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2020 (2) TMI 555 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRAClassification of goods - transformers supplied to Indian Railways - to be be classified as ‘Parts of railway or tramway locomotives or rolling stock’ under HSN ‘8607’ or the transformers shall be categorized under HSN 8504? - HELD THAT:- The classification of goods under Chapter Heading 8607 does not include ‘Electrical transformer’. It only refers to parts of railway such as bogies, bissel-bogies, axels, wheels, brakes, hooks and parts thereof, in a general way; whereas, Chapter Heading 8504 clearly includes ‘Electrical transformers, static converters (for example, rectifiers) and inductors’. Note 2 (f) to Section XVII mentions that the expressions “parts” and “parts and accessories” do not apply to electrical machinery or equipment (Chapter 85), whether or not they are identifiable as goods of this Section - Thus from a reading of Note 2 (f) to Section XVII of the GST Tariff and Note 2 to Chapter 86 of the GST Tariff, the applicant’s product, ‘transformers’ are classifiable under HSN 8504. Circular No. 30/4/2018-GST on January 25, 2018 by the Government of India, Ministry of Finance, Department of Revenue (Tax and Research Unit), New Delhi has issued clarification on classification of supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86 - Therefore, it is very clear that, any product other than those covered under Chapter 86, supplied to the railways would not qualify for the HSN 8607 and are not to be considered as a parts of railway coaches, even if supplied to the railways. Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes. Transformers, though used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for transformer and therefore, the Entry no.241 of Schedule 1 of Notification No. 1/2017 C.T. (Rate) dt. 28.06.2017 does not applies to subject Transformers - Transformers, manufactured and supplied for use in railway, locomotives are classifiable under HSN 8504 and not under HSN 8607. Hence, rate of tax thereon is applicable as per the Sr. no. 375 of Schedule III of the Notification 1/2017 C.T. (Rate) dt. 28.06.2017 @ 18% under GST ACT w.e.f 01.7.2017.
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