TMI Blog2020 (2) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 by the Government of India, Ministry of Finance, Department of Revenue (Tax and Research Unit), New Delhi has issued clarification on classification of supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86 - Therefore, it is very clear that, any product other than those covered under Chapter 86, supplied to the railways would not qualify for the HSN 8607 and are not to be considered as a parts of railway coaches, even if supplied to the railways. Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes. Transformers, though used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for transformer and therefore, the Entry no.241 of Schedule 1 of Notification No. 1/2017 C.T. (Rate) dt. 28.06.2017 does not applies to subject Transformers - Transformers, manufactured and supplied for use in railway, locomotives are classifiable under HSN 8504 and not under HSN 8607. Hence, rate of tax thereon is applicable as per the Sr. no. 375 of Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icon Steel Lamination, c) Stainless Steel SS304 Fabricated Enclosure and d) Other Insulating Items. 2.2 According to applicant, Transformers fall under the HSN 8504 - Electrical Transformers, Static Convertors (E.g.: Rectifiers) and Inductors which is taxed @ 18%. There is another HSN 8607 - Parts of railway or tramway locomotives or rolling-stock ; such as Bogies, bissel-bogies, axles and wheels, and parts thereof which is taxed @ 5%. 2.3 Applicant has submitted that Maintenance Manual for LHB Coaches was issued by the Indian Railways Centre for Advanced Maintenance Technology (CAMTECH), Gwalior in April 2013. As per Chapter 6 - Air Conditioning and Train Lighting in the manual there is a mention of the End on Generation ( EOG ) system which states that EOG system envisages providing power car in front and rear end of a rake of coaches for power requirement between them. These coaches are equipped with 60 kVA step down transformers for stepping down 750 V to lower power supply as per the requirements of power supply. The Power Cars at both ends take care of the entire load of the whole rake, which includes air conditioning, light and fan circuit, emergency bat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feeds the total load of four coaches. It also consists of passenger saloon area, pantry, RMPU, mono block pump controller, electrical cabinet and various end wall panels. It is an air-conditioned coach. 2.6 The primary function of a transformer is to transform the electric current in a form to make it fit the requirements of a circuit and/ or its end use of power. The primary objective of a transformer in relation to railways is to transform the high voltage power pulled by the Pantograph (overhead units that connect to the power lines) to the low voltage as required by the coaches either to move the wheels or for other purposes like running the air conditioner units etc. Without a transformer, electricity supply cannot be controlled thereby making it a very critical Part in the Electrical Circuit of a coach/ bogie. Applicant also refers to the Specifications that are shared by the Research Designs and Standards Organisation ( RDSO ) in so far as the requirements for a Transformer are concerned, wherein the Scope covers the design, manufacturing, test, supply requirements of the Transformers. The transformers also need to meet the Service Conditions that are very typical to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hdg/Tariff item Description of Goods SCHEDULE Rate of Tax under CGST Rate of Tax under SGST 205G 8607 Parts of railway or tramway locomotives. or rolling-stock, such as Bogies, bissel-bogies, axles and wheels, and parts thereof II 6% 6% 3.4 The impugned product, is covered under both entries i.e Under Entry No. 375 of Schedule III of the Notification no. 1/2017-Central Tax (Rate) dt. 28th June 2017 under HSN-8504, and secondly, due to supply to railways, it covered another Entry no 205 G of Schedule II of Notification no. 1/2017-Central Tax (Rate) dt. 28th June 2017, HSN 8607. 3.5 As per the provisions of Notification No 1/2017-CentraI Tax (Rate) dt. 28th June 2017 and Customs Tariff Act, 1975 51 of 1975), the heading which provides the most specific description shall be preferred to a heading providing a general description as per Rule 3(a) of the Rule of Interpretation, of Schedule l. 3.6 In the instant case, there is a specific HSN i.e. 8504 for transformers in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, New Delhi 110002, on 22.8.2019 for the supply of 9 KV 750V/415V/190V AC, 3 phase, Star-Star, Dry Type, Air Cooled Power Distribution Transformer for LHB type Coches . 5.3 According to the Customs Tariff Act, 1975 (51 of 1975), we find that Transformers are classified under HSN 8504 , within the description of goods - Electrical Transformers, Static Convertors (e.g.: Rectifiers) and Inductors and it is covered under entry Sr.no. 375 of Schedule III of the Notification 1/2017 C. T. (Rate) dt. 28.06.2017 and taxable under GST Act @ 18% w.e.f. 1.7.2017. 5.4 There is another entry heading HSN 8607, with the description - Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof and it is covered under Sr. no. 241 of Schedule I of Notification 1/2017 C.T. (Rate) dt. 28.06.2017, taxable @ 5% w.e.f 1.07.2017. This schedule entry was amended vide Sr. No. 205 G of Notification 14/2019 dt. 30.09.2019 and now the tax is leviable @ 12% under GST ACT. Applicant has submitted that the impugned product is covered under both the above said entries. 5.5 Under the GST Law, classification of goods is done in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng capacity exceeding 16 kVA but not exceeding 500 kVA 8504.34 - - Having a power handling capacity exceeding 500 kVA 8504.40 - Static converters 8504.50 - Other inductors 8504.90 - Parts. Chapter Heading 8607 covers the parts of railways or tramway locomotives or rolling-stock . For the sake of information, the chapter heading 8607 is reproduced below: 86.07 - Parts of railway or tramway locomotives or rolling-stock. - Bogies, bissel-bogies, axles and wheels, and parts thereof: 8607.11 - - Driving bogies and bissel-bogies 8607.12 - - Other bogies and bissel-bogies 8607.19 - - Other, including parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable GST rates to such goods, under the aforesaid notifications, even if supplied to the railways. Therefore, it is very clear that, any product other than those covered under Chapter 86, supplied to the railways would not qualify for the HSN 8607 and are not to be considered as a parts of railway coaches, even if supplied to the railways. Entry 8607 is very restrictive entry for the purposes of consideration of goods to be classifiable as parts of railway bogies to avail the benefit of reduced rate of taxes. 5.8 In view of the discussions made above, subject Transformers, though used in Railway coaches, cannot be called as parts of railway bogies under Chapter Headings 8607 of the Tariff, due to the specific HSN available for transformer and therefore, the Entry no.241 of Schedule 1 of Notification No. 1/2017 C.T. (Rate) dt. 28.06.2017 does not applies to subject Transformers. 5.9 We agree with the submissions made by the jurisdictional officer that applicant s goods are to be classifiable under Heading 8504. 5.10 Hence in view of the above discussions, we find that the subject Transformers, manufactured and supplied for use in railway, locomotives are classif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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