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TMI Blog2022 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... l components of a vessel/ship without which the ship would not be complete and would not exist. These are very integral for the functioning of the ship and can also be separated from the ship for repair/replacement. When the definition of the word 'part' is referred, it is found that 'part' 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 form a machine or some type of equipment. The classification of goods under Sr. No. 252 depends solely on the nature of use to which the goods are put to. The impugned goods have the function of purifying water. It is not the case that the ship cannot sail without the impugned goods. The applicant has not produced any evidence to show that the impugned goods are so essential that the ships cannot sail without the same - the impugned goods, being in the nature of additional equipment used in ships and not parts of ship cannot be considered for concessional rate of GST as parts of a ship. The fresh water is very essential necessity for the members/crew of the vessels i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RO Plant/Water Purification System. 2.2 The applicant is engaged in supply of Reverse Osmosis Plant (RO Plant/System) classified under Chapter Heading 8421 as per GST Tariff. The applicant has been supplying the subject goods to various buyers by charging GST @ 18%. The applicant has been informed by the Indian Naval Department that, GST should be charged @ 5% in respect of supply of RO Plant/system to be installed in warship, in view of Notification No.01/2017 dated 28.06.2017 (S. No. 250 252). B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.3 Relevant portion of Notification No. 01/2017 - CTR dated 28.06.2017 is reproduced as under - G.S.R. (E). - In exercise of the powers conferred by sub-section (1) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the rate of the central tax of- (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), (v), and (vi) .. appended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem) supplied by it falls under S. No. 322 of Schedule III of Notification No.01/2017-CTR dated 28.06.2017 attracting 18% CGST, which the applicant has already been charging accordingly. 2.6 APPLICANT SUBMISSION DATED 04.01.2022: TECHNICAL NOTE WATER USAGE / REQUIREMENTS ON SHIPS The ships require the following types of waters for use during its operations at high seas / passages 1. Boiler quality water (Ultra high quality water) for use in boilers which produce steam for running of steam turbines which are used for ships propulsion. 2. Technical quality water (Superior quality water to be used for machinery (Like turbine washing /engine cooling, which are predominantly ships Propulsion systems) 3. Drinking/ Potable water for human consumption by the personnel onboard and also for other uses like cooking in Kitchens / Galleys / Washing machines etc.) 2.7.1 Rochem RO Plants are used in various applications as listed out above either for singular use or multiple uses as required onboard the ship. Hence apart from the basic solution of provision of drinking / potable water, these RO Plants purify the sea water and make it suitable for use effectively for vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2 The application was admitted and called for final e-hearing on 23.11.2021. The Authorized representative of the applicant, Shri. Atul Mishra, learned CA and Shri. Prashant Shrivastava, learned Advocate were present. The Jurisdictional officer Shri. Rajesh Sangale, learned Deputy Commissioner, MUM-VAT-E-634, LTU-3 was also present. The case was heard. 05. OBSERVATION AND FINDINGS: 5.1 We have gone through the facts of the case, perused the documents on record, and considered the oral/written submissions made by both, the applicant as well as the jurisdictional/concerned officer. 5.2 We find that the applicant is engaged in supply of Reverse Osmosis Plant (RO Plant/System) classified under Chapter Heading 8421 as per GST Tariff. The applicant has been supplying the goods (RO Plant/System) to various buyers by charging GST at the rate of 18% and has been discharging GST liability accordingly, thereon. 5.3 The questions raised before this Authority is with respect to the applicable rate of GST on supply of Reverse Osmosis Plant/system (RO Plant/system) to Indian Navy/Indian Coast Guard in normal course and when the said goods are supplied to the Indian Navy/Coast Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned goods supplied by the applicant are parts of a ship first of all we need to examine as to what are Parts . We find that the word Part/Parts has not been defined in GST nor was it defined in Central Excise earlier. In view of this first we are required to understand the general meaning of the word 'Part/Parts' which is of relevance to us in the present case. -------We find that as per Cambridge English Dictionary: Part as a noun - a separate piece of something or a piece that combines with other pieces to form the whole of something --------One of the pieces that together form a machine or some type of equipment. It has other meanings also in other context which are not of relevance in present context like: ----a single broadcast of a series of television or radio programme or Division of a story. ----one of two or more equal or almost equal measures of something etc. 5.5.6 Thus in view of the above meanings/definitions of parts , we will be required to examine as to what are the parts of Goods of CTH 8901, 8902, 8904,8905, 8906 and 8907 and whether the subject goods can be considered as Parts for being covered under Sr. No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India observed: 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 said to be component part and the completed article and then come to a conclusion whether the first article is a component part of the whole or not. One must first look at the article itself and consider what its uses are and whether its only use or its primary or ordinary use is as the component part of another article. There cannot possibly be any serious dispute that in common parlance, components are items or parts which are used in the manufacture of the final product and without which, final product cannot be conceived of. 13. The meaning of the expression `component' in common parlance is that `component part of an article is an integral part necessary to the constitution of the whole article and without it, the article will not be complete'. 14. This Court, in Star Paper Mills (supra ) has made a settled distinction while considering whether paper cores are `components' in the manufacture of paper rolls and manufacture of paper sheets. It is stated that `paper cores' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r does not lose its character as paper in spite of being subjected to chemical processes, and that ribbon is not an accessory but an essential part of the typewriter. While dismissing the appeal Court held that 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. It has to be understood according to the well-established canon of construction in the sense in which persons dealing in and using the article understand it. 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 paper as envisaged by entry 2 of the aforesaid Notification. Regarding ribbon also to which the above mentioned rule construction equally applies, we have no ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Rate) dated 28.06.2017. 5.5.13 The impugned goods, being in the nature of additional equipment used in ships and not parts of ship cannot be considered for concessional rate of GST as parts of a ship in view of our discussions above. 5.5.14 We have also considered the fact that fresh water is very essential necessity for the members/crew of the vessels in terms of drinking water, water for cooking, etc. especially when the ship is out for a long haul but such essential necessity of the impugned equipment is for the crew/members and not for the ship as a whole. Any ship can just sail without have the impugned equipment on board and therefore the impugned goods cannot be considered as parts of a ship and therefore, the subject supply of impugned goods cannot be given the benefit of concessional rate of GST as per Sr. No. 252 of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. 5.6 We observe that, even the applicant is convinced that the impugned goods cannot be covered under Sr. No. 252 of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 as can be seen from its submissions which are reproduced as under:- The applicant's understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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