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TMI Blog2021 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 96GST Act' would mean CGST Act and MGST Act. 2. A. FACTS AND CONTENTION - AS PER THE APPLICANT 2.1 M/s. Cummins India Limited, the Applicant manufactures diesel and natural gas engines, power generation systems, etc. The applicant's business, broadly, comprises of these three segments which includes Distribution business, wherein Applicant provides products, packages, services and solutions for ensuring uptime of equipment supplied; provides parts, new and rebuilt engines, batteries, varied services and customer support solutions. 2.2 Applicant supplies parts of marine diesel engines and gensets to customers such as the Indian Navy, and various shipyards and also other customers for application/ use in ships or vessels. The parts supplied by / to be supplied by the Applicant to the Indian Navy, include numerous and diverse parts, intended for use in marine engines or gensets, of ships or ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hood incorporating a fan whether or not fitted with filter 18% 8409 Parts suitable for use solely or principally with engines of heading 8407 or 8408 28% 8484 Ball or roller bearings 18% 8483 Transmission shaft (including cam shafts) and cranks, bearing housings and plain shaft bearings, ball or roller screws, gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft coupling (including universal joints) 18% 8484 Gaskets and similar joints of metal sheeting combined with other material or of two or more layers of metal; set or assortment of gaskets and similar joints, dissimilar in composition, put up in pouches, envelops or similar packings, mechanical seals 18% 8503 Parts suitable for use solely or principally with the machines of heading 8501 or 8502 18% 2.8 Sr. No. 252 of Schedule 1 of Notification No. 1/2017-C.T. (R), dated 28.06.2017 stipulates that "Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 are taxable at the rate of 5%". The parts supplied/ to be supplied by the Applicant are covered under different tax rate brackets however, the said parts supplied / to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Limited Vs. Commr of Central Excise, Nagpur [2007 (210) E.L. T 579 (Tribunal)] wherein the Hon'ble Tribunal evaluated availability of exemption to goods falling under "any Chapter", when used as parts of goods of Heading 8701. Similar view was taken by the Hon'ble Tribunal in the case of High Energy Batteries (I) Limited Vs. Commissioner of Central Excise, Trichy (2002 (142) E.L.T. 266 (Tribunal)], pertaining to parts of an aircraft or a helicopter. 2.14 Upon application of the ratio of these judgements, parts (goods) when supplied for use/ fit-out in ships or vessels, as in the present case, to the Indian Navy, in terms of Sr. No. 252, these goods qualify for the concessional rate of GST, irrespective of the classification of these goods. The Applicant submits that the said parts supplied / to be supplied by the Applicant are to be considered as parts of goods of heading 8901 to 8907 covered under entry at Sr. No. 252, in terms of the law declared by the Hon'ble Supreme Court in case of M.C.E. Products Sales and Services Ltd. vs. Commissioner of Central Excise [2002 (144) E.L. T. 457 (S.C.)]. 2.15 In the context of the Applicant's business and present factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used to control engine operations i.e. opening/closing of valves, operation of injector 10 Float (3178893) This part is used in a Float Tank in the Fuel Line which maintains height of fuel above engine centre line. 11 Water pump This is used to circulate coolant in engine to maintain engine operating temperature 12 Valve exhaust This is used in Cyl Head which helps release exhaust gas from combustion chamber 13 Belt- drive This drives Water Pump of the engine which cools the engine 14 Adapter, pipe Works as a joint to connect two pipes 15 Air cleaner This item cleans Air before entering engine. 2.17 The above list depicts that the parts supplied/ to be supplied by the Applicant are essential components of the marine engines and gensets used in ships or vessels, without which, the marine engines and gensets may well be incapable of the desired outcome / performance. 2.18 The Applicant refers to the judgement in the case of Commissioner of Cus. (Import), Mumbai Vs. Dilip Kumar & Company (2018 (361) E.L.T.577 (S. C.)] wherein the Supreme Court declared the law that taxing statue (imposing tax liability) should be interpreted strictly and burden to prove tax liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of Not No. 01/2017-Central Tax (Rate). 03. CONTENTION - AS PER THE CONCERNED/JURISDICTIONAL OFFICER: OFFICER SUBMISSION DATED 27.05.2021:- The department's comments/stand in this regard is as follows:- 3.1. Tariff Classification of merchandise under the Harmonized System is governed by the principles set fourth in the General Rules of Interpretation ("GRIs'). The GRIs are intended to be consulted and applied each time merchandise is to be classified under the Harmonized System. Accordingly, it is the GRIs that are the single set of legal principles that always govern the classification of merchandise under the Harmonized System. Rule 3 of General Rules for interpretation of Customs Tariff made applicable to GST in its first sentence to GRI3 (a) provides that goods should be classified in the heading that provides the most specific description. In general, under this criterion, (1) A description by name is more specific than a description by class and (2) A description that more clearly identifies a product is more specific than one which is less complete. Rule 3(a): Prefer the Specific entry over the general entry Rule 3(a) states: 3. when by application of rule 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, there are certain exceptions to this general rule. Parts of General Use Parts of general use consist of tube and pipe fittings, ropes, cables, chains, screws, bolts, etc. For example, a bolt used in a vehicle will be classified as "bolt" and not as "motor vehicle part." It has been held in CCE v. Carrier Aircon Ltd. (2006) 147 STC 421 (SC) that end use to which a product is put is not determinative of its classification. For example, "axle studs" will be classifiable as "screws" even if these are used on motor vehicles as held in Kwality Sales Corporation v. CCE. 3.5 In Indian Aluminium Cables Ltd. vs. UOI (21) ELT 3 (SC) it was held that process of manufacture and end use to which it is put, cannot necessarily be determinative of classification of that product under fiscal statute like CETA. What is more important is that whether the broad description of the article fits in the expression used in the tariff. Therefore, predominantly, the end user test would not be used as a first principle and would come in last if there is no other test or the tariff entry itself is based on end use. Specific entries will have to be adopted in place of a general description. 3.6 Hence, from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is a principal supply. Hence, it is imperative that for a supply to a composite supply, such supply of goods and services are to be provided as a package and the different elements of the supply should be integral to the supply i.e if one or more element is removed, the nature of the supply would be affected. 3.12 As per CBIC's e-flier, 'Composite Supply' entails the concept of 'naturally bundled supply', and whether elements of the supply are bundled in the ordinary course of business would depend upon the normal or frequent practice followed in the area of business. It also says that in order to quay for a composite supply one of the characteristic would be that 'none of the individual constituents of the supply are able to provide the essential character of the service.' 3.13 Applicant's contention that in the impugned situation the service is classifiable under Composite Service, is not tenable. A reading the entire contract between the applicant & ONGC Ltd. as well the definition of composite supply reveals that, the proposed supply is not a composite supply as the applicant had, before this agreement, used to only provide Engines of dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is appropriately covered under mixed supply. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 02.06.2021. Authorized Representatives of the applicant, Shri. Ranjeet Mahtani (learned C.A) and Shri Deepak Bahirwani, Director Taxation, were present. The Jurisdictional officer Shri. R. S. Shelkande Superintendent, Division V, Pune-II Commissionerate was also present. The Authorized Representatives made oral submission with respect to admission of their application. 4.2 The application was admitted and called for final e-hearing on 17.11.2021. The Authorized Representatives of the applicant, Shri. Ranjeet Mahtani, learned advocate, Shri. Ruturaj Bhide, learned advocate and Shri Deepak Bahirwani, learned Tax Director were present. The Jurisdictional officer was absent. Case was heard. 05. OBSERVATIONS AND FINDINGS: 5.1 We have perused the records on file, gone through the facts of the case, submissions made by the applicant as well as the department and have examined the matter in detail. During the course of final hearing, the applicant stated that, they want answer to only one question viz. Whether parts of diesel marine engine or genset supplied or to be supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01, 8902, 8904, 8905, 8906,8907 2.5% 5% 5.4 From the above table it is very clear that parts of goods of headings 8901, 8902, 8904 to 8907 of any chapter are chargeable to CGST/SGST @ of 2.5% each. The Applicant has submitted that they supply parts of marine diesel engines and gensets to the Indian Navy, for application/ use in ships or vessels and the parts supplied by / to be supplied by the Applicant, includes numerous and diverse parts, intended for use in marine engines or gensets, of ships or vessels (of the Indian Navy) failing under Chapter No. 89 of Customs Tariff Act, 1975, typically under tariff heading number 8901,8902,8904,8905, 8906 and 8907. 5.5 In a recent ruling given by this very authority in the case of M/s MAN Energy Solutions India Private Limited (Order No. GST-ARA- 56/2019-20), it has been held that Marine Engines will be considered as parts of vessels falling under heading 8901, 8902, 8904 to 8907, only if they are used in manufacturing goods falling under Tariff Headings 8901, 8902, 8904 to 8907. Further in the same case it has also been held that parts of Marine Engines, falling under Chapter 8408/8409 of the GST Tariff would attract concessional rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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