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2021 (9) TMI 909 - AAR - GSTClassification of supply - supply of batteries by the required Applicant for the use in warships such as submarines of the Indian Navy - goods falls under Entry 252 of Schedule I to N/N. 01/2017-integrated Tax (Rate) dated 28.06.2017 and hence is taxable @ 5% GST or otherwise? - goods covered within the meaning of Parts of Goods of CTH 8901, 8902, 8904, 8905, 8906 and 8907 or not? - HELD THAT:- The batteries are essential parts of a submarine. A submarine cannot be imagined to be in existence without batteries because all internal controls and systems in the submarines, work on the power supplied by these batteries and without batteries, the submarine will not be able to function at all. Further, the batteries manufactured for such supplies are specifically designed and manufactured for use only in warships more particularly in submarines. The batteries will be considered as parts of vessels falling under heading 8901, 8902, 8904 to 8907, only if they are used in manufacturing goods falling under Tariff Headings 8901, 8902, 8904 to 8907 - the applicant's contention is agreed upon that the batteries supplied by them for exclusive use in goods falling under heading 8901, 8902, 8904 to 8907 will be taxable @ 5% IGST. However it is to reiterate that the benefit of reduced CGST and SGST for such batteries is only available if the said batteries are used as parts of goods falling under heading 8901, 8902, 8904 to 8907 of the GST Tariff. The benefit of reduced GST rates would not be available in respect of subject batteries supplied for use in goods other than goods of heading 8901, 8902, 8904 to 8907 of the GST Tariff. The batteries are essential requirements in manufacture of submarines and are classified under heading 85 of the GST Tariff and are parts of submarines. Since the subject goods are meant for use in manufacture of submarines and are supplied for purpose of use or application in manufacture of goods that are classifiable under Tariff headings 8901, 8902, 8904, 8905, 8906, 8907, the said goods can be considered as parts of a submarine. Entry at Sr. No. 252 covers goods which merit classification under “Any Chapter” of the GST Tariff wherein the description in Sr. No. 252, is “Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907”. Accordingly, in the present matter, the Subject Goods will be covered under Sr. No.252. The supply of batteries by the Applicant exclusively and directly to the Indian Navy for use in the manufacture of submarines will be classified under Sr. No. 252 of Notification No. 1/2017- C.T. (Rate), dated 28-6-2017.
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