TMI Blog2018 (9) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments and evidences submitted by the dealer. Even the applicant seems not sure of its uses. Concessional rate is conditional to terms and conditions of Notifications - It is a clear possibility that there are other machine and equipment and their accessories, stores, materials and consumables which though being used in process of petroleum operation but are not enjoining concessional rate as they are not covered under entry no. I to 23 of the notification yet being supplied electricity by these electrical cables to make them functional . Electrical Cables are generally used to set up a network of wires and cables which are usually permanent in nature through which electricity can flow, distributed and supplied to various points. To regard Electrical Cables as “accessories, stores, materials or consumables for running of the goods specified in the List” as mentioned in entry no. 24 of the notification is not rational by any stretch of imagination - If we regard Electrical Cables as accessories, stores, materials and/or consumables for running of the goods specified in the List, then going through this logic poles, insulators, transformers and all other equipments used to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government to Cairn Energy India Pvt. Ltd. in the State of Rajasthan which was vested in Vedanta after the merger of Cairn India Pvt. Ltd. in Vedanta. For carrying out such petroleum operations, it uses various kinds of machines and equipment. Almost all machines and equipment used by Vedanta for petroleum operations run on electricity and thus, electric cables are required for providing electricity to such machines and equipment, 4. M/s. Vedanta issues tender notice for supply of power cables required for its petroleum operations and further selects a supplier who is required to supply power cables in accordance with the specifications of the cables viz. the cable type, length, thickness, material, color, etc. provided by M/s. Vedanta in the order sheet issued for this purpose. 5. The Applicant had been selected by M/s. Vedanta for supplying cables to it by raising Purchase Order No. 4500030187 and 4500030182 both dated 14.11.2017 and amended rev-01 dated 12.01.2018. Directorate General of Hydro carbons certifies that these goods i.e. power cables of various specifications, which are required for the petroleum operations. 6. It is to be noted that in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the central tax leviable thereon under section 9 of CGST Act as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions annexed to the notification .A corresponding benefit is given under Rajasthan Goods and Services Tax Act vide File No. F.12 (56)FD/Tax/2017-Pt-1-42 dated 29.06.2017. Similar benefit on inter-state supplies is given under IGST Act vide Notification No. 03/2017-lntegrated Tax (Rate) dated 28.06.2017. 12. Further, Sl. No. I of Notification No. 03/2017-CT provides that the said benefit would be available for the goods provided in List 1 of Notification No. 03/2017-CT. The List of goods appended to Notification No. 03/2017CT specifies various goods including, 24. sub-assemblies, tools, accessories, stores , spares, materials , supplies, consumables for running , repairing or maintenance of the goods specified in this List . 13. The Applicant stated that the concessional rate benefit would be available to the goods specified in the list to Notification No. 03/2017-CT provided the goods are used for the activities mentioned in the entry i.e. petroleum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Directorate General of Hydro carbons certifying that the goods are required for the petroleum operations referred in the Sl. No.1. 19. Applicant submitted that the term Indian Company has not been defined in Notification No. 03/2017-CT. Moreover, it is also not defined in the CGST or IGST Act. In common parlance, an Indian Company would mean any company who is established and registered in India in accordance with the relevant laws prevailing at that time. 20. To substantiate the same, reference is made to the definition provided in the Income Tax Act, 1961, which defines Indian Company under section 2(26) as under: (26) Indian company means a company formed and registered under the Companies Act, 1956 and includes................ 21. Dealer stated that in view of the above, it can be concluded that to claim benefit of concessional rate of tax under Notification No. 03/2017-CT the following conditions are required to be satisfied cumulatively in the instant case: i. The goods must be covered under the list to the Notification No.03/2017-CT; ii. The goods must be supplied in connection with petroleum operations undertaken under specified c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required for the petroleum operations undertaken by Vedanta. Thus, the Applicant supplies the goods to Vedanta only when it produces the requisite certificate 26. Applicant insisted that in view of the above, it can be safely concluded that in the instant case, condition no. 2, 3 and 4 as discussed above, are satisfied by the Applicant. 27. As far as condition no. 1, he stated that a detailed analysis of the same is given in the following paragraphs. The power cables supplied by the Applicant qualify as accessories which are required for running the goods (machines) specified in the list 28. According to him, benefit of concessional rate of duty is extended to the accessories used for running machines covered under the List appended to Notification No. 03/2017-CT. However, the term accessories is also not defined in Notification No. 03/2017-CT. so applicant has relied on the dictionary meaning of the term accessories , which have been extracted here under: (i) The New Merriam-Webster s Dictionary a person or thing that aids subordinately, an adjunct, appurtenance, accompaniment (ii) The Oxford Advanced Learners Dictionary an extra piece of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er uses also. It is its general or predominant user which seems to determine the category in which an article will fall. 10 . Accessories are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument. Emphasis Supplied 31. He further stated that in view of the above discussions and the judicial decisions relied upon, it is submitted that the power cables supplied by the Applicant to Vedanta in the instant case qualify as accessories for running the machines given in the list annexed to Notification No. 03/2017-CT. The power cables supplied by the Applicant also qualify as material for running the goods (machines) specified in the list 32. Further according to him entry no. 24 of the list appended to Notification No. 03/2017-CT also covers the materials required for running, repairing or maintaining the machines provided in that list. The term material used in the list is not defined in Notification No. 03/2017-CT. Thus, it becomes imperative to refer to the dictionary meaning of this term. Some of them are extracted below for reference: (i) The New Merriam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are supplied to M/s. Vedanta, an Indian company, against the certificate issued by the Directorate General of Hydrocarbons. As all the conditions prescribed in Notification No. 03/2017-CT for Sl. No. 1 are satisfied, the Applicant is eligible for the benefit of concessional rate of duty under Notification No. 03/2017-CT. 37. Applicant contents that intention on the part of the Applicant and M/S Vedanta to supply/procure such power cables for the purpose of running machines to be used in petroleum operations. 38. Based on above the applicant states that it can be inferred that the power cables supplied by the Applicant to Vedanta which are meant to be used for running the machines would be covered under either of the several heads given under entry no. 24 of list to Notification No. 03/2017-CT. Therefore, supplies of power cables by the Applicant to Vedanta would be eligible for the benefit of concessional rate of duty as provided under Notification No. 03/2017-CT. 5. ISSUES REQUIRING ADVANCE RULING AND APPLICANT S UNDERSTANDING: In the light of aforementioned, the Applicant seeks to enter the following question for Advance Ruling and its interpretation of the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the list annexed to this table 9. Findings and analysis: a) Applicant is a public limited company and is engaged in the business of manufacturing and supply of various kinds of Electrical Power Cables . b) The applicant has to supply electrical cables in accordance with the specifications of the WS Vedanta Ltd. which is undertaking petroleum operations in Rajasthan and electrical cables are needed for providing electricity to machines and equipments. c) Directorate General of Hydrocarbons certifies that goods i.e. power cables of various specifications are required for the petroleum operations. d) Applicant contends that power cable supplied to M/s. Vedanta for supplying electricity to the machines or equipments used in its petroleum operations would qualify as material , accessories , consumables , and/or stores of SI. No. 1 of Notification No. 03/2017-CT for running machines listed in the list annexed to that notification. (Entry no.l to 23) and thus can be supplied at concessional rate as mentioned in the notification. e) Notification No. 03/2017 provides for the intra-State supplies of goods, the description of which is specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of goods appended to Notification No. 03/2017-CT specifies various goods including sub-assemblies, tools, accessories , stores , spares, materials , supplies, consumables for running , repairing or maintenance of the goods specified in this List . k) This clearly means that sub-assemblies, tools, accessories , stores , spares, materials , supplies, consumables for running , repairing or maintenance are only restricted and related to those goods as specified in entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. l) On careful perusal of notification it is evident that Electric cables are not included in any of the entries of goods specified from entry no. 1 to 23 of the List of goods appended to Notification No. 03/2017-CT. m) In Advance Ruling Application the applicant has citied certain judgements and citation from various courts for categorizing Electrical cables as accessories, stores, materials and/or consumables as mentioned in entry no. 24 of the notification, which were carefully examined. To qualify for concessional rate of tax, these Judgements and citations have to be analysed and applied strictly in light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant are not specific or exclusive to the machines used by Vedanta. In fact, the said power cables so supplied to M/S Vedanta are capable of being used with more than one kind of machines. (pg. 20 of ARA) Here again the applicant has mentioned that Electrical Cables so supplied by them 1) are not specific and exclusive to machine used by M/s. Vedanta 2) supplied cables are capable of being used with more than one kind of machine by M/s. Vedanta. Thus it can be inferred that: 1) dealer is not aware off and has not clarified that Electrical cables supplied will be used as accessories, stores, materials and/or consumables to which goods falling under entry no. 1 to 23 of the list. 2) Electrical cables supplied can very well be used as by M/s. Vedanta as accessories, stores, materials or consumables for even those goods which are not covered under entry no. 1 to 23 of the list. 3) It is to be noted that in the instant case, the Applicant is not aware off the type, nature and functions, etc. of the machines or equipment for which the cables are required. The Applicant is supplying power cables to on the basis of the job sheet provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e generally used to set up a network of wires and cables which are usually permanent in nature through which electricity can flow, distributed and supplied to various points. To regard Electrical Cables as accessories, stores, materials or consumables for running of the goods specified in the List as mentioned in entry no. 24 of the notification is not rational by any stretch of imagination. If we regard Electrical Cables as accessories, stores, materials and/or consumables for running of the goods specified in the List, then going through this logic poles, insulators, transformers and all other equipments used to ensure flow of electricity at work site from the main source to the supply point are to be covered under this classification. v) Main function of Electric Cables is to supply and distribute electricity to various points at a worksite so electricity can be made available for all electrical, electronic, machines and mechanical equipments using electrical energy to function but these Electric Cables so supplied will whether be used to supply electricity ONLY to those goods which are covered under I to 23 of the list is not clear from documents submitted nor h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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