure. 6. Considering the above classification, the Applicant would like to draw reference to Schedule III of CGST Notification No. 01/2017 Central Tax (Rate) that prescribes GST rate of 18% for product falling under Chapter Heading 7326. The relevant extract has been provided hereunder for your easy reference: S. No. Chapter / Heading / Sub-heading / Tariff item Description of goods 238 7326 Other articles of iron or steel 7. Therefore, the Applicant submits that the frontal frames would merit classification under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other 6. From the tariff entry reproduced above, the Applicant submits that the pads are made from polyethylene and therefore, it is important to understand the meaning of the term polymer . From dictionary meaning, the Applicant understands that the term polymer means a substance which has a molecular structure built up chiefly or completely from a large number of similar units bonded together. Hence, the Applicant would like to submit that polymers of ethylene would mean things mainly made from ethylene. Therefore, the Applicant submits that facia pads made from polyethylene would merit classification of tariff code 3920 1099. 7. In order to be classified under the aforementioned entry, the following conditions need to be satisfied: (i) The product should be one of plates, sheets, film, foil or strip (ii) It should be made out of plastic (polymer) and can be supported or combined by other elements. 8. It is important to analyse each of the above criteria in order to determine whether fascia pads can be classified under the given heading. (i) The product should be one of plates, sheets, film, foil or strip The explanation to hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re floating structure of steel used in the middle of seas as locators or as warning points for the ships/ vessels. Mooring buoys are a type of buoy, to which, ships can be moored in the deep oceanic areas. 2. As a process, the Applicant would procure materials separately from different vendors such as PUF chemicals, rubber fenders, steel ring, stud link chain etc. These items would be given to another vendor for the purpose of fabrication. The ready to use or completely fabricated item, known as buoys, would be sold to customers. The same process and raw material would be required to manufacture buoys subject to specifics and requirement of the customers. 3. The photos of the buoys are reproduced hereunder for easy understanding of the products. 4. Buoys are mainly made from steel and it is nothing but round shaped structure of steel. In order to maintain buoyancy or to enable the structure to float on water, foam is filled up in the structure. Once, this is done, it is painted with bright color so as to ensure its visibility. 5. Tariff under Customs Tariff Act, 1975 provides that buoys would form part of other floating structures . The relevant extract is reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so broad as to include everything that floats but appears to be limited to articles which are moored to the bottom of a body of water to mark something. That provision only covers items which can be described as floating structures. The net buoys are not moored to the bottom of a body of water when in use nor do they perform a function similar to those of buoys as previously described. 9. In the given case, the buoy is moored to the bottom of the water body to which ships are moored too and also offer a warning point thereby serving navigational purposes, and are not classifiable as net buoys which essentially assist in fishing activities. 10. Considering the above, the Applicant believes that buoys would merit classification of other floating structures under heading 8907 90. Accordingly, the Applicant would like to draw reference to Schedule I of CGST Notification No. 01/2017 Central Tax (Rate) that prescribes GST rate of 5% for product falling under Chapter Heading 8907. The relevant extract has been provided hereunder for your easy reference: S.No. Chapter / Heading / Sub-heading / Tariff item Description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a rate of 18%. (G) Rubber Fender 1. Rubber fenders are primarily used as bumpers to absorb collision energy during contact between the vessel and docks (or even other vessels). The massive sea vessels are embedded with rubber fenders on the outer surface of the vessel or installed on the docks in some cases. These fenders are also known by some as rubber buffers . The primary objective of the rubber fenders on the dock is to absorb collision energy during the berthing process. This in return protects both the ship and the dock after collision. Generally, there are two types of rubber fender viz. pneumatic rubber fender and foam rubber fender. The sample copy of bill of entry and sales invoice is enclosed as Annexure F 2. Pneumatic rubber fenders are made out of rubber and strengthening cord layers. This rubber fender is filled with air. Solid rubber fenders have been used for ages since they are readily available and are considered long lasting. Pneumatic Rubber fenders come in different forms including cell rubber fender, cone rubber fender, arch type, unit element fender, cylindrical type CY, D type fender, square shaped, keyhole version, cylindrical tug fen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- Patches for puncture repair of self-vulcanising rubber or a rubber backing 4016 93 20 --- Rubber rings (O-ring) 4016 93 30 --- Rubber seals (Oil seals and the like) 4016 93 40 --- Gaskets 4016 93 50 --- Washers 4016 93 60 --- Plugs 4016 93 90 --- Other 4016 94 00 -- Boat or dock fenders, whether or not inflatable 6. Accordingly from the above description, the Applicant believe that pneumatic rubber fenders as well as foam rubber fenders would be classified with HSN 4016 94 00. Accordingly, the Applicant believes that rubber fenders would be leviable @ 18% by virtue of following line entry of Schedule III which has been reproduced hereunder for you easy reference: S.No. Chapter / Heading / Sub-heading / Tariff item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a composite supply. 4. It can be observed that in cases where two or more taxable supplies are made together for a single price and when such supply is not classified as a composite supply, it will be categorized as a mixed supply. Therefore, at the outset it is necessary to determine whether the supply of a fender panel system qualifies as a composite supply. 5. There are certain conditions which need to be satisfied in order to be considered as a composite supply which are summarized below: (i) Supplies to be made by a taxable person (ii) Supply should consist of two or more taxable supplies of goods or services (iii) The various components of such supply should be naturally bundled and in conjunction with each other (iv) One of supply is principal supply 6. Since the Applicant is a taxable person who supplies two or more taxable supplies by way of supplying fender panel system, the first two conditions are satisfied. It will now be necessary to determine the fulfillment of the latter two conditions. An e-flyer issued by the CBIC on Composite supply and mixed supply provides insights on few indicators which can be used to determine that supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when any of the item is damaged or has become non-usable which requires replacement of damaged item. 9. Apart from above, the Applicant would like to place reliance on few of the decisions of European Court of Justice, as under. The copy of rulings are enclosed herewith as Annexure H. In the case of Card Protection Plan v. Customs and Excise Commissioners, [1998] EUECJ C-349/96 , the ECJ held that a service must be regarded as ancillary to a principal service if it does not constitute for customers an aim in itself, but a means of better enjoying the principal service supplied. In the case of Levob Verzekeringen BV, OV Bank NV v. Staatssecretaris van Financi n, [2005] EUECJ C-41/04 , the ECJ held that where two or more elements or acts supplied by a taxable person to a customer are so closely linked that they form objectively, from an economic point of view, a whole transaction, which it would be artificial to split, all those elements or acts constitute a single supply for the purposes of application of VAT. 10. Considering above discussion, the Applicant submits that in order to qualify various services as naturally bundled, it is essential to have followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (119) of the CGST Act, 2017, since the installed AFC system cannot be said to result in the emergence of an immovable property. The relevant extract of the decision is reproduced hereunder, for your ready reference. 25. As per the applicant, apart from the flap gates and manual swing gates, which can arguable to be said to be fixed/ annexed to immovable property, rest all hardware to be supplied under said contracts are movable property. The flap gates, POS machines and manual swing gates are attached with screws and bolts at the entry gates of the bus station. These flap gates can be easily removed without damaging such gates and re-attached to some other locations. Hence, it cannot be said that such gates are permanently embedded to the bus stations and, hence, should be considered as an immovable property. Further, the flap gates are just a part of the AFC system and is not the main equipment of the AFC system. Even if, it is argued that the flap gates are permanently fastened to the earth and form part of the immovable property, it cannot be construed that the whole AFC system would form part of the immovable property. 26. The applicant further submitted that in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . The applicable subheading for the plastic faced steel panel and rubber fender imported together will be 7308.90.9590, HTSUS, which provides for structures and parts of structures .of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel, other, other, other, other, other. The rate of duty will be free. 18. From the perusal of above, the applicant also believes that even when the frames and fascia pads are supplied i.e. the supply is made for fender panel system excluding the fixtures, the supply would still merit classification under Heading 7308. Accordingly, the Applicant would like to draw reference to Schedule III of CGST Notification No.01/2017 Central Tax (Rate) that prescribes GST rate of 18% for product falling under Chapter Heading 7308. The relevant extract has been provided hereunder for easy reference: S.No. Chapter /Heading /Sub-heading/ Tariff item Description of goods 251 7308 Structures (excluding prefabricated buildings of heading 94.06) and parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itting out, modification, alteration work is carried out for an immovable property. The term immovable property has not been defined in the CGST or IGST Act and accordingly, recourse can be taken from other relevant acts to understand the meaning of the term immovable property . As per General Clauses Act, 1897, the term immovable property has been defined as under: (26) immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth; , Attached to the earth condition not getting fulfilled 4. As the expression attached to the earth has not been defined in the General Clause Act, reference can be drawn from Section 3 of Transfer Property Act which gives the following meaning to the expression attached to the earth : (a) rooted in the earth, as in the case of trees and shrubs, (b) embedded in the earth, as in the case of walls or buildings, and (c) attached to what is so embedded for permanent beneficial enjoyment of that to which it is attached. 5. From above, the Applicant understands that immovable property would mean anything that is permanently faste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customer, the supplier would provide fender penal system along with installation services. Conditions of composite supply Fulfilled in present case Supplies to be made by a taxable person Yes Supply should consist of two or more taxable supplies of goods or services Yes The various components of such supply should be naturally bundled and in conjunction with each other Yes One of supply is principal supply Yes, fender panel system 11. Therefore, the Applicant believes that the present case would qualify to be composite supply wherein the supply of fender panel system is the principal supply which provides essential character to the entire bundle of supply of goods as well as installation service by the Applicant. Therefore, the Applicant believes that the supply of fender panel system would merit classification under Heading 7308 90. Accordingly, the Applicant would like to draw reference to Schedule III of CGST Notification No. 01/2017 Central Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chemical supply constitute composite supply. 4. As discussed and elaborated in Part B C on essential ingredients of composite supply, the Applicant believes that the present case qualifies to be a composite supply wherein the installation service is the principal supply and usage and supply of chemical during the course of providing such service is an ancillary supply. 5. The Applicant would also like to draw reference to Circular No.34/8/2018-GST dated March 1, 2018 wherein it has been clarified that the rubber used during the course of retreading of tyres is an ancillary supply and retreading would form the pre-dominant element of supply. The relevant extract has been reproduced hereunder: S.No. Issue Clarification 2 Whether retreading of tyres is a supply of goods or services? In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Rubber used for retreading is an ancillary supply. Which part of a composite supply is the principal supply, must be determined keeping in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such holes are blasted in a sequence as required. The explosives are neither handed over to the client nor is it in possession of client; that any quantity of explosives or other material left after carrying out blasting activity is transferred back to the Magazine of the applicant. While determining whether the present supply is supply of goods or supply of service, the Gujarat AAR observed the following: In the present case applicant uses explosives in the blasting activity at their client's site. Thus it would be evident that blasting activity is carried out by the applicant for their client for which the applicant uses explosives. The applicant carries out blasting work with the aid of explosives. Thus, there is deemed supply of explosives in this case in view of the judgement of Hon'ble Supreme Court in the case of Bharat Pest Control (supra) as well as the supply of service in the form of the blasting work. Therefore, the situation as narrated by the applicant is a composite supply of goods and services and shall be covered by Section 2(30) and Section 8(a) of the CGST Act, 2017. 9. Considering the above advance rulings and circulars, the Applicant wishes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar provisions of the GGST Act. 14. Based on the submission of the applicant as well as the arguments/discussions made by the representative of the applicant during the course of personal hearing, we find that there are four different issues to be discussed in respect of which the applicant has asked four questions seeking Advance Ruling on the same. They are as under: Question-1(Part-A) What would be the classification of the following products under GST and applicable tax rate thereon in accordance with Notification No. 01/2017 dated June 28, 2017 (as amended). Sr.No. Products 1 Bollards 2 Bolts, nuts, screw, washer etc. known as fixtures 3 Frontal Frames 4 Fascia Pads UHMW PE pads 5 Buoys 6 Chains/Swivel/D-Shackle/Chain tensioner 7 Rubber Fender (both types) Question-2(Part-B): Whether supply of few product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Before taking up the discussion of each of the aforementioned products, we find it necessary to refer to the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under: (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, Explanation (iii) and (iv) of the said Notification reads, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his chapter covers a certain number of specific articles in headings 73.01 to 73.24 and in heading 73.25 and 73.26 a group of articles not specified or included in Chapter 83 or 83 and not falling in other Chapters of Nomenclature, of iron (including cast iron as defined in Note 1 to this Chapter) or steel. For the purposes of this Chapter, the expressions tubes and pipes and hollow profiles have the following meanings hereby assigned to them: (1) Tubes and pipes: Concentric hollow products, of uniform cross-section with only one enclosed void along their whole length, having their inner and outer surfaces of the same form. Steel tubes are mainly of circular, oval, rectangular (including square) crosssections but in addition may include equilateral triangular and other regular convex polygonal cross-sections. Products of cross-section other than circular, with rounded corners along their whole length, and tubes with upset ends, are also to be considered as tubes. They may be polished, coated, bent (including coiled tubing), threaded and coupled or not, drilled, waisted, expended, cone shaped or fitted with flanges, collars or rings. (2) Hollow profiles: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes and frames for sewage water or similar system 7325 99 99 ---- Other 19. On going through the above, and comparing the same with the description of the aforementioned product and the photographs provided by the applicant, we find that bollards would be rightly covered under Tariff heading 73259999. Having decided the classification of the product bollard we are required to find out the rate of GST liability of the said product for which we will be required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time). On going through the same, we find that Sub-heading 7325 finds mention at Entry No.237 of Schedule-III of the said notification wherein the GST liability is 18% (9% SGST + 9% CGST) which reads as under: Sr.No. Chapter /Heading / Subheading /Tariff item Description of goods 237 7325 Other cast articles of iron or steel; such as Grinding balls and similar articles for mills, Rudders for ships or boats, Drain covers, Plates and frames for sewage water or similar system. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashers 7318 22 00 -- Other washers 7318 23 00 -- Rivets 7318 24 00 -- Cotters and cotter-pins 7318 29 -- Other : 7318 29 10 --- Circlips 7318 29 90 --- Other 22. On going through the above, and on comparing the same to the description of the products and photographs provided by the applicant, we find that fixtures such as bolts, nuts, screws and washers are specifically covered under the aforementioned sub-heading 7318 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Further, the specific tariff headings of the said products would be as under: Sr.No. Name of the product Tariff heading as per Customs Tariff Act, 1975 01. Bolts 73181500 02. Nuts 73181600 03. Screws 73181500 04. Washers 73182200 23. Having decided the classification of the above products, we need to find out the GST liability on the same for which we need to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---- Shanks 7326 90 99 ---- Other 25. Looking to the description of the product given by the applicant as well as the photographs of the Frontal frames provided by the applicant and comparing the same to the above, it appears that the said product will be rightly covered under Sub-heading 7326 and specific tariff heading 73269080 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Having determined the classification of Frontal frames , we need to find out the GST liability on the said product, for which we need to refer to Notification No.01/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) and find that Sub-heading 7326 finds mention at Entry No.238 of Schedule-III of the said notification on which GST liability is 18%(9% SGST = 9% CGST). The same reads as under: Sr.No. Chapter / Heading / Sub-heading / Tariff item Description of goods 238 7326 Other articles of iron and steel, forged or stamped, but not further worked; such as Grinding balls and similar articles for mills, articles for automobiles and Earth moving i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covers plates, sheets, film, foils and strips of plastics combined with other materials and Tariff heading 392010 covers sheets of polyethylene. Images of UHMW PE pads (as obtained from internet) are placed above. Also, as described by the applicant, fascia pads are made of high quality of plastics (polyethylene )and are applied on the frame structure on which vessels/ship hull touches. In this regards, we would like to refer to the decision of Veer Plastic Pvt. Ltd. Vs. Collector of Central Excise, Ahmedabad [2004 (168) E.L.T. 255 (Tri. - Del.)], (which was also referred to by the applicant) wherein it was held that HDPE (High-density polyethylene) tapes or strips would be classifiable under 3920. Further, keeping in view the above description of the product as well as the photographs provided by the applicant, we find that the Fascia pads which are sheets of polyethylene(made from polymers of ethylene) would be rightly classifiable under the Tariff heading 39201099 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Having decided the classification of Fascia pads , we need to find out the GST liability of the said product for which a reference will be requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, we find that Sub-heading 8907 finds mention at Sr.No.251 of Schedule-I of the said notification on which GST liability is 5%(2.5%SGST + 2.5% CGST). The same reads as under: Sr.No. Chapter / Heading / Subheading / Tariff item Description of goods 251. 8907 Other floating structures (for example, rafts, tanks, cofferdams, landing-stages, buoys and beacons). 30. The next product whose classification is required to be determined is of Chains/Swivel/D-Shackle/Chain tensioner . As per the submission of the applicant, the raw materials used for the manufacture of the said products are iron and steel. They have submitted photographs of the said products and sample copies of bill of entries and sales invoices. They have submitted that chain, swivel, d-shackle and chain tensioner are used to support frames to stand still and they are mainly made from steel. They have stated that on referring the explanatory notes for World Customs Organization, they observed that it is clearly stated that chains of cast iron, irrespective of dimensions, process of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sink stoppers, lavatory cisterns, etc. All these chains may be fitted with terminal parts or accessories (e.g., hooks, spring books, swivels, shackles , sockets, rings and split rings and tee pieces). They may or may not be cut to length, or obviously intended for particular uses. Iron or steel parts of chains specialised as such e.g. side links, rollers, spindles, etc., for articulated chain, links and shackles for non-articulated chain , also fall in this heading. This heading does not cover: (a) Chains having the character of imitation jewellery in the sense of heading 71.17(e.g. watch chains and trinket chains). (b) Chains fitted with cutting teeth, etc., and used as chain saws or cutting tools(Chapter 82), or other articles in which chains play a subsidiary role such as bucket chains, conveyor hook chains or stretchers for textile finishing. (c) Door guards fitted with chains(heading 83.02). (d) Surveying chains(heading 90.15). 33. On going through the details provided under Sub-heading 7315 as per the Customs Tariff Act, 1975, the explanatory notes of HSN in respect of subheading 7315, the description of the aforementioned products giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fenders on the outer surface of the vessel or installed on the docks in some cases and the primary objective of the rubber fenders on the dock is to absorb collision energy during the berthing process which in return protects both the ship and the dock after collision; that there are generally two types of rubber fenders viz. pneumatic rubber fender and foam rubber fender for which they have submitted photographs of the same and submitted the description as under: (a) Pneumatic rubber fenders are made out of rubber and strengthening cord layers. This rubber fender is filled with air. Solid rubber fenders have been used for ages since they are readily available and are considered long lasting. Pneumatic Rubber fenders come in different forms including cell rubber fender, cone rubber fender, arch type, unit element fender, cylindrical type CY, D type fender, square shaped, keyhole version, cylindrical tug fender, W version, M version etc. The photos are reproduced hereunder for easy understanding of the product: (b) Foam rubber fenders, made out or rubber and foam, are also used to absorb collision energy during contact between the vessel and docks (or even other vess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4016 99 90 --- Other 37. Looking to the description of Rubber fenders as well as the photographs provided by the applicant, and comparing the same to the above, we find that the said product rightly merits classification under the Tariff Heading 40169400 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). which reads as Boat or dock fenders, whether or not inflatable. Having decided the classification of Rubber fenders , we need to find the GST leviable on the same for which a reference is required to be made to Notification No.01/2017Central Tax(Rate) dated 28.06.2017(as amended from time to time). On going through the said notification, we find that Sub-heading 4016 finds mention at Sr.No.49 of Schedule-IV of the said notification on which GST liability is 28%(14%SGST + 14% CGST). The same reads as under: Sr.No. Chapter / Heading / Sub-heading / Tariff item Description of goods 49 4016[other than 40169200] Other articles of vulcanised rubber other than hard rubber (other than erasers) The aforementioned notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 181600 18%(9% SGST + 9% CGST) 04. Screw (fixtures) 73181500 18%(9% SGST + 9% CGST) 05. Washer (fixtures) 73182200 18%(9% SGST + 9% CGST) 06. Frontal Frames 73269080 18%(9% SGST + 9% CGST) 07. Fascia Pads UHMW PE pads 39201099 18%(9% SGST + 9% CGST) 08. Buoys 89079000 5%(2.5% SGST + 2.5% CGST) 09. Chains 73158900 18%(9% SGST + 9% CGST) 10. Swivel/D-Shackle/ Chain tensioner 73159000 18%(9% SGST + 9% CGST) 11. Rubber Fender (both types) 40169400 (i) 28% (14%SGST + 14%CGST) upto 14.11.2017. (ii) 18% (9%SGST + 9%CGST) from 15.11.2017 onwards. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service . (iv) Other illustrative indicators, not determinative but indicative of bundling of services in the ordinary course of business are: There is a single price or the customer pays the same amount, no matter how much package they actually receive or use The elements are normally advertised as a package The different elements are not available separately The different elements are integral to one overall supply. If one or more is removed, the nature of the supply would be affected (d) The above flyer has relied upon the Service Tax Education Guide issued in erstwhile regime of Service Tax wherein the clarification were provided with respect to services bundled in the ordinary course of business. (e) The customer perceives fender panel system involving all items to be one set or system and in general, this is the similar practice followed by trade and industry. Further, this bundle of items is essential for each other and are natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply would still merit classification under Heading 7308. Accordingly, the supply would be considered as falling under Sub-heading 7308, falls at Sr.No.251 of Schedule III of CGST Notification No. 01/2017 Central Tax (Rate) that prescribes GST rate of 18%. 41. On going through the copy of the amendment to Purchase order submitted by the applicant, we do find that frontal frames, fascia pads and fixtures find mention in the same order mentioning the value as well as the GST amount therein. We also find the applicant submitting that they get several such orders from customers but they have not submitted copies of any such purchase orders. Even otherwise, just because a customer orders for all the three aforementioned goods in a single order does not necessarily mean/prove that they are naturally bundled and supplied in conjunction with each other in the ordinary course of business. It also does not mean that asking for the supply of all the three goods together is the general trend in the market. Further, although they have mentioned in their submission that many a times, they receive orders from the customers wherein the customer wishes to purchase frames along with fascia pads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cillary; 43. From the above, it can be seen that for being a composite supply, all the following conditions are required to be necessarily satisfied: (i) The said supply should be made by a taxable person to a recipient. (ii) It should consist of two or more taxable supplies of goods or services or both or any combination thereof. (iii) They should be naturally bundled and supplied in conjunction with each other in the ordinary course of business. (iv) One of the supplies must be a principal supply. Comparing the above conditions to the issue in hand, we find as under: (i) The said supply is made by a taxable person i.e. the applicant, hence the first condition is satisfied. (ii) The said supply consists of supply of three different taxable supply of goods i.e. frontal frames, fascia pads and fixtures. It therefore consists of two or more taxable supplies of goods. Hence this condition is also satisfied. (iii) The supply of goods i.e. frontal frames, fascia pads and fixtures are not naturally bundled and not supplied in conjunction with each other in the ordinary course of business as discussed in the foregoing para. Further, although they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately; 45. From the above, it can be seen that for being a mixed supply, all the following conditions are required to be necessarily satisfied: (i) The said supply should be made by a taxable person to a recipient. (ii) It should consist of two or more individual supplies of goods or services or any combination thereof. (iii) It should not constitute a composite supply. (iv) They should be made in conjunction with each other for a single price. 46. Comparing the above conditions to the issue in hand, we find as under: (i) The said supply is made by a taxable person i.e. the applicant, hence the first condition is satisfied. (ii) The said supply involves three individual supply of goods i.e. frontal frames, fascia pads and fixtures. Hence this condition is also satisfied. (iii) The said supply does not constitute a composite supply . Hence this condition is also satisfied. (iv) The supply of goods i.e. frontal frames, fascia pads and fixtures can be said to have been made in conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point for the aforementioned supply being a composite supply as under: (a) The applicant requires to supply fender panel system along with services such as assembly, installation supervision as per the requirements of the customer for which the price /consideration for fender panel system and services would be separate and individual invoices would be issued for supply of goods and supply of service. (b) The present supply would not qualify as works contract service by referring to the definition of work contract under Section 2(119) stating one of the essential conditions to qualify as works contract supply is that the fabrication, erection, fitting out, modification, alteration work is carried out for an immovable property. (c) Immovable property would mean anything that is permanently fastened to the earth. Considering this, the resultant structure arising in the present case is not an immoveable property for the reasons that: (i) the fenders panel system can be easily shifted at another location without any complex dismantling process (ii) the fender panel system is dismantled on a periodical basis as these would suffer wear and tear after a certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in the event of non-submission of copy of any work order/contract etc. it would not be possible for us to decide whether the present supply is Work Contract or otherwise. We, therefore, have no option but to rely on the submission of the applicant and available records to decide the type of supply. 52. In order to find out whether the aforementioned supply i.e. Fender Panel System (along with services such as assembly, installation supervision) is a composite supply or otherwise, we will be required to refer to the definition of Composite Supply as appearing in Section 2(30) of the CGST Act, 2017. But, before proceeding further, we would like to reiterate here that although the applicant has considered the supply of the fender panel system as a single supply of goods (as per his above question seeking Advance Ruling), the fact is that this supply consists of 3 different supply of goods i.e. frontal frames, fascia pads and fixtures, which, do not form a single supply or a composite supply since they are not naturally bundled or supplied in conjunction with each other in the ordinary course of business as discussed in the foregoing paras. Section 2(30) of the CG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be obtained by the recipient from the applicant but can be obtained from some other supplier also. We, therefore, find that the supply of goods mentioned above and the aforementioned supply of services are not naturally bundled nor supplied in conjunction with each other in the ordinary course of business. Hence this condition is not satisfied. (iv) None of the aforementioned supply of goods, nor the supply of services which the applicant wants to supply alongwith the supply of goods, individually, forms the principal supply. Hence this condition is also not satisfied. In view of the above, since all the above conditions have not been satisfied, we conclude that the aforementioned supply of goods and services does not constitute a composite supply 54. Having concluded that the aforementioned supply of goods and services is not a composite supply, the next thing required to be checked is whether it gets covered under the definition of mixed supply of services or otherwise. For the said purpose, we need to refer to the definition of mixed supply as defined in Section 2(74) of the CGST Act, 2017 which reads as under: (74) mixed supply means two or more indiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orementioned supply is neither a composite supply nor a mixed supply , we conclude that the applicant will have to supply the aforementioned goods as well as services separately and not as a combination. In view of the above, we conclude that the supply of goods i.e. fender panel system along with services such as assembly, installation supervision service would not qualify as a composite supply or a mixed supply. Hence, there is no question of either determining the classification of this bundle or deciding it s applicable tax rate. 58. Now, we are required to discuss the fourth question of the applicant seeking Advance Ruling which reads as under: Question-4 (Part D) Whether supply of installation service where usage of chemical is essential to provide effective service would qualify as composite supply or not? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax thereon in accordance with Notification No.11/2017 dated June 28, 2017 (as amended)? 59. The applicant has submitted his view point for the aforementioned supply being a composite supply as under: (a) The Applicant, as per the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity at their client's site for the client, thus, there is deemed supply of explosives in this case in view of the judgement of Hon'ble Supreme Court in the case of Bharat Pest Control (supra) as well as the supply of service in the form of the blasting work and is therefore a composite supply of goods and services covered by Section 2(30) and Section 8(a) of the CGST Act, 2017. (g) Considering the above advance rulings and circulars, the Applicant wishes to submit that in cases where materials are consumed during provision of a service, such cases would qualify to be composite supply of goods as well as service wherein the supply of service would be the principal supply. (h) In the present case, the present supply would qualify under SAC 9987 Installation services of other goods n.e.c. leviable to GST @ 18%. 60. We have gone through the submission of the applicant as also the copy of work order dated 18.07.2019 issued by the Krishnapatnam Port Company ltd. to the applicant, which reads as under: Installation of SCN 1600 Cone Fender System: Stage-1: Removal of the existing fender system from the wharf wall. Stage-2: Coring on Wharf wall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find as under: (i) The said supply is made by a taxable person i.e. the applicant, hence the first condition is satisfied. (ii) The aforementioned supply consists of Installation services along with supply of chemicals which will be used up during the course of supply of service. It therefore consists of two or more taxable supplies of goods or services or combination of both. Hence this condition is also satisfied. (iii) The supply of services i.e. Installation services along with supply of goods i.e. chemicals which will be used up during the course of supply of service are naturally bundled and supplied in conjunction with each other in the ordinary course of business as in the present supply, installation services is supplied with the help of the Chemical (which helps in effective service of installation as submitted by the applicant) which is used up during the course of supply of Installation services. Hence this condition is also satisfied. (iv) Out of the aforementioned supply, the supply of installation service forms the principal supply and the supply of goods i.e. chemicals, forms the ancillary supply. Hence this condition is also satisfied. 62. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the GST liability on Installation Service we will be required to refer to the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) which covers the classification of services as well as rate of GST liability on them. On going through the same, we find that Installation Service appears at Sr.No.25 (ii)of the said notification on which GST liability is 18%(9% SGST + 9% CGST). The same reads as under: Sr.No. Chapter, Section or Heading Description of service. Rate (per cent) Condition 25 9987 (i) Services by way of house-keeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017 2.5 --- (ia) Maintenance, repair or overhaul services in respect of aircrafts, aircraft engines an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise here that decisions of Advance Ruling Authorities cannot be relied upon by the applicant, since, as per the provisions of Section 103 of the CGST Act, 2017, the Advance Ruling pronounced by the Advance Ruling Authority or the Appellate Authority shall be binding only on the applicant who had sought it in respect of any matter referred to in sub-section(2) of Section 97 for Advance Ruling and the concerned officer or the jurisdictional officer in respect of the applicant. 66. In view of the above circumstances, we rule as under : RULING Question-1(Part-A) What would be the classification of the following products under GST and applicable tax rate thereon in accordance with Notification No. 01/2017 dated June 28, 2017 (as amended). Sr.No. Products 1 Bollards 2 Bolts, nuts, screw, washer etc. known as fixtures 3 Frontal Frames 4 Fascia Pads UHMW PE pads 5 Buoys 6 Chains/ Swi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Notification No.01/2017 dated June 28, 2017 (as amended)? Answer : Supply of products such as frontal frames with fascia pads along with fixture as a complete set, would qualify as a mixed supply for the reasons discussed hereinabove. The said mixed supply can be classified as supply of any of the three supplies i.e. Frontal frames (Tariff heading 73269080) OR Fascia pads (Tariff heading 39201099) OR Fixtures (Tariff heading 73181500/73181600/73182200), for the reasons discussed hereinabove and the GST applicable thereon will be 18%(9% SGST + 9% CGST). Question-3(Part-C): Whether supply of goods i.e. fender panel system along with services such as assembly, installation supervision service would qualify as composite supply or not? If the supplies would qualify as composite supply, what would be the classification of this bundle and applicable tax rate thereon in accordance with Notification No.1/2017 dated June 28, 2017 (as amended)? Answer : Supply of goods i.e. fender panel system along with services such as assembly, installation supervision service would not qualify as a composite supply or a mixed supply for the reasons discussed hereinabove. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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