2022 (10) TMI 859 - AAR - GST

Levy of GST - marine engines, being the part of a fishing vessel - applicability of Entry Serial No.252 of Schedule I of Notification No.1/2017 CT(R) dated 28.06.2017 State Notification No. S.R.O. 360/2017 - HELD THAT - In order to classify the products, the provisions of Notification No 01/2017 Central Tax (Rate) dated 28.06.2017 are to be verified. As per entry at SI No. 114 of Schedule IV of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017, the marine engines imported by the applicant are classified under Customs Tariff Heading 8407 21 00 -Outboard motors - Marine Propulsion engines - Spark-ignition reciprocating or rotary internal combustion piston engines and attracts GST at the rate of 28%. Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and are liable to GST at the rate of 5% as per SI No. 247 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. However, as per entry in SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%. Therefore, if the Marine engines are supplied for use as part of a fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of a fishing vessel will only attract GST at the rate of 5% as per the entry in SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. As per entry in SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 it is notified that parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%. Therefore, if the marine engines are supplied for use as part of a fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of a fishing vessel will only attract GST at the rate of 5%. as per entry at SI No. 252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017. If it is supplied for use other than as parts of fishing vessels as stated, GST at the rate applicable under the respective Customs Tariff Headings in which they are classified will apply.

Summary

Issues:
- Applicability of GST rate on marine engines of heading 8407 for fishing vessels of heading 8902
- Applicability of GST rate on spare parts of marine engines for fishing vessels of heading 8902

Analysis:

Issue 1: Applicability of GST rate on marine engines of heading 8407 for fishing vessels of heading 8902

The applicant, a cooperative federation for fishermen, sought a ruling on the GST rate for marine engines and spare parts used in fishing vessels. They argued that as per Notification No. 01/2017, marine engines supplied for fishing vessels should attract a GST rate of 5%. The jurisdictional officer did not provide any comments. The Authority examined the issue and referred to the relevant notifications. They clarified that marine engines for fishing vessels fall under Customs Tariff Heading 8902 and attract a GST rate of 5%. The ruling was supported by Circular No.52/26/2018-GST, confirming the 5% GST rate for marine engines used in fishing vessels. Therefore, the ruling stated that marine engines for fishing vessels under Heading 8902 are subject to a GST rate of 5%.

Issue 2: Applicability of GST rate on spare parts of marine engines for fishing vessels of heading 8902

The applicant also inquired about the GST rate on spare parts of marine engines used in fishing vessels. The Authority examined the relevant provisions and notifications. It was clarified that spare parts of goods falling under specific headings, including 8902, attract a GST rate of 5%. Therefore, spare parts of marine engines used in fishing vessels falling under Heading 8902 should also be taxed at a GST rate of 5%. The ruling specified that spare parts for vessels under Heading 8902 are subject to a GST rate of 5%.

In conclusion, the Authority ruled that both marine engines and spare parts supplied for use in fishing vessels falling under Customs Tariff Heading 8902 shall attract a GST rate of 5%. If these items are used for purposes other than as parts of fishing vessels, they will be taxed according to the respective Customs Tariff Headings.