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2022 (3) TMI 1299 - AUTHORITY FOR ADVANCE RULING, TAMILNADUClassification of goods - rate of tax - Marine Engines coming under HSN Code 8407 or not - spare parts exclusively used as part of fishing vessel classified under heading 8902 or not - collection made towards supply of materials and labour charges towards repair of fishing vessel - puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene - marine engine coming under HSN Code 8407 supplied to Defence Department for patrol, flood relief and rescue operations or not. Rate of tax on Marine engines coming under HSN code 8407 and its spare parts exclusively used as part of fishing vessel of heading 8902 - HELD THAT:- From the tariff 89 headings, it is clear that the rate is applicable based on the end use of these engines i.e., if they become part of fishing vessels or other vessels including warships and life boats other than rowing boats. Thus the rate of tax at 5% is based on the end use these engines are put to and is available only for the vessels - From the invoice submitted, it is seen that the OBM has been supplied to an individual and the HSN adopted is 8407. As per entry at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017, parts of goods of headings 8901,8902,8904,8906,8907 falling under any chapter of the customs Tariff attracts GST @5%. Therefore if the marine engines supplied for use as part of vessel falling under tariff heading 8902, which are used by the fishermen, then such engines as part of such vessels will only attract GST at the rate of 5% as per the above entry. Rate of tax on spare parts exclusively used as part of fishing vessel of heading 8902 - HELD THAT:- Entry Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017 applies only to parts of goods of heading falling under any chapter when it is a part of goods falling under heading 8902. As the applicant has not produced documents establishing details of spare sales, this authority is constrained to ascertain whether the spares supplied are parts of goods of vessels falling under chapter 8902. In this scenario, for want of documentary substantiation, no ruling is offered with respect to spares. Whether GST is leviable on supply of materials and labour charges incurred during the warranty period, free of cost? - HELD THAT:- As parts are provided to the customer without a consideration under warranty, no GST is chargeable on such replacement. The value of supply made earlier includes the charges to be incurred during the warranty period. Therefore the replacement of the goods and service rendered during the warranty period without consideration does not attract GST separately. The warranty card issued by the applicant has a condition that during the time of repair, transportation expenses and all other expenses have to be borne by the boat owner. If such cost are incurred by the applicant on behalf of the boat owner and is combined, with warranty charges, taxes are applicable. Hence in cases where warranty services are rendered exclusively without combining any other service charges or incidental expenses incurred while rendering the warranty services, only will not attract GST. Rate of tax applicable for collection made towards supply of materials and labour charges towards repair of fishing vessels of heading 8902, after the warranty period - HELD THAT:- The spares and labour charges are treated as separate transactions and have been taxed at the appropriate rates. To decide on the nature of activity supplied, if composite or not, the terms of such activity should be known. That is, it should be made clear if the activity of rendering repair or maintenance services of fishing vessels/boats etc involves supply of both goods/spare parts and services in conjunction and are naturally bundled with each other in the ordinary course of business to be treated as composite supply. This fact can be ascertained only from the contract entered into for rendering such service - The applicant has neither produced any copy of the contract nor agreement for supply of repair or maintenance service of fishing vessels. From the invoices submitted, it is observed that spares and labour charges have been taxed individually and the nature of supply, whether the predominant supply is service or replacement of spares cannot be established. As the contract/agreement which would throw light on the, nature of supply, predominant supply etc is not furnished and the invoices are unable to establish the nature of such repair work done after the warranty period, this authority is constrained to ascertain the nature of the supply of repair or maintenance services rendered by the applicant as to whether it is a composite supply or it provides for the supply of spare parts and services (labour) as distinct and separately identifiable supplies. Hence no ruling cannot be extended in this regard. Rate of tax on puff insulated ice boxes used by fishermen in fishing vessels for reducing spoilage and maintaining good hygiene - HELD THAT:- To avail the concessional rate of 5% under entry no. 252 cited supra, goods supplied should be part of goods falling under Chapters 8901, 8902, 8904, 8905, 8906, 8907. The subject Puff insulated ice box is only used independently to keep the fish fresh and it does not become a part of the vessels as provided in the notification. Such boxes cannot be considered as part of the vessels and are in no way connected to the vessels. Their main purpose is to keep the fish fresh and prevent decay and has nothing to do with the vessels or operation of such vessels. Hence the product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible for the concessional rate of GST as per entry at SI.No.252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. Rate of tax on marine engines to Defence department for patrol and flood relief and rescue operations - HELD THAT:- Applicant had not filed any documentary evidences along with the application to substantiate that the engines they supply are being used in boats used by defence departments. The applicant has not furnished any purchase orders for supply of engines at present or for proposed supplies. In this scenario, this authority is constrained to pass any ruling on the question raised about eligibility to avail rate of 5% as prescribed at Sl.no. 252 of Annexure-I of Notification No. 01/2017-C.T. (Rate) dated 28.06.2017.
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