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2021 (8) TMI 529 - AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESHClassification of goods - HSN Code - rate of tax - Submarine Fired Decoy System (SFDS) supplied by the applicant - classifiable as ‘parts of submarine’ under Chapter Heading 8906 - whether 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? HELD THAT:- The proposed supply of goods by the applicant, i.e., Submarine Fired Decoy System (SFDS) is an anti-torpedo defence system - A plain reading of chapter 89 connotes that the heading 8906 constitutes all kinds of structures that make any floating vessel but not of a particular kind. All the assembled, unassembled, or disassembled structures which are integral and essential to the making of a vessel fall in this category. The description of goods under 51.No. 252 is “Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907.” - In the instant case the product supplied by the applicant i.e., SFDS is basically not part of goods falling under headings 8901, 8902, 8904, 8905,8906, 8907 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 question falls under SI.No.434 under Chapter/Heading/Sub-heading/ Tariff Item 9306 under Schedule III of Notification No. 1/2017 - Central Tax (Rate) dt: 28.06.2017 attracting tax rate of 18% as amended from time to time.
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