TMI Blog2019 (9) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... d elsewhere and without the same the barge will not be able to function for the purpose for which it is built, namely for unloading materials in mid-sea. Hence the subject products i.e. Marine Duty Hydraulic Cylinders and Hydraulic Power Packs, can be considered as an integral part of such barge and therefore would fall under Sr. No. 252 of Schedule I of GST Notification No. 1/2017 as Parts of goods of headings 8901. GST @ 5% (CGST of 2.5% and SCGT of 2.5%) or IGST @ 5% [under Serial No. 252 of Schedule I of GST Notification No. 1/2017], will be applicable for the above mentioned Marine Duty hydraulic equipment, which is being designed and custom built for being fitted on a Barge falling under Serial No 246 of Schedule. I of GST Notification No 1/2017 dated 28th June 2017. Input tax credit - indigenous and imported inputs which are being used for manufacture of the above equipment - HELD THAT:- Chapter V of the CGST Act, 2017 comprising of Sections 15 to 21, contains provisions pertaining to availment and utilization of Input Tax Credit. Subject to satisfying the provisions of Chapter V, we are of the opinion that the applicant can claim input tax credit in such a situation. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d functional requirements. Thereafter drawings are prepared submitted to the customer for approval. After approval of drawings, the products are tailor manufactured their capacities, sizes, dimensions and mounting configurations are maintained to suit the requirement of each individual equipment on which they have to be fitted. In the present case, we are supplying the following items to our customer M/s. Mandovi Dryrocks in Goa. A]. Marine Duty Hydraulic Cylinders and Hydraulic Power Pack employed for splitting of the barge hull for mid sea discharge its cargo. B] Marine Duty Hydraulic Mooring Winches for positioning of the barge and also for anchoring the barge. B] 1 No. Marine Duty Hydraulic Mooring Winch for positioning of the barge and also for anchoring the barge. These winches will be operated by the Hydraulic Power at [B] above. All items referred to above, are being designed, custom manufactured and supplied by us, and are essential parts of the Barge, without which the Barge will neither be complete nor capable of performing its required functions, i.e. they are integral for the functioning of the barge. We are manufacturing Marine Duty Hydraul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Barge will neither be complete nor capable of performing its required functions, i.e. they are integral for the functioning of the barge. REQUEST FOR ADVANCE RULING IN RESPECT OF FOLLOWING: In view of the foregoing facts, we respectfully seek an Advance Ruling from this Hon ble Authority in respect of the following. 1] Applicability of GST @ 5% (CGST of 2.5% and SCGT of 2.5%) or IGST @ 5% for the above mentioned Marine Duty hydraulic equipment, which is being designed and custom built by us for being fitted on a Barge falling under Serial No 246 of Schedule. I of GST Notification No 7/2017 dated 28th June 2017, and its Parts falling under Serial No. 252 of Schedule I of GST Notification No. 7/2017, which are essentially required for the functioning of barge. 2] Whether we can claim input tax credit in respect of indigenous and imported inputs which are being used for manufacture of the above equipment, if GST on the equipment manufactured by us is determined as 5% in terms of Notification No 1/2017 dated 28th June 2017, 3A. Relevant Provision of GST Law: We are presently executing an Order of M/s. Mandovi Drydocks, Goa, for design, manufacture, supply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner is that From submission of the applicant, function of the barge for which it is put to use is not clearly ascertainable ...... The above contention of the Ld Asst. Commissioner is not sustainable as the function of the Barge has been very clearly stated repeatedly in our Application. We are furnishing below the relevant extracts of our application wherein the function and use of the barge have been mentioned. A] In Annexure A: Description in Brief: Here we have very clearly stated in paragraph [A] that Marine Duty Hydraulic Cylinders and Hydraulic Power Pack employed for Splitting of the Barge Hull for mid sea discharge of cargo . B] In Annexure B: Questions on which Advance Ruling is required : Here we have clearly stated that These are to be fitted on a 850 Cu. M. Barge for Opening and Closing of the Hull, which requires an axial force of 750 tons and will be provided by the above hydraulic equipment . C] In Annexure C: Statement of Relevant Facts having a bearing on the Questions Raised . Here we have very clearly stated the function of Barge and in fact clarified it as under. Paragraph A: 2. Nos. Marine Duty, Custom Built Hydraulic Cylind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e The above contention of the Ld Asst. Commissioner is not sustainable on the following grounds. A] In Annexure A: In Description in Brief we have very clearly stated as under: The Hydraulic Equipment/Products are designed by us to suit the individual application/end use of each customer, after studying their operational and functional requirements, Thereafter, drawings are prepared and submitted to the customer for approval. After approval of drawings, the products are tailor manufactured and their capacities, sizes, dimensions and mounting configurations are maintained to suit the requirement of each individual equipment on which they have to be fitted. From the foregoing facts it will become explicitly clear to this Hon ble Authority that the contention of Ld. Asst. Commissioner is not sustainable on the following grounds : A] The Hydraulic Cylinders are TAILOR MADE with their CAPACITIES, DIMENSIONS, SIZES, MOUNTING CONFIGURATIONS and FORCE GENERATION to suit the specific equipment on which they have to be fitted, Consequently, these Hydraulic Cylinders cannot be fitted on any other equipment. B] Such huge size marine duty Hydraulic Cyl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking pressure would all be completely different, based on barge design of the Shipyard. POINT No. 3: The two contentions raised in Point No. 3 by the Ld. Asst. Commissioner are that, #1 Barge is used to transport the material from sea shore to the middle of the sea, where as hydraulic cylinder and its power pack is used to split the hull and drop the material ...................... Dropping of material from the barge to sea bottom is a altogether different function from transporting the materials .................... #2 Hydraulic cylinder and power pack are not indispensable to drop the material from the barge. The material can also be dropped from barge by using human labour (non mechanical way) or by using other mechanized instruments like crane. With regards to the first contention raised above, we have to submit as under. #1 To address the first issue raised by the Ld. Asst. Commissioner, we must first understand the main purpose of a Split Hopper Barge. It is a vessel with a large material holding chamber (called hopper), used to load and transport material. The barge hopper is loaded with a large quantity of materials by any automated mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same process can be done manually by using human labour or by using a crane, we have to submit as under, 1] MANUALLY : It would take several hours and a large work force to manually discharge around 1000 Tons of material, which takes just around 3.- 4 minutes by splitting the hull, and is therefore not a feasible option, apart from it being unsafe. 2] USING CRANE : A crane fitted with a grab bucket of 10 Cu. M. capacity would require 85 turn around cycles to discharge 850 Cu. M. This process would not only take around 3 hours, but is an expensive and slow operation, and hence never used to discharge materials into the sea, which can simply be achieved by splitting the hull of the Split Hopper Barge and achieving the same function in just 3-4 minutes. From the foregoing it will become clear that in order for a Split Barge to function, the Hydraulic Cylinder and Power Pack are indispensable to achieve its core functions of firstly transporting the materials by holding the hull in a closed condition when the barge is moving and secondly by discharging the materials at the precise designated location by splitting the hull. Without the Hydraulic Cylinder and Hydrauli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 of GST notification No. 1/2017. Point no. 2 The word Part/Parts has not been defined in GST nor was it defined in central excise earlier. The general meaning of the word part/Parts is a separate piece of something or a piece that combines with other pieces to form the whole of something (Cambridge dictionary), in case of Saraswati sugar mills V/S Commissioner of Central excise civil appeal.no. 5295 of 2003 dated 2nd Aug 2011 = 2011 (8) TMI 4 - SUPREME COURT hon. Supreme Court of India in para 12 observed: 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, ore items or parts which are used in the manufacture of the final product and without which, final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions made by both, the applicant as well as the jurisdictional office. The applicant is a manufacturer of customized hydraulic equipment for use in Dams (Irrigation Projects), Marine Vessels, etc. and the said equipment/products are designed to suit the individual application / end use of each customer, after studying their operational and functional requirements. Their present query is with respect to tailor made Marine Duty Hydraulic Cylinders and Hydraulic Power Pack and Marine Duty Hydraulic Mooring to be supplied by them to M/s Mandovi Drydocks in Goa, their client, which will be used in barges for splitting of the barge hull for mid sea cargo discharge and for positioning and also for anchoring the barge. They have submitted that Marine Duty Hydraulic Cylinders and Hydraulic Power Pack and Marine Duty Hydraulic Mooring, custom manufactured and supplied by them are essential parts of the Barge, without which the Barge will neither be complete nor capable of performing its required functions. They have further submitted that the subject barges, used for transport of goods/cargo, which are discharged mid-sea, fall under Chapter 8901 as per Sr. No. 246 of Schedule I of GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No 246 of Schedule. I of GST Notification No 1/2017 dated 28th June 2017. Now we discuss the second question raised by the applicant as under: Question No. 2 :- Whether we can claim input tax credit in respect of indigenous and imported inputs which are being used for manufacture of the above equipment, if GST on the equipment manufactured by us is determined as 5% in terms of notification No. 1/2017 dated 28 th June 2017. Chapter V of the CGST Act, 2017 comprising of Sections 15 to 21, contains provisions pertaining to availment and utilization of Input Tax Credit. Subject to satisfying the provisions of Chapter V, we are of the opinion that the applicant can claim input tax credit in such a situation. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 05/2019-20/B-98 Mumbai, dt. 23/08/2019 For reasons as discussed in the body of the order, the questions are answered thus - Question 1:- Applicability of GST @ 5% (CGST of 2.5% and SGST of 2.5%) or IGST @ 5% f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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