TMI Blog2019 (3) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... e the AAR with respect to supplies undertaken in the month of Jan.,2018. Hence the case is out of the purview of the Advance Ruling. Thus, as the question posed by the Appellant is related to supplies undertaken by them prior to the date of filing of the application for advance ruling, no ruling can be given on the question. - ORDER NO.RAJ/AAAR/05/2018-19 - - - Dated:- 5-12-2018 - MS. ARCHANA P. TIWARI, MEMBER And SH. ALOK GUPTA, MEMBER Present for the Appellant: Sh. Manish Gaur, Advocate, Ms. Jyoti Pal, Advocate and Shri Adarsh Jain, Sr. General Manager Proceedings (Under Section 101 of the Central GST Act, 2017 and Rajasthan GST Act, 2017) At the outset we would like to make it clear that provisions of both the Central GST Act, 2017 and Rajasthan GST Act, 2017 are same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central GST Act would also mean a reference to the same provisions under Rajasthan GST Act. 2. The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as 'CGST Act') and Rajasthan GST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer cables of exact length/specifications as ordered by M/s. Vedanta and the same are supplied exclusively to M/s. Vedanta and not to any other recipient. 9. It is pertinent to note that even though the cables are manufactured as per the specifications provided by M/s. Vedanta and supplied exclusively to M/s. Vedanta, the cables are not exclusively or specifically meant to be used with such machines in as much as these power cables are general power cables and are capable of being used with any machine/equipment. 10. The Appellant submitted the following questions for Advance Ruling Whether the power cables supplied by the Appellant would be covered under the scope of Sl. No. 1 ofN0tification No. 03/2017-CT? 11. Appellant contended 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 Sl. No. 1 of Notification No. 03/2017-CT for running machines listed in the list annexed to that notification. (Entry No. 1 to 23) and thus can be supplied at concessional rate as mentioned in the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electrical Cables are generally used for setting up of a system in which by electric cabling or wiring, electricity is downloaded from the main source ( i.e. from grid or transformers ) and further transmitted , distributed or supplied to various points in working area. Machines, equipments and accessories draw supplies of electricity from these points to be functional. Hence 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. vii) The Appellant has failed to identify/clarify as to under which category i.e. accessories, stores, materials and/or consumables as mentioned in S.No. 1 to 23 of the list, would electrical cables fall. Further he has not given any assurance regarding restricting the use of electrical cables as accessories, stores, materials, consumables to goods falling under entry no. l to 23 of the list, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff item Description of Goods Rate Condition No. (1) (2) (3) (4) (5) 1 Any Chapter Goods specified in the List annexed to this table required in connection: (1) (2) Petroleum operations undertaken under specified contracts; or (3) (4) (5) 2.5% 1 4 As per the above entry, the given benefit would be subject to Condition No. 1 provided in Notification No. 03/2017. The relevant portion of the said condition is reproduced hereunder: Condition No. Condition 1. If: a. the goods are supplied to, - (i) .. (ii) an Indian Company or Companies, a Foreign Company or Companies, or a consortium of an Indian Company or Companies and a Foreign Company or Companies (hereinafter referred to as the contractor ) or a sub-contractor of the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts are those contracts which are entered under the policies specified in the list. However, unlike other clauses of Sl. No. l, clause (b) does not provide the policy under which the specified contracts are entered. 8 At this juncture, attention is invited to Condition No. 1 to Sl. No. 1 which provides that the goods should be supplied to the organization/companies who have entered into contract with the Government of India. On a conjoint reading of clause (b) along with condition no. 1(ii), it can be inferred that specified contracts referred in clause (b) are those contracts which are entered into with the Government of India in relation to petroleum operations. 9 It is to be noted that prior to introduction of New Exploration Licensing Policy, licenses for petroleum explorations were granted by the Central or State Government. The licenses granted by the Central or State Government before the NELP are also known as Pre-NELP contracts. 10 Thus, in view of the above discussion, it can be concluded that the term specified contracts under clause (b) of Sl. No. 1 would mean and include all those contracts which are entered into with the Government of India under the pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he machines which are used for undertaking petroleum operations under the specified contract i.e. the contract entered into by Cairn Energy India Pvt. Ltd. with the Government of India under Pre-NELP. Thus, it can be concluded that the supply of electric cables is in connection with the petroleum operations under the specified contract. It is submitted that fulfilment of Condition No. 2 is not disputed in the impugned order by the Ld. AAR. 18 Condition No. 3: In the instant case, the Appellant is supplying electric cables to Vedanta which is a public limited company registered under the Companies Act, 1956. Thus, the Appellant is supplying goods to an Indian Company. Such cables are supplied to Vedanta in relation to their petroleum operations being undertaken in the State of Rajasthan. It is to be noted that the license for petroleum exploration in field RJ-ON-90/l was given to Cairn Energy India Pvt. Ltd. under the Pre-NELP. This information is available at the website of Directorate General of Hydrocarbons (http://www.dghindia.gov.in/index.php/show_field_lists?rd_id=43). Subsequently, Cairn Energy India Ltd. was merged into Vedanta Ltd. The relevant certificate dated April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d withdrawn in case the said goods are used for purposes other than its intended use'. In this regard, it is submitted that this shall not impact the Appellant's eligibility to the exemption under Notification No. 03/2017. This sentence in the certificate is to take care of a possible event of unauthorised diversion of goods, in which case certificate would stand withdrawn. So long as there is no diversion of the goods, the certificate stands valid and benefit shall not be denied. 23 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 Appellant. Condition No. 1: Electric cables supplied by the Appellant are covered by entry no. 24 of the list 24 As far as condition no. 1 is concerned, it is to be analyzed if the electric cables supplied by the Appellant to Vedanta would be covered by entry no. 24 of the list appended to Notification No. 03/2017-CT which covers sub-assemblies, tools, accessories , stores , spares, materials , supplies, consumables for running , repairing or maintenance of the goods specified in this List . A detailed analysis of the same is given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 28 Further, in a recent case of CCE, Salem vs. Madras Aluminum Co. Ltd., [2017 (349) ELT 133] = 2016 (12) TMI 1374 - MADRAS HIGH COURT maintained at 2017 (354) ELT A192 = 2017 (7) TMI 465 - SUPREME COURT the issue pertaining to meaning of the term 'accessories' came up before the Hon'ble Madras High Court, wherein, the court held that the term 'accessories' means thing which could be added to something else in order to make former more useful, versatile or attractive. 29 On a careful perusal of the above referred meaning of the term 'accessories', it is clear that accessories are those things or equipment which are not essential but which are used to make something else more efficient or useful. 30 In the instant case, Vedanta is using various machines for carrying out petroleum operations which are also procured by obtaining Essentiality Certificate from Director General of Hydrocarbons certifying that such machines are used for petroleum operations. Such machines used for petroleum operations run on electricity and therefore, would require electric cables to supply electricity to the machines. The electric cables so requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Commissioner (Appeals) and dismiss this appeal. . Emphasis Supplied 35 Similarly, in the case of State of Punjab vs. Nokia India Pvt. Ltd. [2015 (315) ELT 162] SC = 2014 (12) TMI 836 - SUPREME COURT Hon'ble Apex Court had held that the charger would qualify as accessory of mobile phone. 36 Reliance is also placed on the decision of Allied Healthcare, India vs. CC, Chennai [2010 (259) ELT 711 - Tri Chen]. = 2010 (6) TMI 418 - CESTAT, CHENNAI In this case, while deciding the availability of exemption under Notification No. 17/2001-Cus. to stents as accessories of Cardiac Catheters (endoscope), the Hon'ble Tribunal held that stents are essential for treatment function of endoscope as treatment is not complete without implanting stent with help of catheters and therefore, stents are treatable as accessories. A similar decision was given in the matter of CC, Chennai vs. Indian Surgicals [2009 (244) ELT 603 Tri Chen]. = 2009 (8) TMI 280 - CESTAT, CHENNAI The decision has been followed at 2010 (259) E.L.T. 711 (Tri. Chennai). = 2010 (6) TMI 418 - CESTAT, CHENNAI 37 In the above referred decisions, the battery and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded that the electric cables supplied by the Appellant, being essential for the functioning of machines in as much as it is required for providing electricity to machines, qualify as accessories of such machines with which these are used. 41 In view of the above discussions and the judicial decisions relied upon, it is submitted that the electric cables supplied by the Appellant to Vedanta in the instant case qualify as accessories for running specific machines given in the list annexed to Notification No. 03/2017. The electric cables supplied by the Appellant also qualify as material for running the goods (machines) specified in the list 42 It is pertinent to note that entry no. 24 of the list appended to Notification No. 03/2017 also covers 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. 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-Webster's Dictionary highly important, significant (ii) The Oxford American Desk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bles, attention is invited to the decision of Hon'ble Ahmedabad Tribunal in Sanghvi Aerospace (P) Ltd. vs. CCE, Ahmedabad [2009 (247) ELT 578 Tri - Ahmd].= 2009 (6) TMI 808 - CESTAT, AHMEDABAD In the said case, the issue involved was whether or not, the wires and cables supplied for aircrafts, satellite launch vehicles, etc. would be entitled to the benefit under Notification 10/97-C.E. While deciding the issue in favor of the Appellant in that case, the Tribunal held as under: 11. According to the learned advocate, the wires and cables supplied by them are eligible under this notification. However, we find that wires and cables can be said to be covered by SL No. 8 of the Notification reproduced above since it covers stores also. The exemption is not limited to only parts or equipments but also systems, sub systems, equipments and stores . Therefore, a view can be taken that wires and cables are nothing but consumable stores which are stored and used from time to time as and when required. The Commissioner has observed that in respect of a few clearances the party has claimed benefit of Sl. No. 7 of the notification. However, as already mentioned the item seem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry no. 24 of the list appended to Notification No. 03/2017 covers spares, accessories, sub-assemblies, consumables, stores, material, tools which are required for running, repairing or maintenance of the goods specified in the said list. The AAR has failed to appreciate that some words used in this entry viz. material, accessories are of wider connotation and would cover in its ambit almost all the goods (in any form whatsoever) required for running, repairing or maintenance of the machines specified in the list. Not only this, the terms used in this entry can also be used interchangeably which makes it even clear that the Government intends to extend this benefit to all the goods, which are required for undertaking petroleum operations, when supplied to specified persons. It is also pertinent to mention that AAR has failed to appreciate that use of such electric cables (which can be termed as accessories/spares/material interchangeably as quoted above) is certified by Director General of Hydrocarbons by issuing Essentiality Certificate whereby the Entry No. 9/24 is specifically mentioned under the S. No. of Notification No. 3/2017. 52 Further, as correctly noted in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 03/2017 to the Appellant. 56 It is humbly reiterated that Ld. AAR has failed to consider that use of such electric cables is certified by DGH after considering all the relevant conditions, its usage and documentation such as purchase order, Performa Invoice, details of GST jurisdiction of Vendor supplying the goods, etc) in this regards by way of issuance of Essentiality certificate to the effect that such electric cables are required to be use in petroleum operations. The DGH exercises proper due diligence regarding the usage of the such goods in the petroleum operations before issuance of EC and the EC once issued by DGH is the sole legitimate proof of the goods to be required for petroleum operations. It is to be appreciated that DGH is the Indian governmental regulatory body established under the Ministry of petroleum and Natural gas, Government of India. 57 As mentioned above, the electric cables supplied by the Appellant are used by Vedanta with machines / equipment, as listed above at para 51, covered under Entry No. 9 of the List appended to the Notification No. 03/2017. Therefore, it is submitted that the requirement that the electric cables must act as accesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication and no such objection was ever raised at that time. After the admission, the Authority decided the application on merits and rejected the application. Against the rejection on merits the present appeal has been filed. Moreover, the department has not filed any appeal against the admission of the application. They also submitted a copy of compilation of the case laws supporting the arguments that the cables are accessories and once the certificate has been issued by the DG Hydrocarbons, the said certificates are conclusive. 15. During personal hearing, the appellant has also asked for some time to gather and produce the material for rebutting the above query put forth by us. Their request was allowed. 16. In follow up to above, written submission were tendered by the Appellant on 26.11.2018 which are being reproduced hereunder :- 2. At the outset, the Appellant most humbly submits that the basis of the objection raised by the Appellate Authority is factually incorrect as the supply was not complete on the date of filing the advance ruling application. The Appellant submits that in terms of the Purchase Order No. 4500030187 and 4500030182 both dated 14.11.2017 and am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was specifically held to be admissible. The application was admitted, and advance ruling has been passed on merits vide the impugned ruling. The Appellant submits that no objection was raised at that time, neither has the department filed any appeal against the impugned ruling to the extent that it is admitting the application filed by the Appellant. 5. The Appellant humbly submits that at this stage, when the application has been decided by the Advance Ruling Authority on merits after admitting the application specifically, the Appellant's appeal shall not be rejected by the Hon'ble Appellate Authority on the ground of maintainability before the Advance Ruling Authority. 6. The Appellant submits that courts have in a catena of decisions held that the question of maintainability shall not be raised at a belated stage, especially when the matter has been admitted and either kept pending or decided on merits as raising a question of maintainability at a later stage serves no purpose. In this regard, the Appellant wishes to rely upon the following judgments: i. M.K. TRADING CO. vs. UNION OF INDIA, 2018 (11) G.S.T.L. 37 (Bom.) = 2018 (1) TMI 1268 - BOMBAY H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and order . The petition was entertained at the initial stage after hearing the learned Counsel for the Revenue, and interim relief had been granted after having deliberations at length and the Counsel for Revenue did not even raise the plea in this regard at that time. It is being raised at a belated stage, the same is not worth acceptance and accordingly rejected. iv. Kesoram Rayon vs. Collector of Customs, 1989 (44) ELT 37 (Tri.-Del) = 1989 (6) TMI 176 - CEGAT, NEW DELHI approved by the Hon'ble Supreme Court in the case of Kesoram Rayon vs. Collector of Customs, Calcutta, 1996 (86) ELT 464 (S.C.) = 1996 (8) TMI 109 - SUPREME COURT OF INDIA 6. ... Having failed to do so, the learned JCDR could not now raise the preliminary objection that an appeal against the impugned order of the Collector (Appeals) before this Tribunal is not maintainable on the ground that the appellants did not file an appeal against the Assistant Collector's order dated 8-5-1985. In similar circumstances, in the case of Additional Commissioner of Income-tax v. Dalmia Magnesite Corporation, reported in (1979) 117 1TR 930, the Hon'ble Madras High Court has held that the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jan.,2018. Since the Appellant has asked for ruling on the transactions effected prior to the date of filing of the application before AAR, we find it appropriate to visit the definition of the 'Advance Ruling' given under Section 95(a) of the CGST Act which we are reproducing hereunder :- 95(a) advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (l) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; 18. From the definition, it is very much clear that the scope of the Advance ruling for both i.e. AAR (Authority for Advance Ruling) and AAAR (Appellate Authority for Advance Ruling) is limited to the transactions being undertaken or proposed to be undertaken. In the instant case, as already narrated, the application seeking advance ruling was filed on 09.05.2018 before the AAR with respect to supplies undertaken in the month of Jan.,2018. Hence the case is out of the purview of the Advance Ruling. 19. Ld. Advocate has argued during hearing that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accepted, supply of many goods like TV, Refrigerator, washing machine etc. would be treated as 'being undertaken' even 5 to 10 years after their sale just because of their warranty clauses. In other words, a supplier of these goods can apply for advance ruling even 10 years after the sale of these goods just because warranty on the goods has not come to an end. 21. Appellant has submitted that they regularly enter into similar contracts for supply of identical / similar electric cables to various customers like Vedanta. In fact, there were purchase orders pending also on the date when the Appellant filed the advance ruling application, i.e. on 09.05.2018 hence the question asked in the advance ruling application should not be restricted to the POs enclosed by the Appellant with the Advance Ruling Application. We find that the appellant has asked for advance ruling with respect to particular transactions i.e. transactions mentioned in the DGH certificate dated 18.01.2018. Hence we are bound to pronounce our verdict on these transactions only. 22. The Appellant has submitted that courts have in a catena of decisions held that the question of maintainability shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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