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TMI Blog2021 (8) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed by him. It is neither integral nor essential to the basic structure and intended general functioning of the submarine , Besides, this anti-torpedo decoy system detects and locates the incoming torpedo with the help of SONAR deploys decoys to confuse incoming torpedo attack It is an anti-torpedo counter measure system for submarines and not an indispensable part of the submarine. Thus, it is not a part of ships boats and floating structures but an additional feature that falls under the category of arms and ammunition . As there is no description or explanation of arms and ammunition anywhere in the GST Act, we refer to the general usage of the word in trade parlance. In the present instance, SFDS is a part of military supplies and an anti-weaponry defence system used in naval warfare. This anti-torpedo system launches or drops expendable decoys from the launching pad - the SFDS system can very well be categorised under the heading of arms and ammunition . Moreover, in terms of classification rules, the goods need to be classified with goods of similar nature or they are akin to. Accordingly, goods are classified under chapter 93. The proposed supply in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sifiable as parts of submarine under Chapter Heading 8906 and, therefore, attract a GST rate of five (5%) by virtue of entry no. 252 of Schedule I in Notification No. 1/2017-Integrated Tax (Rate) dated 28.07.2017 ? On Verification of basic information of the applicant, it is observed that the applicant is under State jurisdiction, i.e. Assistant Commissioner (ST) Gajuwaka Circle, Visakhapatnam Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. In response, remarks are received from both the State and Central Tax officers concerned stating that no proceedings are lying pending or passed relating to the applicant on the issue, for which the Advance Ruling was sought by the applicant. 5. Applicant s Interpretation of Law and Facts: The Applicant submits the specifications and usage of SFDS system in a submarine. Usage of SFDS system in a submarine Submarines, apart from surveillance, are usually built for warfare and armed with torpedoes or guided missiles. A submarine is equipped with a torpedo launching sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 8904, 8905, 8906, 8907/ The said entry is reproduced hereunder for ease of reference: Schedule I-5% S.No. Chapter/Heading/Sub-heading/Tariff item Description of goods 252 Any Chapter Parts of goods of headings 8901,8902,8904,8905,8906, 8907 From the aforesaid, it is understood that SFDS supplied by the Applicant qualify as parts of goods of heading 8906 , and SFDS system shall be classifiable as a supply under serial no. 252 attracting a GST rate of 5%. Hence, in the Applicant s view, the SFDS system supplied by the Applicant qualifies as a part of submarine and, as a consequence, be classifiable under entry no. 250 of Schedule I and attracts a lower rate of 5% GST. The SFDS system qualifies as part of a submarine for the following reasons: Although entry no. 252 under the first Schedule of the Notification uses the expression parts of goods of headings 8906 , neither the Schedule nor the GST define the term parts of goods . Therefore, reliance needs to be placed on the case laws under the erstwhile regime and dic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not parts of general use. The relevant extract of the decision is as hereunder: 6. We have carefully considered the facts of the case and the grounds of appeal. The first two categories of goods are parts of gadgets used in cars. As per section note 1 (k) to Section XVI, parts of automobiles cannot be classified under chapters 84 and 85. They have to be classified as parts falling under Section XVII. In the instant case they are classifiable as automobile parts of Chapter 87. The third category of goods is designed for use in automobiles and is of high degree of precision. They have to be classified under the related heading for parts of vehicles etc. of Section XVII. Therefore, despite the judicial precedents cited are not being case laws of the GST regime, the principles/ratio laid down thereunder should be adopted for the purpose of classification of SFDS in question. The SFDS system in question is tailor made/customized for use in the submarines by the Indian Navy. Apart from their usage in a submarine for countering torpedoes, it does not have any independent use for it to be sold in the market. In view of the aforesaid judicial precedents, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 20 00) or 8906.... Notification N0.64/95-C.E. included the following exemption 21 All goods If, - (a) the said goods are supplied for use in construction of warships 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. Further, Notification No.12/2012- Cus also had the following entry 459 Any Chapter Capital goods and spares there of raw materials, parts, material handling equipment and consumables, for repairs of oceangoing vessels by a ship repair unit. Notification No. 82/84 - C.E. exempted all capital goods, components and raw materials falling under the Schedule to the Central Excise Tariff Act, 1985 and cleared the repai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Pvt. Ltd.(2019 (26) G.S.T.L. 506 (A.A.R.-GST)), has held that Marine Parts - Engine, Gear Box and Generator supplied by the applicant therein would fail in Chapter 84/85 of Customs tariff. However, classification of goods under Sr. No.252 depends solely on the nature of use to which the goods are put to use. Thus, it is clear from the above ruling that any sub-systems proposed to be supplied by the applicant for use in warships etc. should be classified under SI.No.252 of the CGST Rate Notification and accordingly attracts 5% GST. The applicant submits that Submarine Fired Decoy system (SFDS) is required to protect submarines against enemy attacks using torpedoes. Therefore, SFDS is an essential part of the submarines and hence qualifies to be part of Submarines and, therefore, attract GST at the rate of 5% by virtue of entry no.252 of Schedule I of the CGST Rate Notification. The SFDS system in question is designed for use in the submarines. Apart from their usage in a submarine for countering torpedoes, it does not have any independent use for it to be sold in the market. The fact that the system in question does not have any independent use other than in a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afety of warships. It was held by the Maharashtra Appellate Authority for Advance Ruling in the case of A.S. Moloobhoy Pvt. Ltd . that 35. We agree with contention of the appellant that if EPIRB which is a critical element of GMDSS is classified as part of the ship under Sr. No.252 then there is no reason to exclude SART, NAVTEX and AIS from it. GMDSS includes the following systems:- (a) Communication equipment. (b) Positioning and localization system. (c) Maritime safety information. EPIRB on SART are a part of the positioning and localization system and NAVTEX is a part of maritime and safety information. It is submitted that even in applicant s case, the purpose of warship would get defeated if the safety of warships is not kept in mind. Hence, SFD system is an integral part of the Warships. The applicant submitted that they were of the view that the rate of 5% GST in terms of SI. No.252 of Schedule I would apply whenever goods falling under any chapter are supplied, either as individual parts/components or as system/assemblies so long as they are meant for use in Warships (or other type of vessels falling under Heading 8901 etc.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decoys to confuse incoming torpedo attack It is an anti-torpedo counter measure system for submarines and not an indispensable part of the submarine. Thus, it is not a part of ships boats and floating structures but an additional feature that falls under the category of arms and ammunition . As there is no description or explanation of arms and ammunition anywhere in the GST Act, we refer to the general usage of the word in trade parlance. Ammunition (informally ammo ) is the material fired, scattered, dropped or detonated from any weapon. Ammunition is both expendable weapons (e.g., bombs, missiles, grenades, land mines) and the component parts of other weapons that create the effect on a target (e.g., bullets and warheads) . Ammunition meaning as per your dictionarty.com - Any military supplies . Any means of attack or defence The definition of ammunition is any object that can be discharged from a weapon, launched , or exploded. In the present instance, SFDS is a part of military supplies and an anti-weaponry defence system used in naval warfare. This anti-torpedo system launches or drops expendable decoys from the launching ..... X X X X Extracts X X X X X X X X Extracts X X X X
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