TMI Blog2018 (12) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant. Ruling:- Only those Annexure B items which are not listed above will be considered as parts of warship falling under 8906 and will be covered under entry number 252 of the schedule 1 of the Notification No 01/2017-Integrated Tax (Rate). The items/ goods which are considered as parts of warships, in the discussions above will be covered under entry number 252 of the schedule I of the Notification No. 01/2017-lntegrated Tax (Rate) and liable to GST @ 5% (2.5% each under CGST and SGST) and for the other items, the tax rate will be applicable as per the respective Scheduled Entry in which the goods fall. - GST-ARA-28/2017-18/B-64 - - - Dated:- 11-7-2018 - SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by Shandong Heavy Industry India Pvt. Ltd, the applicant, seeking an advance ruling in respect of the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of warships and submarines as per the specifications/requirements provided by Indian Navy. All the inputs including raw materials, parts, consumables etc. required for constructing the warships and submarines are directly procured/ imported by the MDL (List of the Inputs are mentioned at Annexure B). In addition, some of the blocks of ships required for the manufacture of Ships are outsourced to Vendors. As required, Annexure B contains the following: a. The bifurcation of goods into equipment, raw material consumables; b. Essentiality of such goods; c. Usability of Such goods on the warship/Submarine. d. Bifurcation of goods as imported/ indigenous. 3. The 5% rate of GST for warships is prescribed at entry no. 250 of the Schedule 1 in rate notification under the heading 8906. The description of the entry no. 250 is Other vessels, including warships and lifeboats other than rowing boats . 4. Entry no. 252 of Schedule 1 in rate notification is Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 . In view of the same, rate of GST for parts of goods of heading 8906 is 5%. 5. In the Earlier Law i.e. under Excise Law, goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng classifiable under the parent machine would hold good. b. In Eureka Forbes v. CCE 2001 (130) ELT 146 (CEGAT) = 2000 (8) TMI 567 - CEGAT, NEW DELHI , it was held that a hose specifically designed for a particular product and not capable of general use will be classified as part of that machine and not as a hose . c. In G S Auto International v. CCE 2003 (152) ELT 3 (SC) = 2003 (1) TMI 700 - SUPREME COURT , it was held that If a part solely or primarily suitable for automobiles will be classified as automobile part (under heading 87.08) and not under general heading. This was followed in CCE v. Basmark Components (2007) 213 ELT 533 (CESTAT) = 2007 (3) TMI 50 - CESTAT, CHENNAI , where it was held that plastic goods designed specifically for automobile with high precision are to be classified as automobile parts. d. In Hallmark Industries v. CCE 2000 (122) ELT 540 (CEGAT) = 2000 (6) TMI 802 - CEGAT, CALCUTTA , Elgi ultra Appliances v. CCE 2001 (134) ELT 245 35 RLT 175 (CEGAT) = 1999 (7) TMI 422 - CEGAT, CHENNAI and EPC Irrigation v. CCE 2002 (139) ELT 84 = 47 RLT 369 (CEGAT) = 2001 (8) TMI 193 - CEGAT, MUMBAI , it was held that plastic pipes and pip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... custom tariff Act 1975, wherein we believe that, all goods specifically (Specific entry) falls under entry 252 i.e Parts of goods which was not provided in erstwhile excise custom schedules given in chapter 89. Also HSN 8906 occurs last in numerical order to classify this parts under 8906 (Rule 3(c) of Custom Tariff Act). 12. From the above submission, we are of the view that all the goods will fall under entry no 252 GST @ 5% will be applicable. However, since there are no conditions or procedures prescribed for entry no. 252 of Schedule I which was provided in the erstwhile law to avoid litigation to clear our ambiguity, advance ruling is sought in relation to question raised under Sr-14 of the application. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- In this connection, the point wise comments on para 14 of the application are as under: 1) The meaning of expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry no 252 of the Schedule 1 of the Notification No.1/2017 - Int. Tax is the parts, which are exclusively used for these goods only. 2. Whether the expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. We find that the applicant is the India s leading Defense public sector undertaking shipyard under the Ministry of Defense, which is involved in manufacture of warships and submarines as per the specifications/ requirements provided by Indian Navy. All the inputs including raw materials, parts, consumables etc. required for constructing the warships and submarines are directly procured/ imported by the applicant (List of the Inputs are mentioned at Annexure B of their application). In addition, some of the blocks of ships required for the manufacture of Ships are outsourced to Vendors. First and foremost it is seen that Entry no. 250 represents Other vessels, including warship and lifeboats other than rowing boats . Against this entry of the Schedule 1 in rate notification under the heading 8906 the rate of GST prescribed is 5%. Entry no. 252 of Schedule 1 in rate notification represents Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 . Against this entry of the Schedule I in rate notification under the heading 8906 the rate of GST prescribed is 5%. We find that the issue that is raised before us by the applicant is whether the inputs mentioned in An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that items like Anchor, Bow, Bowsprit, Fore and Aft, Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Bridge, etc. are very essential parts of a ship or vessel and are quite clearly parts of a vessel/ ship and a ship cannot be imagined to be in existence without these parts. However, in addition to the above there are some additional equipments that are required to be made available on a ship as a measure of statutory compliances under various marine acts such as Merchant Shipping Act or Additional Safety measures such as Walkie-talkie, Binoculars, Life Jackets, Lifeboats, etc. Though these are also to be compulsorily made available on a vessel and ship but cannot be taken to be parts of a ship as per general understanding but are rather additional equipments on a ship. In addition to the above there are other essential items like furniture, fans, air-conditioners, television, etc which are very essential for comfort of officers and crew of the ship but do not come under essential parts or equipments of a vessel/ ship. We find that the items that are discussed as essential parts of a ship/vessel are such essential components of a vessel/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification in so far as manufacture of paper in rolls is concerned. Paper core, however, cannot be said to be used in the manufacture of paper in sheets as component part. We are conscious that the relevant tariff item uses the word paper but since paper in rolls and paper in sheets are nothing but different forms of paper, both of them would be excisable goods as paper under the relevant tariff item. 15. In Modi Rubber Ltd. v. Union of India, (1997) 7 SCC 13 = 1997 (8) TMI 75 - SUPREME COURT OF INDIA , the appellant had set up tyre and tube manufacturing plant and imported various plants and machineries. While using the plants and machineries, PPLF (Polypropylene Liner Fabric) was used as a device in the form of liner components to various machinery units to protect the rubber-coated tyre fabric from atmospheric moisture and dust. This Court held that the PPLF was not a component of the machine itself. It was not a constituent part. It was used as a Liner Fabric not only in tyre production but also in similar other industrial processes. In case of Jindal Strips Vs Collector of Customs, Equivalent citations: 1997 ECR 98 Tri Delhi, 1997 (94) ELT 234 Tri Del. = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esel is a part of a bus in the same way, ribbon is not a part of the typewriter though it may not be possible to type out any matter without it. The very same question with which we are here confronted came up for decision before the High Court of Mysore in State of Mysore v. Kores (India) Ltd (26 STC 87) = 1970 (3) TMI 126 - MYSORE HIGH COURT . (1) Where it was held: Whether a typewriter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commercial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essential part of a typewriter so as to attract tax as per entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957. In light of the above discussions, considering the meaning of an expression (Part) as given in the dictionary and also the ratio as adopted by the Hon ble Courts as mentioned above besides common parlance test, we now take up each and every input claimed by the applicant to be parts of a warship/ submarine [as listed in Annexure B Of this ARA application] and discuss and find out whether each of the subject goods/ spare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items can be considered to be parts of a warship/ submarine., for reasons mentioned above. The fourth addendum to Annexure B is a P-75 Tools Other List consisting of 98 items. We find that except the equipments mentioned in Sr. Nos. 69 and 70, all other equipments can be considered to be parts of a warship/ submarine., for reasons mentioned above. In the above discussions we have listed a list of items which cannot be considered as a part of a warship/ submarine. Other than that all the equipments/ tools, etc can be considered as parts of a submarine/warship, without which the same would not be complete and would not exist. These are very integral for the functioning of the submarine/ warship. Hence for reasons mentioned above we find that except for the items listed by us above from the Annexure B and Addendums to Annexure B, all other items can be considered as parts of a ship and therefore would be eligible to concessional rate of GST as contended by the applicant. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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