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TMI Blog2021 (10) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... and without these cables all the essential equipment would be rendered nonoperational and submarine warship would be ineffective during war operation. The use of cables for electrical or mechanical and instrumental functioning of the submarine warship is very essential and without these cables the supply of power would not be possible and all the equipment and machinery of submarine warship become non-functioning or we can say submarine warship itself may become non-operational and ineffective. Hence, Marine Pressure Tight cable and non-pressure tight cable are integral and essential for the functioning of the submarine warship. The marine pressure tight cables and non-pressure tight cables manufactured and supplied by the applicant to the Indian Navy are essential and integral parts of the submarine warship and hence the benefit of reduced rate of GST of 5% is available to the appellant as per Sr. No. 252 of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017. - GUJ/GAAAR/APPEAL/2021/22 - - - Dated:- 28-6-2021 - J.P. GUPTA AND SEEMA ARORA, MEMBER Present for the applicant : Advocate Amal Paresh Dave At the outset we would like to make it clear that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication and applicability of GST@5%. 5. The applicant has claimed that supply of Marine-pressure tight and Non-Pressure tight cables, specially made and designed for use in the warship as parts of warship are essential parts of warship and liable for GST @ 5% in terms of Sr. No. 252 of Notification No. 01/2017-CT (rate) dated 28.06.2017. Sr. No. 252 of Notification No. 01/2017-CT (rate) dated 28.06.2017 is read as under: S. No. The goods of any Tariff Heading/Chapter, if they are the Parts of goods of headings Rate of Tax 252 8901, 8902, 8904, 8905, 8906, 8907s GST @5% 6. The applicant has placed on the records 4 purchase Orders received for supply of Marine-Pressure/ Non-Pressure Tight Cables from Defence Machinery Design Establishment (DMDE), Department of Defence Research Development, Ministry of Defence, Govt. of India for their Warship Submarine Applications as the Parts of Goods of heading No. 8906 or the Parts of Warship . 7. The applicant has submitted that marine/pressure tight cables/nonpressure tight cables, to be suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to GST rate @5%. However, the applicant have not submitted any details with regard to the goods viz. Marine pressure tight cables and non-pressure tight cables are essential and integral part of the warship without which warship cannot function and cannot be completed. Also the applicant has not submitted the details such as: (i) the definition of marine pressure tight cables and non-pressure tight cables (ii) in which part of the warship they are used. (iii) do they constitute parts which can be used solely in warships? (iv) what are the uses of these cables i.e. what is the purpose they serve. (v) the reason why these cables can be considered to be so essential or so integral a part of a warship, without which the warship would not come into existence or would not be complete. In the absence of these details, it would not be possible for them to decide whether the subject goods are parts of warship or otherwise. 9.1 The GAAR, has also observed that in the End Use certificate issued by the Admiral and Director of DMD Establishment vide F. No. HLC/85/PT10 Cables (32 type/S4* dated 11.06.2019) it is not specifically mentioned that the subject goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in their submarine warship application. (iii) The items mentioned in the Ruling i.e. Fore and Aft, Ship s Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Funnel, Navigation Bridge, Deck, Deck Crane, Forecastle etc. and considered as only essential and integral parts of the warship are the illustrative list of the parts of the ship and they are not exclusive but inclusive. The cables manufactured /designed and supplied to the Indian Navy/ Ministry of Defence are very essential and integral parts of the Warship and which can never be the items of comforts in nature fitted in the warship. (iv) The judgments of Hon ble Supreme Court relied upon by the Authority are not applicable in this case because Cables are manufactured with special properties, design, characteristics and supplied to the Indian Navy/ Ministry of Defence solely for submarine warship application is forming essential and integral parts of the warship as without being their use or fitted, the warship cannot function, work and treated as completed in all respect. (v) The GAAR observation that exemption provided under erstwhile Central Excise regime vide Not. No. 64/95-CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal and written submissions filed by the appellant, submissions made at the time of personal hearing, Advance Ruling given by the GAAR and other material available on record. 15. We find that the appellant has received the order for supply of Marine-Pressure Non-Pressure Tight Cables from Defence Machinery Design Establishment (DMDE), Department of Defence Research Development under the Ministry of Defence, Govt. of India, specially made and designed for use in the Warship Submarine Application as Parts of Warship. These cables are classified under tariff Heading No. 8544 of Custom tariff Act, 1975, but are/were made and designed for use in the Warship Application only as an essential and integral parts, without which warship cannot function and cannot be treated as completed in all respect. Therefore, the moot question here is to decide whether the Marine-Pressure Non-Pressure Tight Cables are essential and integral parts of the submarine warship or otherwise because GAAR in their Ruling has ruled that the said goods are not essential and integral parts of submarine warship. Therefore, Appellant is not eligible for GST rate @ 5% in terms of Sr. No. 252 of Not. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, detergents and water are present. These cables are designed and develop to possess requisite level of electrical, mechanical, chemical, environmental and thermal properties to carry out desired function in presence of electrical, mechanical and thermal stresses arising out of installation and subsequent operation on submarine warship during the entire service life . These thin walled insulated, sheathing materials are halogen free and fire retarded with low smoke generation and low toxicity properties. Further, it is submitted in the technical write-up that, all above technical requirements/ properties are integrated in single cable and we can conclude that these cables are unconditionally only for use in underwater warship submarine applications where ambient pressure in machinery compartment is expected to vary from 900 to 1330 mbar during operation . 16.2. The applicant has submitted the End-User certificate dated 04.12.2019, issued by Rear Admiral, Indian Navy wherein it is stated that cables supplied by M/s. Apar Industries Ltd. against P.O. No. HLC/85/NPT Cables (56 types)/S4*/243 dated 17.07.2019 are intended for bonafide use towards Warship application of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only be used in under water submarine warship due to their properties, technical specification and are used in machinery compartment where ambient pressure is expected to vary from 900 to 1330 mbar during operation. 18. The Rear Admiral in their End User certificate has certified that these cables are intended for bonafide use in submarine warship. Also clarified in their letter dated 29.10.2020 that these cables i.e. Marine-Pressure Non-Pressure Tight Cables are utilized for powering the essential equipment listed at Para 15 (Page6) of the Advance Ruling i.e . Anchor, Bow, Bowsprit, Bow Thrusters, Fore and Aft, Ship s Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Funnel, Navigation Bridge, Deck, Deck Crane, Forecastle and also used in weapon launchers; all equipment and electrical cables fitted ONBOARD warship are to be watertight and ruggedized to work in high salt water content sea waters and in submerged conditions while going through cyclonic storms; without these marine cables the essential equipment would be rendered non-operational thereby rendering warships ineffective during war operations. Hence the Rear Admiral has stated that th ..... 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