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TMI Blog2024 (6) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... attery Pack for Jet Suit - HELD THAT:- EDF is a type of propulsion system commonly used in electric radiocontrolled (RC) planes and some small drones. EDFs are designed to mimic the appearance and function of jet engines, that are powered by electric motors and are typically more compact. They consist of a ducted fan, which is essentially a fan enclosed in a cylindrical housing (the duct). The product EDF i.e. Electric Ducted Fan , works on electric current drawn from the battery - the impugned product specifically classifiable as a fan, enclosed by a metal sheet. - the EDF (Electric Ducted Fan) Thrusters are classifiable under CTH 84145990. Rate of tax - HELD THAT:- Entry Number 317B of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, specifies the GST rate of 18% for the goods falling under 8414, having description Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; Gas-tight biological safety cabinets, whether or not fitted with filters [other than bicycle pumps, other hand pumps and parts of air or vacuum pumps and compressors of bicycle pumps. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Battery Pack for Jet Suit made by the applicant to the DEBEL? c) What is the applicable rate of tax under the Central Goods and Services Tax Act, 2017 and Karnataka State Goods and Services Tax Act, 2017 on the such supplies of EDF Thrusters with Battery Pack for Jet Suit made by the applicant to the DEBEL? 4. Admissibility of the Application: The applicant sought to know the classification of their supplies EDF Thrusters with Battery Pack for Jet Suit and the applicable rate of tax. The said issues are concerning Classification of any goods or services or both and Determination of the liability to pay the tax on any goods or services or both , which are covered under Sections 97 (2) (a) 97 (2) (e) respectively of the CGST Act 2017 and hence the instant application is admissible 5. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue: 5.1 The applicant is a private limited company incorporated under the Companies Act 2013 (erstwhile The Companies Act 1956) located at No. 80/2, Honnasandra village, Kasaba Hobli, Nelamangala, Bengaluru 562123. Registered under the Central Goods and Services Tax Act, 2017 as well as Karnataka State Goods and Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the electrical requirement of the EDF thrusters and various accessories. 5. 7 As per the specification given in the annexure to the supply order, the said supplies should be completed in 2 milestones namely T1 and T2. The applicant is required to supply following items by milestone T1 SI No Items Qty a) 25Kgs EDF Thrusters with accessories 16Nos b) 2 Kw hr battery pack with charger 4 Nos c) EDF performance mapping and test reports 1 set d) Battery pack performance test report 1 set Further, the applicant is required to supply following items by milestone T2 SI No Items Qty a) 25Kgs EDF Thrusters with accessories 26 Nos b) 2 Kw hr battery pack with charger 4 Nos c) EDF performance mapping and test reports 1 set d) Battery pack performance test report 1 set 5.8 The applicant is also required to carry out specified performance evaluation test of the EDF Thrusters and Battery packs before supplying the materials to the DEBEL and submit the performance mapping and test report along with supplies made at each milestone, as mentioned supra. 5.9 The applicant is also responsible for following as a part of supply of EDF Thrusters with Battery Pack for Jet Suit: a. All the necessary fixtures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In accordance with notification 01/2017 Central Tax (Rate) dated 28th June 2017 read with notification 18/2021-Central Tax (Rate) dated 28th December 2021, supply of aircraft falling under HSN code 8802 or 8806 is covered under entry number 244 of Schedule I of the notification, and supply of Parts of goods of heading 8802 or 8806 (except parts of items covered in SI. No. 383 in Schedule III) is covered under entry number 245 of schedule I of the notification. Both such entries namely entry number 244 and entry number 245 are subject to CGST at the rate of 2.5%. Accordingly, an updated schedule of CGST rate is: SI.No. Chapter/Heading / Subheading / Tariff item Description of Goods Rate 244 8802 or 8806 Other aircraft (for example, helicopters, aeroplanes) except the items covered in SI. No. 383 in Schedule III, other than for personal use 2.5% 245 8807 Parts of goods of heading 8802 or 8806 (except parts of items covered in SI. No. 383 in Schedule III) 2.5% 6.4 Entry number 383 in Schedule III of notification 18/2021-Central Tax (Rate) dated 28th December 2021 covers supply of Closed-circuit television (CCTV), transmission apparatus for radio-broadcasting or television, whether or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract. Therefore, the said supplies made by the applicant under the supply order from DEBEL should be classified as supply of Parts of goods of heading 8802 or 8806 (except parts of items covered in SI. No. 383 in Schedule III) under entry number 245 of notification 01/2017 Central Tax (Rate) dated 28th June 2017 read with notification 18/2021-Central Tax (Rate) dated 28th December 2021. Accordingly, the said supply should be subject to tax at the rate of 2.5% under the Central Goods and Services Tax Act, 2017 and at the rate of 2.5% under the Karnataka State Goods and Services Tax Act. 6.8 The applicant craves leave and reserves its right to vary, amend, alter and/or add to these interpretation and to produce such oral and documentary evidence and file such compilation of documents as may be necessary at the time of hearing of the application for advance ruling. PERSONAL HEARING PROCEEDINGS HELD ON 14.03.2024 7. Sri. Sumith Rathi, Chartered Accountant Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application. FINDINGS DISCUSSION 8. At the outset we would like to make it clear that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er's body head against impacts and transmit critical flight parameters to the user. As per the supply order, the proposed configuration of the wearable flight system has a requirement of 6 EDF thrusters within an individual static thrust of approximately 25 kgs at MSL resulting in a cumulative static thrust of approximately 150 kgs. The system is also proposed to have self-contained rechargeable Battery Pack to cater to the electrical requirement of the EDF thrusters and various accessories. 11. The applicant is also required to carry out specified performance evaluation test of the EDF Thrusters and Battery packs before supplying the materials to M/s DEBEL and submit the performance mapping and test report along with supplies made at each milestone, as mentioned supra. 12. The applicant, admittedly, is also responsible for the following as a part of supply of EDF Thrusters with Battery Pack for Jet Suit: a. All the necessary fixtures, rigs for the performance evaluation. b. Interface for data feeds from the EDF controllers and BMS for onward transmission to the helmet mounted display for the user (providing helmet is not in the scope of supply) c. The throttle control switch b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et Suit , to be supplied to the DEBEL along with relevant HSN code and the GST rate applicable thereon. The applicant contends that the impugned supply is meant for 'Jet Suite', which qualifies to be an aircraft, in terms of Aircraft Act, 1934 as other aircraft and thus the supply becomes parts of aircraft and accordingly classifiable under HSN code 8802 or 8806 and the impugned supply is classifiable under HSN 8807 as parts of goods of heading 8802 or 8806 (except parts of items covered in SI. No. 383 in Schedule III). Therefore, the impugned supply attracts GST @ 5% in terms of entry number 245 of notification 01/2017 Central Tax (Rate) dated 28th June 2017 read with notification 18/2021-Central Tax (Rate) dated 28th December 2021. However from the definition of 'aircraft' as per Section 2(1) of the Aircraft Act, 1934; aircraft means any machine which can derive support in the atmosphere from reactions of the air , [other than reactions of the air against the earth's surface] and includes balloons, whether fixed or free, airships, kites, gliders and flying machines; In the instant case, the Electric Ducted Fan (EDF) thrusters based Jetsuit apparently derives s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or not fitted with filters; gas-tight biological safety cabinets, whether or not fitted with filters. Heading 8414.59 covers Fans Other(with output exceeding 125 W), and 84145990 covers Fans Others. Relevant extract of Customs Tariff Act 1975 is reproduced here below: Tariff Item Description of Goods 8414 51 - Fans : -- Table, floor, wall, window, ceiling or roof fans, with a self-contained electric motor of an output not exceeding 125 W: 8414 51 10 --- Table fans 8414 51 20 --- Ceiling fans 8414 51 30 --- Pedestal fans 8414 51 40 --- Railway carriage fans 8414 51 50 --- Wall fans 8414 51 90 --- Other 8414 59 -- Other : 8414 59 10 --- Air circulator 8414 59 20 --- Blowers, portable 8414 59 30 --- Industrial fans and blowers 8414 59 90 --- Other On perusal of the above tariff items, the EDF (Electric Ducted Fan) Thrusters are classifiable under CTH 84145990. 18. Entry Number 317B of Schedule III to the Notification 1/2017-Central Tax (Rate) dated 28.06.2017, as amended, specifies the GST rate of 18% for the goods falling under 8414, having description Air or vacuum pumps, air or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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