CLASSIFICATION OF REACTOR USED IN HAND PUMP FOR WATER DISINFECTION

[Mr. M. GOVINDARAJAN]

In re ‘Taraltec Solutions Private Limited’ – 2018 (10) TMI 682 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA the petitioner is a manufacturer of reactor used in hand pump for water disinfection.  The reactor harnesses fluid dynamics and kills microbes in water bore well hand pump and motorized water lines eliminating water borne diseases such as diarrhea, cholera and typhoid.  The reactor can easily be retrofitted into the India mark two model within an hour by a local plumber with no special tools.   The applicant sought advance ruling before the Authority for Advance Ruling as to-

• The classification of goods, i.e., reactor used in hand pump for water disinfection.
• GST rate applicability on reactor machine which is used in hand pump for water disinfection.

The applicant contended that the product is forming part of hand pump that should be classified as HSN No. 8413, 8413 91 as hand pumps and parts thereof.

The Revenue contended the following-

• The applicant has furnished only the end use of the product.
• It is settled principle of law that classification of the product cannot be decided solely on the basis of the product.
• The details like design, characteristics, nature, functions etc., are essential requirements to decide the classification of the product.
• The applicant has not submitted any material/documents like product catalogue, brochure, diagram or any other relevant material to ascertain the nature of the product.
• In the absence of sufficient material it is not clearly evidence whether the product in question are suitable for use solely or principally with machines falling under Chapter 84q3.

The Revenue, therefore, contended that since the applicant has not furnished the required details, the application for advance ruling may not be admitted and the applicant may be directed to furnish the details of the product.  The applicant produced the required documents on the directions of the Authority. 

The Revenue filed additional written submissions as detailed below-

• On scrutiny of the catalogue, designs and write up of the products the brief nature, characteristics of the said product appeared to be as under-

• According to the assessee the said product requires no spares or consumables.
• The device converts kinetic energy of fluid into millions of targeted micro bubbles each acting as localized reactors.  They are packed with extreme heat, pressure and turbulence that release intense energy packets during the collapse of the bubbles.  A jet of water flow into the reactor, the resultant shock waves physically kills microbes and delivers the purified water to those drawing it up.

• The reactors have entirely different function than the water pumps, even if meant to be used with water pumps, the radiators merit classification under tariff heading 84212190.
• The product of the applicant does not form part of a hand pump.
• It is a device retrofitted to a hand pump to purify the water.
• The applicant stated that the other applications of the reactor in the pipe line are-

• to be fitted for wells, ponds, lakes etc., to motorized pipelines;
• to be fitted in buildings along with the overhead tank;
• swimming pools/fountains;
• sewage water treatment in townships, hotels, hospital etc.,

It is felt that the reactors are entirely different article having a different purpose and framing them water pumps will not be correct as they are not meant to be solely used with hand pumps.

• The description of the product provided by the applicant the correct position of law is that the reactors are more appropriately classifiable under chapter sub heading no. 8421.21.90.

The Authority admitted the application.  The Authority found that the reactor manufactured by the applicant is used to purify the water supplied by hand pumps.  The main function of  a hand pump is to life water from the underground water and make them available to the public.  The hand pump does it work even without the presence of the reactors inside it.  Therefore it clearly appears that the reactor is not an essential part of the hand pump.   Based on the submissions of the applicant the Authority found that the reactors have function which is entirely different from that of a hand pump.  Thus it can easily be seen that the reactor cannot be considered as a part of the hand pump.  The basic function of the reactor is to purify the water which is different from the function of the hand pump.  The reactors can also be used with other machinery and their main function is to purify the water.

 The Authority found that the reactors have use as water purifier at several places in various pipelines for purification of water and not only in hand pumps.  Therefore the claim of the applicant that the reactors be treated as parts of hand pump is not correct.

Regarding the rate of tax the Authority held that the apparatus used for filtering or purifying water falls under heading 84212190 attracting 9% CGST and SGST each.  The reactor is neither an ion exchange plant nor apparatus, household type filter and therefore would fall under other categories i.e., 842121 90 thus attracting 9% CGST and SGST each.

Against the findings of the Authority for Advance Ruling the applicant filed an appeal before the Appellate Authority for Advance Ruling - (2019) 70 GSTR 347 (AAAR).  The appellant submitted the following before the Appellate Authority-

• In the order it was mentioned that the applicant has indicated other uses of reactor which is incorrect.  The appellant did not give anything like that to the Revenue.
• Thus the findings of Authority for Advance Ruling have been passed with certain inaccuracies.
• The appellant has not been provided a reasonable opportunity of being heard which is against to the principles of Natural Justice.
• Their product is meant for poor masses of rural India located in villages.
• Their product is of no use without being fitted in hand pump to purify water that is consumed by the village folks.
• Their product has acclaimed honor from various State Governments and also from the Prime Minister’s Office in India for being innovative product to be used by the general masses.

The Appellate Authority considered the submissions of the appellant.  As per the appellant the impugned product is retrofitted to the hand pumps for the purpose of purifying and disinfecting the water by killing the microbes in the water from the bore well hand pump and motorized water lines, thus eliminating the water borne diseases.  Thus it can be clearly seen that the impugned product is not fitted with the hand pumps at the time of manufacturing of the hand pumps, rather it is retrofitted with the hand pumps with the purposes different from the hand pumps whose main function is to draw the underground water from the bore wells whereas the primary function of the impugned product is to purify the water.  Thus the impugned product is not an essential part of the hand pumps because hand pump can function without the impugned product.  The impugned product is no way associated with the extraction of the underground water from the bore well, which is the main function of the hand pump.

The Appellate Authority further held that the product of the appellant, according to him, is meant for the poor masses of rural India located in villages and their product has acclaimed honor from various State Governments and also from the Prime Minister’s Office in India for being an innovative product, is in itself commendable yet under the GST law the classification of any commodity is not governed by such factors, but by the nature, design, character and function of the article.

The Appellate Authority held that the impugned product is classifiable, in line with the contention made by the jurisdictional officer, under the Heading 8421 21 90 having description as ‘filtering or purifying machinery and apparatus for liquids’.