TMI Blog2022 (7) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... iable under chapter 86.07. Further, applying the same analogy, in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS RAMSONS UDYOG (P) LTD. [ 1999 (9) TMI 284 - CEGAT, NEW DELHI ] the Hon'ble has observed that the Sanitaryware are also design for fitment into the Coach they would be classifiable under Heading 86.07 . Thus, the Roof Mounted AC package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in Railway coaches and nowhere else - further, it is observed that as per Section Notes and Chapter Notes, parts suitable for use solely or Principally with the articles of those chapters are covered under chapter 86 to 88. Thus, the classification of the Roof mounted AC package Unit manufactured as per the specific design and layout provided by the railways (RDSO) and supplied to the Indian Railways only and no where else, falls under chapter 86.07 of the GST Tariff. - Order No. 02/2022, Case No. 14/2021 - - - Dated:- 8-2-2022 - SHRI MANOJ KUMAR CHOUBEY AND SHRI VIRENDRA KUMAR JAIN, MEMBER Present on behalf of applicant : Shri Yogesh Chourasia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that part or accessory. 3.4 The Product Roof Mounted AC Package Unit is so designed that it can be fitted only to Railway Coaches (Rolling Stock) and performs the function of only Servicing Railway Coaches. It has such inbuilt features which renders them usable only with reference to the needs of Railway Coaches. Functionality Though it may be that the impugned item function as other equipment's of similar nature like the Air Conditioner in House or Motor Vehicles but by the features which are built in them rendered usable only with the Railway Coaches and it can be concluded that this item for that reason can be taken only as adjunct of the Railway Coaches. In no case this Part manufactured and Supplied by the Company are usable in a matter unconnected with the Railway Coaches. As In terms of Section note -3 of Chapter XVII under which Chapter 86 falls it is clearly stated that Parts or accessories which would fall under Chapter 86 to 88 would only be those which are suited principally with the articles under this heading i.e. 86 to 88. 3.5 As regard to the classification under Chapter 86 of the GST Tariff, the Chapter 86 covers Railway or Tramway Locomotive, Rollin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally at to what output is given by the equipment but the use to which equipment is to be put would be determinative of the classification. Going by the use of the equipment and the un-disputable position that i.e. the exclusive use of GPU meant for the Aircraft in terms of this section note, it qualifies as an item which will fall under Chapter 88 which covers Aircrafts. 20. The Section note-2 under which the Electrical Machinery of Chapter 85 stands excluded from purview of Section XVII will not come in the way of the classification of the goods under Chapter 88 in view of the fact that the item on market criteria of its exclusive use gets to be classified under Chapter 88. 21. We observe that a meaning has to be given to provisions of Chapter note-3 and what is set out to be included should be given preference to what is set out to be excluded when both the notes deal with the same issue. The interpretation which is favourable to the assessee has to be preferred in view of well settled principle law as laid down by the Hon'ble Supreme Court in a number of cases the latest being 1997 (93) ELT 641 in the case of Sun Export Corporation v. CC Bombay , the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IC engines used in motor vehicles are parts of motor vehicles came up for consideration. The Tribunal gave the answer in the affirmative. These parts of IC engines which were the main parts in the locomotive should also be termed as part of the locomotive and not as IC engines coming under the general category. Central Board of Excise and Customs had to consider the issue as to whether a radiator assembly supplied to Indian Railways is to be classified under sub-heading 8607.00 or otherwise. The Board observed that product radiator assembly is designed according to the specifications of the Indian Railways and is for use solely and principally with locomotives of Heading 8601 and 8602. It is clarified that the radiator assembly is not to be classified as parts of IC engines under Heading 8409. This understanding of the Central Board of Excise and Customs is discernible from circular No. 16/90 dated 11-6-1990, which still holds good. If radiator assembly manufactured for Railways for being fitted in locomotives is to be classified under Heading 8607, we do not find any justification in the department taking a view that integral parts of IC engines which form locomotive are outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific Design and layout Provided by the Railways and Supplied to the Indian RaiIways only and nowhere else falls under Chapter 8607 of the GST Tariff. 4. QUESTIONS RAISED BEFORE THE AUTHORITY: Whether Roof Mounted AC Package Unit manufactured as per the specifications and drawings issued by organizations owned and operated by Ministry of Railways of India/Research Design and Standards Organisation (RDSO) working under Ministry of Railways of India is covered under chapter Heading 8607 of GST Tariff? 5. RECORD OF PERSONAL HEARING 5.1 Shri Yogesh Chourasia, Cost Accountant - Authorized Representative of the applicant appeared for personal hearing on behalf of the applicant and reiterated the submissions made in the application and also submitted Advance Ruling decision given by AAR, Uttar Pradesh in case of M/s Prag Polymers, Lucknow(UP). 6. COMMENTS OF THE JURISDICTIONAL OFFICER : The Deputy Commissioner, State Tax, Circle Mandideep vide his letter No.AC/Vachak/2021 dated 08.12.2021 addressed to Advance Ruling Authority submitted that on the basis of perusal of Application Section XVII of GST, Chapter -86 to 88 and various decisions, it appears that the Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted AC package unit is not covers in the exclusion clause of Chapter 86 and parts of Railway and tramway is covers under chapter 86. 7.6 Here, we observe that in the case of Commissioner of Central Excise, Bangalore Vs. Sri Ram Metal Works {1998 (99) E.L.T. 616 (Tribunal)}, the Hon'ble Tribunal has observed that: It is seen that the containers as fabricated, to specific design and drawing of the railways for fitment into coach and it becomes a part of the coach. In that view of the matter, assessment under 8312.90 is not sustainable. The Chapter Note 2 to the Chapter 86 clearly sets out that the coach work falls under this chapter. The term coach work; as such, has not been defined. Coach work, as such, has to be, therefore, treated in the broad sense of the Work which goes to make the coach functionally complete. In the case of railways, it goes without saying that the provision of water in the coach is a necessity and the coach can be taken to be complete with the fitment of the water tank. More so, when the water tank becomes ports of the coach itself Tariff Heading 8607 for assessment of the water tank . By applying the same analogy in the instant case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Commissioner, CGST Central Excise, Bhopal vide Order in Original No. 17/Pr.Commr/CEX/BPL III/2019 dated 26.08.2019 decided the case in favour of applicant and hold that the Roof mounted AC package unit is appropriately classified under chapter 86 of the Central Excise Tariff Act and leviable excise duty @6% vide Notification No.12/2016-CE dated 01.03.2016. We further observe that Authority for Advance Ruling Uttar Pradesh, Lucknow vide their order No.56 dated 14.02.2020 in case of M/s Prag Polymers, Lucknow ruled that Roof mounted AC package unit is falls under chapter 86.07 of the GST Tariff. 7.13 We observe that the Roof Mounted AC package Unit would be manufactured by the applicant, strictly as per the specification and design provided by the Indian Railways (RDSO) and specially meant to be solely used in Railway coaches and nowhere else. We further observe that as per Section Notes and Chapter Notes, parts suitable for use solely or Principally with the articles of those chapters are covered under chapter 86 to 88. We further observe that the ratio of the above referred judgement is squarely applicable in the instant case that the Roof mounted AC package unit are the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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